part 4

Greener Africa: Time for ‘free trade but also fair trade with Europe’

in depth

This article is part of the dossier:

Greener Africa

By Kako Nubukpo

Posted on October 8, 2020 17:52


Africa’s summit meeting with the European Union (EU) in 2021 is a critical opportunity to assert that the relationship is mutually beneficial only if Africa produces what it consumes.

This is part 4 of a series.

Africa’s summit meeting with the European Union (EU) in 2021 is a critical opportunity to assert that the relationship is mutually beneficial only if Africa produces what it consumes.

Europe should in turn practice the solidarity it preaches in principle, by supporting capacity building in Africa for self-sufficiency. Africa needs to stand firm, with a clear, long-term vision, in order to forge with the EU a common and equitable path to prosperity.

The COVID-19 pandemic and the climate emergency have exposed afresh Africa’s various shortcomings, notably in the health and education sectors that are the foundation for capacity building.

Yet, the crises also set the stage for Africa to put unprecedented emphasis on human development, which is one of the pillars for the structural transformation discussed for the past 60 years.

Fundamental change needed

Another pillar is economic diversification. Africa has long been merely a supplier of raw materials and recipient of finished products. This role has been codified in the Lomé and Cotonou conventions and the EU/African, Caribbean and Pacific framework such that African raw materials get EU customs exemptions but processed African exports are greeted with heavy taxes.

An equitable partnership requires a fundamental change in this relationship. This is why the African Continental Free Trade Agreement (AfCFTA) is an excellent platform for genuinely African products to feed African markets based on strict rules of origin and local content.

READ MORE Now is the time for Africa to implement AfCFTA, not later

However, before the AfCFTA can restructure production and distribution patterns, there are constraints to overcome. These include:

  • Africa’s internal coordination
  • Policy space
  • Governance

“Africa’s far smaller margin for monetary manoeuvre”

Negotiations are on-going between Africa’s 33 least developed countries (LDCs) and the remaining low and middle-income countries which are more interested in a common African position.

Currently, the latter have relatively limited access to EU markets under the Standard Generalized System of Preferences (GSP) while the LDCs have largely free access under the GSP Everything but Arms initiative.

Such differences also have repercussions on AfCFTA discussions on tariffs among economies that range in size from tiny to giant. Given Africa’s greater vulnerability to global warming and its need for international support, better coordination is also needed for a collective response to climate effects that do not respect borders.

In terms of policy space, Africa’s injection of about 5% of GDP in response to the economic impact of COVID-19 seems timid when the rest of the world injected about 20% of GDP. The reason is Africa’s far smaller margin for monetary manoeuvre; another indicator of our need to reconquer economic sovereignty in terms of currency and budget. A related problem is the tendency to think at the macro level in the wake of our Bretton Woods partners.

READ MORE The G20’s action on debt is an important first step; now for the hard part

One example is the call for almost $100bn in international COVID support by Africa’s finance ministers which is more a macro-level than a sectoral response when Africa needs to come down to the micro level of the vast majority of our economic actors in order to build their capacity and responsiveness to current crises and emerging frameworks.

“Quality of governance”

Another constraint is the quality of governance, which plays an important role in what may be called “the dictatorship of emergencies”, or constant fire-fighting.

Besides reflecting the presence or absence of a capable state providing amenities and economic prospects for citizens, political instability and insecurity also discourage foreign direct investment. ECOWAS leaders in October 2019 decided, problematically, to classify military spending as public investment expenditure, meaning that all types of resources including development aid could be diverted to military spending at the expense of schools, clinics, feeder roads and potable water.

READ MORE Egypt VS Coronavirus: Military’s excuse to extend economic control?

This illustrates the short-term thinking that for 60 years has exposed Africa to many supposedly exogenous shocks that in fact only reveal our failed approach to structural transformation.

Time is right for Africa to deploy pragmatic and long-term vision

Local processing begins with choosing the appropriate product and working out the factors for success. The frequent mistake is one of scale, aiming too high to start with. If we identify the target market and use small-scale hydro and solar energy, we can create successful enterprises and then work on upscaling, with no need for big dams or fossil fuel.

  • Developing a textile industry would clearly be easier and more broadly and immediately beneficial than processing uranium.
  • African cotton is already highly prized abroad. With a market of 400 million people in West Africa alone, and further cooperation among nations and regional institutions, textile industries could take off and Africa could establish its own international brand.

However, for at least 20 years the World Bank and International Monetary Fund have forced us to allow second-hand clothes imports to swamp our markets. We need enlightened protectionism to build competitive industries.

This entails radical policy changes to end the colonial structure of dependence that privileges raw material exports for foreign revenue while discouraging bank finance for local processing and extended local markets. It implies avoiding the resource curse, boosting local content, transforming value chains and attaining agricultural self-sufficiency.

The pandemic revealed the responsiveness of local production and distribution networks linking urban, peri-urban and rural areas to meet demand as food imports shrank. Promoting these local networks boosts rural and urban incomes, with a very small carbon footprint. Such promotion also shortens the linkages from local to continental value chains, illustrating the importance of the AfCFTA and genuinely free movement of people, goods, services and capital across Africa.

READ MORE COVID-19: When ‘local sourcing’ is more than buzz words, but a reality

Africa must reduce transport and energy costs which discourage rural producers as well as industrialists. Better roads and active development of solar and small-scale hydroelectricity can rapidly improve production and marketing prospects. The final requirement is high-quality governance and management at both national and firm level, such that capital is never mistaken for profit.

Bottom line

Europe has launched a “Green Deal” which aims to halve its carbon emissions by 2030 and achieve net-zero emissions by 2050. It has also committed to a new Africa strategy which recognises respective and mutual interests and responsibilities and promotes green growth.

Africa must therefore meet Europe with its own strong vision of a green and industrialised future. It aims to change the continent’s role as a reservoir of raw materials and recipient of manufactured goods. It rejects the neo-liberalism that protects European markets and forces African markets open. Africa wants free trade but also fair trade and well-targeted support for a win-win partnership with Europe.

*This Op-Ed is part of a series of pieces produced for a United Nations University Institute for Natural Resources in Africa (UNU-INRA) project on Green Transformation in the wake of Covid-19 recovery, in collaboration with the German Federal Ministry of Economic Cooperation and Development (BMZ), the African Union Commission (AUC), United Nations Economic Commission for Africa (ECA) and other partners. The views expressed do not necessarily represent those of the institutions involved in the project.

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