Tag: MARKET

The recently signed protocol in Kigali Rwanda to set up an African economic community is already plagued by lack of unanimity. First of all, there is nothing new in the idea which was first articulated in the 1991 Abuja charter on the same issue of a common market in Africa. What the Kigali treaty is attempting to do is to bring into reality an idea whose time has come. There are examples to go by. The European Union provides a useful paradigm for Africa to follow. Africa can learn from the problems of the European Union which have led to the impending withdrawal (BREXIT) of Britain and threatened expulsion of economically insolvent Greece. The fact that Nigeria and South Africa stayed away from the Kigali protocol at least for now raises fundamental issues about the process of the negotiations preceding the signing of the protocol and therefore foreshadows the future viability of the project.

It seems to me that Nigeria was on board until the last minute when organized labour and the Manufacturers Association of Nigeria (MAN) began to voice some misgivings about the deal on two grounds of possible flooding of Nigerian market with goods coming from Europe and Asia being repackaged as goods of African origin and therefore leading to market loss for manufacturers and unemployment for Nigerian workers. I do not know why South Africans stayed away because they are likely to be the biggest beneficiary of an African common market in view of their developed manufacturing base. Perhaps the staying away of Nigeria made nonsense of the whole idea in view of the fact of Nigeria’s huge market for South African goods and services.

Whatever the case may be, nobody can seriously argue against the idea of Africa pulling together to protect itself in a world of rising nationalism and protectionism particular in America and Europe. Ironically, it is China a communist country that is currently championing free trade which has been an article of faith of capitalists since Adam Smith wrote his book the “The Wealth of Nations” in 1775. Of course China is championing free trade not out of altruism but enlightened self-interest. This is because China is more or less the workshop of the whole world and free trade as far as China is concerned is freedom to sell its cheap goods in all markets of the world whether in developed or under developed countries.

One of the strongest arguments in favour of African common market is that intra-African trade is negligible. Even where the idea of economic integration is well and alive as in the ECOWAS, Southern African Development Community (SADC) and in the MAGHREBIAN countries, trade within those areas are also almost at rudimentary levels. There is hardly any economic contact between East and West, North and South of the continent facilitating closer economic interaction and trade. This lack of economic cooperation may be why the quantum of African trade with the rest of the world remains abysmally small sometimes put at about 4% the same with small Belgium. To increase this is what is at the back of the minds of economic planners for Africa. For example, instead of 53 national airlines, one well-endowed airline operating in a continental open air space regime will not only be more viable and efficient but will also be able to compete with foreign airlines on the continent. Manufacturers will also benefit from economy of scale when servicing a tariff free continent wide market. Transport and electrical grids serving across borders would break down inherited colonial artificial boundaries separating African peoples, labour and capital.

The problem really is ensuring a win-win situation for individual countries. This is the crux of the problem. To avoid benefits going to either the big economies alone or the smaller ones that can be infiltrated by foreign economic interests to reap the benefits of a big market, things will need to be properly worked out.

For some time the EU has been putting pressure on ECOWAS to revise the so called Lome convention to give its members unfettered entry into its market without adequate protection for domestic manufacturing companies. If not properly negotiated, the new African market could be a Trojan horse by which African economy will be subverted by stronger European and Asian economic power. This was the case when under the AGOA (African Growth and Opportunity) Act enacted in the USA on May 18, 2000 now renewed till 2025. Sub Saharan states in Africa were granted access to the United States market. Chinese companies took advantage of this by setting up textile companies in Southern African countries of Lesotho and Swaziland. The result is that previously prospering textile manufacturing companies could not compete and benefit from AGOA. This was the experience in Nigeria and this may have been the reason why organized labour in Nigeria has been hostile to the coming common market in Africa.

Nigeria should however not become a cog in the wheel of African economic integration and progress. Whatever concerns we have must be put on the table so that we can find appropriate solutions that would be acceptable to other countries. I am of course aware of a possible gang-up of smaller and poorer countries against Nigerian interest. This is because in recent times, perhaps because of our internal problems in the militancy in the Niger Delta and insurgency of the Boko Haram, Nigeria has been punching below its weight in global and African affairs thus allowing the likes of Rwanda to dictate the tune without the ability to pay the piper. The original common market for Africa was first mooted by Nigeria in Abuja in 1991. Our country’s diplomacy should have been out in the front directing negotiation favourable to our economic aspirations instead of waiting until the last minute to block the movement towards greater integration.

We will of course make some sacrifices and provide funds for the secretariat hopefully to be domiciled appropriately in Abuja while we open our air space to a commonly supported African aviation. One thing that is clear is that this continent will not make it until we have the necessary transportation and communications links. I remember having to travel to N’djamena in the 1980s from Lagos via Paris before coming to a neighbouring country of Chad. This is probably still the case today. The insecurity problem most African countries face is probably the result of their isolation from each other and the rest of the world. Any organizational instrument that will obviate the terrible situation will be a welcome initiative. I can also think of the problem of water management on the continent in which a continental approach will be better than unilateral or bilateral approach. The current prickly relations between Ethiopia and Egypt over the massive dam across the Nile in Ethiopia  comes readily to mind because if the Nile does not flow to Sudan and Egypt in correct volume, it will be disastrous to all the riparian states downstream from the Ethiopian highlands. The shrinking of Lake Chad can be reversed if the course of the Shari and Ubangi Rivers in the CAR are diverted to the lake. The underutilized Congo River can be exploited for electricity to a wider spectrum of countries in central and even West Africa. Financing which is the main problem for gigantic projects would be easier to negotiate with the force of a continental economic union backing them. In other words, walking away from the economic union or Zollverein is not the solution; the solution is to make the economic community work for every country with each country contributing to the pool of economic activities based on each country’s comparative advantage.