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EDITORIAL: Smell the coffee of shared prosperity

Wednesday July 05 2017
trade

Contrary to what many believe, intra-African trade can give the continent a healthy degree of insularity from global shocks. The numbers speak for themselves. Intra-African trade is a $6 trillion opportunity in the near term and more than $12 trillion over the horizon.

By The EastAfrican

Over the course of the past half century of Independent Africa, the continent’s leaders have been regular cry-babies, lamenting over anything from the arbitrary boundaries that created artificial divisions among their people, to neocolonial plots to keep Africa backward.

Rarely, if at all, is the contribution of the continent’s post-colonial leaders to its malaise ever discussed, as continental forums quickly turn into platforms for anti-colonial rhetoric and self-adulation over achievements that often have more significance for the ruling elite than the masses.

It was refreshing, therefore, when speakers at the annual general assembly of the African Export-Import Bank in Kigali this past week, laid bare the hollowness of African trade policy.

Giving the example of just two countries – South Africa and Angola – speakers demonstrated just how hard and expensive it is to conduct trade between African states.

As an example, they showed how moving a shipment from Durban to Luanda consumes the better part of a month and requires a paper trail that tallies 634 pages, 28 SADC certificates, 84 Customs stamps, 56 Customs signatures and 83 export documents!

Intra-African trade accounts for a paltry 16 per cent of the continent’s trade volumes.

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And that is before discordant standards codes and other barriers come into the mix. All this is supposedly done in the name of national interest and sovereignty.

Yet experience teaches us otherwise. Far from creating islands of prosperity, years of protectionism have led to a slow but gradual decline for everybody. East Africa offers a very good example.

For nearly two decades after the collapse of the initial East African Community, inward-looking policies created the illusion of success for some but the regional economy ultimately suffered from protectionism that stifled the movement of financial and human capital to areas where it offered the most returns to investors.

South Africa, arguably the most advanced economy on the continent, is today tottering, with a youth unemployment rate close to 25 per cent. Yet it remains largely closed to the rest of the continent, even as it seeks to trade there.

A way forward is for African leaders to wake up and smell the coffee of shared prosperity. Contrary to what many believe, intra-African trade can give the continent a healthy degree of insularity from global shocks. The numbers speak for themselves. Intra-African trade is a $6 trillion opportunity in the near term and more than $12 trillion over the horizon.

But this is going to require transforming existing mindsets, bringing down trade barriers and easing the movement of people between states.

Rwanda offers a good example of the benefits of opening up. A small landlocked country in the heart of Africa, it was an early adopter of initiatives such as concessional trade within Comesa.

Rwanda is one of the most open countries in Africa to foreign workers, bridging critical skills gaps. The national economy has continued to expand, industrialisation is gathering pace and more importantly, the national budget is edging towards parity.

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