MUCH has been said about African trade and the continent’s integration into a range of forums. It is the policy of African governments, and plenty of implementation is under way.
Africa’s leaders have long recognised the importance of economic integration as a remedy for the continent’s fragmentation. At the past two African Union summits, much was discussed regarding intra-African trade. We know the problems, the diagnostics and even the cure.
More than half of Africa’s 54 countries have a gross domestic product of less than $10bn, and a population of less than 10-million. Sixteen are landlocked, with all the challenges associated with small size and small markets. All of this is known.
Most African countries struggle to achieve the economies of scale required to become competitive internationally. That is why, through successive agreements, African governments have committed themselves to the pursuit of greater integration.
These commitments have not always proved easy to implement. In practice, national priorities have often trumped regional needs — a phenomenon not unique to Africa, of course.
As a result, the opportunities of regional integration have not been fully exploited. Yet today, as yesterday, trade still holds tremendous unrealised potential as a driver of growth and a way of improving food security, creating jobs and reducing poverty.
In short, while intra-African trade has more than doubled over the past five years, it remains far below potential. Most people would agree there are four pervasive challenges:
• a lack of adequate hard infrastructure, in particular transport, connectivity and energy;
• problems with ‘soft’ infrastructure — the institutions and regulations to facilitate trade links, which includes the overall business environment, and impediments to the free movement of goods, capital and talent;
• myriad company-level challenges that affect the private sector and the emergence and sustainability of exports, such as quality and meeting standards; and
• access to finance, trade finance and the financial infrastructure that supports trade.
These are issues we know well. Of growing urgency are railways and maritime port capacity. Much of our railway network dates back to the colonial era, and the costs of ageing systems with multiple gauges are now a real impediment. Few railways have been built since independence.
At our ports, crucial for regional integration and international trade, capacity has become a major obstacle. The volume of freight that they handle has increased dramatically in recent years. Most of these ports were not designed with a regional market in mind, and many are rapidly running out of capacity, especially as mineral exports increase.
As a result, they operate well below international norms, resulting in higher costs and longer processing times.
We know what has to be done, including the financing gap. Today, we need to ask a different question: since we all seem to agree on the principles and even the road map, what keeps us from faster progress? And how can our legislatures help?
Of late, many African countries have celebrated their golden jubilees. There has been much celebration, indeed, but also soul searching. There has been acknowledgment of progress and of disappointments.
However, as with all celebrations, there is the morning after. Where did we go wrong? Could we have charted a different path?
While we are all wiser in hindsight, there is no doubt we could have made better progress. And the new global environment dictates we do better.
As Africa enters this new era, we have only two options: a paradigm shift or a new period of muddling through, pleading some sort of African exceptionalism.
Our founders laid the basis: political liberation. They achieved much, including the epic struggle to rid Africa of the last vestiges of colonialism and apartheid. Like all pioneers, they often made mistakes — sometimes costly ones — that led to military dictatorships, one-party states and economic experimentation. In between, often economic meltdown, mayhem and even genocide.
There is much unfinished business politically: building peace, security and rule of law. However, most people would now agree the colossal struggle in Africa must be that of economic liberation through integration. There is also now near unanimity that this outcome is not possible with 54 balkanised states, economically speaking.
Nations develop through trade and investment. Of course some develop by exploiting other nations’ wealth and labour, and by imposing on other nations economic policies that they did not follow themselves at earlier stages of their development.
I am not saying Africa should also explore the second option. That would be absurd. What I want to suggest is different, an affirmation that many of the regions also grew by integration. By delaying economic integration in Africa, therefore, we are almost by default making it possible for others to continue exploiting our wealth and potential.
Former president Julius Nyerere of Tanzania, one of the founding fathers of the Organisation of African Unity, had this to say in Accra at Ghana’s 40th independence anniversary: "The confession is that we of the first-generation leaders of independent Africa have not pursued the objective of African unity with the vigour, commitment and sincerity that it deserved ...
"So this is my plea to the new generation of African leaders and African peoples: work for unity with the firm conviction that without unity, there is no future for Africa.
"My generation led Africa to political freedom. The current generation of leaders and peoples of Africa must pick up the flickering torch of African freedom, refuel it with their enthusiasm and determination, and carry forward Africa’s integration."
These are powerful words. The case he makes was valid yesterday and remains so today, more urgent than ever given recent developments in the global economy.
• Kaberuka, who holds a doctorate degree in economics from the University of Glasgow, is serving his second five-year term as president of the African Development Bank. He was the architect of Rwanda’s economic reforms and growth, having served there as finance minister from 1997 to 2005.
Source: Business Day
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