Africa’s Revolutionary New Free Trade Area Could Lift Millions out of Poverty

by Alexander C.R. Hammond

In recent months, African nations have been in the process of creating, signing and ratifying the African Continental Free Trade Area (AfCFTA). The agreement is one of the largest trade liberalization efforts since the founding of the World Trade Organization in 1995.

Last Sunday, at the 31st African Union (AU) Summit in Nouakchott, Mauritania; the total number of AfCFTA’s signatories reached 49 out of 55 African Union (AU) member states. So is free trade becoming mainstream in African politics?

If all 55 AU nations ratified the proposed agreement, AfCFTA would create a trading area with 1.2 billion people and a cumulative GDP of $2.5 trillion. It aims to improve trade within the continent by immediately removing tariffs on 90 percent of goods, with the remaining 10 percent of tariffs on “sensitive goods” phasing out over time.

Being able to trade freely with one’s neighbors is vital for economic growth. In 2016, just 18 percent of Africa’s total exports were traded within the African continent. In Europe and Asia, intra-regional trade accounted for 69 percent and 59 percent of total exports respectively.

Under the AfCFTA, the UN Economic Commission on Africa estimates, intra-African trade could increase 52.3 percent by 2022. It could double again, after the final 10 percent of tariffs are removed. If adopted, the AfCFTA has the potential to revolutionize African trade and add billions to the continent’s GDP.

Quality of government could also improve through competition to create welcoming and stable business environments.

For the AfCTFA to be implemented, 22 countries must ratify the agreement. So far, six have done so. Unfortunately, prior to last weekend, the AfCFTA did not have the support of the continent’s two richest nations. Whilst Nigeria remains reluctant to cooperate, South Africa, the continent’s largest economy, has finally signed the agreement.

Admittedly, the AU has a long history of failed promises and meaningless acts. If AfCTFA succeeds, it will signify an important shift away from the socialist policies of Africa’s past. As Professor George Ayittey, the president of the Free Africa Foundation, explains:

“Most African nations took the socialist route after independence… In many places in Africa, capitalism was identified with colonialism, and since the latter was evil and exploitative, so too was the former. Socialism, the antithesis of capitalism, was advocated as the only road to Africa’s prosperity… and in its wake followed economic atrophy, repression and dictatorship.”

Africa’s socialist experience started in Ghana, the first African colony to gain independence in 1957. Kwame Nkrumah, the man many consider to be the “Father of African socialism”, pursued “complete ownership of the economy by the state”. Nkrumah encouraged Africans to “not rest content until we demolish this miserable structure of colonialism and erect in its place veritable paradise”.

Ahmed Sekou Touré of Guinea in 1958, Modibo Keita of Mali and Leopold Sedar Senghor of Senegal in 1960, Kenneth Kaunda of Zambia in 1964 and Agostinho Neto of Angola in 1975 were just some of the leaders who followed Nkrumah’s example.

In Africa, socialism was implemented through the one-party state apparatus. The state would own everything and direct economic activity.

“Predictably, in one country after another, economic ruin, dictatorship and oppression followed with deadly consistency… In Africa, socialism was implemented through the one-party state apparatus. The state would own everything and direct economic activity,” explains Ayittey.

Compare Africa’s past with its present. The AfCTFA is championed by Paul Kagame, the AU’s Chairman and President of Rwanda. Kagame describes himself as an avid free-trader and a disciple of Lee Kuan Yew, the first leader of the independent free-trading nation of Singapore. He is not alone: Mahamadou Issoufou, the President of Niger, noted that mobilising his peers to sign the agreement was easy as “most leaders already wanted to create a free-trade area in Africa”. The AfCTFA will mean “more integration (and) more growth for the whole continent,” Issoufou has declared.

Beyond the AfCFTA, overall trends across the continent indicate shifting attitudes towards free enterprise.

As Marian L. Tupy of the Cato Institute notes, “Africa’s love affair with socialism persisted until the 1990s, when, at long last, Africa started to reintegrate into the global economy”. According to the Economic Freedom of World report, Africa’s economy is becoming freer—its economic freedom score is now equal to the world average in 1996.

Tupy continues: “Trade relations with the rest of the world were somewhat liberalised (after 1990), and African nations started to deregulate their economies, thus climbing up the rankings in the World Bank’s Ease of Doing Business report.”

Despite this trend towards liberalisation, many African nations continue to be rife with corruption, ruled by dictators and face persistent poverty. But the AfCTFA and the desire of 49 nations to pursue intra-African free trade is a symbol that attitudes in what was once described as “The Hopeless Continent” are changing.

From socialist dictatorships to free trade, the prospects for African growth are looking better than ever. Let’s hope this deal adds billions of dollars to the continent’s economy, lifting millions out of poverty.

Reprinted from CAPX

Alexander Hammond Africa human progress

Alexander C.R. Hammond
is the Research Assistant for HumanProgress.org.

This article was originally published on FEE.org. Read the original article.

Congo and its neighbors mobilize to tackle Ebola outbreak

Chikwe Ihekweazu, UCL

At least 17 people have died in an outbreak of Ebola Virus Disease in the north west of the Democratic Republic of the Congo (DRC) in the town of Bikoro. Ebola is endemic to the country. But the number of deaths in a short period is cause for concern. The Conversation Africa’s health and medicine editor Candice Bailey spoke to Chikwe Ihekweazu in Nigeria.

What are the critical steps that the DRC needs to take now that the outbreak has been confirmed?

Health authorities have learnt many valuable lessons from previous Ebola outbreaks – particularly the outbreak in 2014 in West Africa where more than 11 000 people died.

Because the DRC has had so many outbreaks it’s developed the capacity to deal with new ones. But, as with every other disease that threatens global health security, it is critical for nearby countries to collaborate with it to ensure the outbreak stays under control.

Bringing the outbreak under control has two important phases. Firstly, health authorities in the country must define its scale. Secondly, they have to interrupt its chains of transmission as quickly as possible.

Our colleagues at the Centre for Disease Control in the DRC are currently evaluating the people who are infected. There are several pieces of information that they want to establish: when and where people were infected, where they they’ve been – or travelled to – since being infected. This will give them a better understanding of the extent of the person-to-person transmission.

Once this has been established, the government can respond. Several control activities will be initiated almost immediately covering both prevention as well as treatment. From a prevention perspective, it’s important for the government to engage with communities so that people understand the outbreak and how quickly the virus is able to spread.

From a treatment perspective, health authorities need to set up treatment centres and access to laboratory diagnosis. Given the death rate, epidemiologists will have to be on hand to carry out detailed investigations on the origins of the outbreak. This is the only way the chain of transmission can be broken.

Congo and its neighbors mobilize to tackle Ebola outbreak
USAID/flickr

The DRC has had numerous outbreaks of Ebola. What challenges does the country face handling a virus like this?

The DRC has had more Ebola virus outbreaks than any other country in the world. Over the past 10 years there have been five: 2007, from 2008 to 2009, 2012, 2014 and 2017.

As a result the country has gained a lot of experience in how to control the disease. But there are still many unknowns. One of the most critical gaps is understanding the transmission dynamics of the virus from its animal reservoir to humans.

The country has good systems for diagnosing the disease – its reference laboratory was able to test and confirm cases within 24 hours. But when it comes to surveillance and monitoring its systems are weak. Stronger surveillance systems would ensure that cases were reported early, and a country-led response mounted.

Nigeria is on high alert following the outbreak in the DRC. What are the concerns?

Nigeria, as well as other countries in Africa are at medium risk, according to a classification by the World Health Organisation.

Nigeria has learnt that it is better to be prepared than to be caught unaware.
To mitigate the risk, the country’s Centre for Disease Control has taken extra precautionary measures. This has included placing its emergency operations centre on alert and issuing a public health advisory. In addition, the national port health services have heightened screening at points of entry.




Read more:
How Nigeria beat the ebola virus in three months


There are also protocols in place to ensure that if a case is suspected, it’s detected early and response activities are initiated immediately.

It’s important for countries to ensure that their citizens are well aware of the risk the disease poses. Nigerian health authorities are working hard to ensure that this happens.

What steps will Nigeria take to help the DRC?

The ConversationDuring the 2014 Ebola outbreak, the African Union arranged for health workers from Nigeria to go to Liberia and Sierra Leone. As a result of this initiative, Nigerian health authorities have a large cohort of well-trained resources that can be deployed to support the country if that’s needed.

Chikwe Ihekweazu, Senior Honorary Lecturer on Infectious Diseases, UCL

This article was originally published on The Conversation. Read the original article.

What Buhari and Trump stand to gain from state visit

Stephen Onyeiwu, Allegheny College

Nigerian President Muhammadu Buhari’s visit to the Obama White House three years ago was ecstatic. By contrast, his visit this week to the Trump White House will be awkward. This time around, his host is a president who has referred to African states as “shithole countries” and remarked that Nigerians would never want to leave the US to “go back to their huts”.

Given Trump’s unpalatable statements about Africans in general, and Nigerians in particular, it’s fair to wonder why Trump invited the leader of a country he despises so much for a state visit. And also why Buhari accepted the invitation.

Muhammadu Buhari Nigeria UNGA

Muhammadu Buhari at United Nations, 2017

One answer is that the meeting offers both leaders a platform to promote their various political goals. Trump could use the occasion to showcase his credentials as an indefatigable fighter against terrorism. And he could pledge to help Buhari defeat Boko Haram in northern Nigeria, much as he has done with ISIS in Syria and Iraq.

For his part, Buhari is headed for a tough re-election bid a year from now and may believe that a visit to the White House could boost his international profile. His prolonged absence from office last year due to illness led some observers to believe that Nigeria had abandoned its role as a leading voice for Africa.

It’s not inconceivable that Buhari’s visit to the White House has little to do with economic relations, but more about the political gains both leaders can make. Buhari’s US visit comes on the heels of a recent visit to Downing Street, and will soon be followed by another visit to the Elysee Palace.

What must not be forgotten is that US dependence on Nigerian oil has increased dramatically with imports jumping threefold in 2016 driven by uncertainties in Iran and Venezuela. This suggests that both countries have a common interest in maintaining a close relationship.

What will be on offer

One deal that’s likely to be consummated during the meeting is the planned sale of up to 12 Embraer A-29 Super Tucano attack planes to the Nigerian Air force for about USD$600 million to help fight Boko Haram. Trump is also likely to announce the deployment of more military advisers to assist Nigeria in fighting Boko Haram.

But fighting Boko Haram requires much more. As the commander of the US Africa Command, General Thomas D. Waldhauser, recently observed,

Unrest within West Africa is driven by local grievances, corruption and weak governance, human rights violations, and imported religious ideology.

Buhari could also do with substantial non-military assistance. In particular, he needs help to address two huge social problems in Nigeria: the fact that 70% of Nigerians live in abject poverty, and that more than 50% of the country’s young people are jobless.

But Buhari should not count on Trump to increase aid for the kind of economic transformation the country needs. In the 2017 financial year, the US budgeted a mere USD$608 million in foreign assistance to Nigeria, a number which eerily echoes the price tag for the 12 fighter jets Nigeria wants to buy.

US assistance is unlikely to increase for two main reasons. First, Trump is pursuing his “America First” philosophy and has vowed to slash its foreign aid budget. In 2017, the budget was USD$34 billion, or 0.2 percent of US budget, out of which Africa received 21%.

The other reason the aid taps are unlikely to be opened is that Trump has threatened to withhold aid to countries that supported the UN resolution condemning his administration’s decision to recognise Jerusalem as Israel’s capital. Nigeria is one of the several African countries that voted for the resolution.

Trade

Nigeria is America’s 56th largest goods trading partner. The US exported goods worth USD$1.9 billion in 2016, and imported goods worth USD$4.2 billion that year, leaving the US with a trade deficit of USD$2.3 billion with Nigeria. But these numbers are deceptive because US imports are made up mainly of crude oil. Stripping out the oil, the US would have had a trade surplus of USD$1.7 billion in 2016.

To alleviate poverty and create jobs Nigeria needs to export more non-oil products to the US. At the very least, Buhari should press Trump to strengthen the African Growth and Opportunity Act (AGOA) enacted in 2000 to facilitate the access of African exporters to the US market. Nigeria was the leading AGOA exporter in 2016, with over USD$2 billion worth of exports under the Act.

There are fears that Trump might jettison the Act, or weaken some of its provisions that he deems inimical to his “America First” philosophy. Buhari should defend it unequivocally.

And he should tell Trump that Nigeria needs more US foreign direct investment. In 2016 the number was USD$3.8 billion in 2016, far less than the USD$13 billion the Chinese invested in Nigeria in the same year.

Business as usual

The US-Nigeria relationship has historically been driven less by economics, but more by convenience and indifference. While Nigerian presidents covet a visit to the White House, US presidents tend to be indifferent, and sometimes passive, about Nigerian affairs.

The ConversationAn example is the blind eye various US administrations turned as successive military dictators presided over Nigeria for three decades. Some of those dictators managed to stash their ill-gotten wealth in US financial institutions. I suspect that Buhari will be asking Trump to help repatriate some of those illicit funds. Whether Buhari also gets to ask Trump to commit to trade and investment, and not fighter jets, remains to be seen.

Stephen Onyeiwu, Professor and Chair of the Economics Department, Allegheny College

This article was originally published on The Conversation. Read the original article.

South Africa Didn’t Learn from Apartheid and Still Wages War against Free Markets

By Marian L. Tupy

In 1986, a well-known African-American economist traveled to South Africa for a conference on the role of business in helping to overcome racial divisions in that country. Three years later, Professor Walter E. Williams of George Mason University published a book titled South Africa’s War against Capitalism.

Racial discrimination in the country, he wrote, was not a result of free enterprise. Instead, it was a consequence of the government’s attempt to protect white workers from their black competitors. “If capitalism can be described as the unfettered operation of the market in the allocation of society’s scarce resources,” he concluded, “then apartheid is the antithesis of capitalism.”

Today, the South African government is, yet again, undermining the country’s market economy and racial tensions are on the rise. To save themselves from economic collapse and rising racial tension, South Africans of all colors should read William’s sage words and, maybe, invite him to visit South Africa once more.

The Racial and Economic Struggles with Apartheid

apartheid Walter Williams South Africa War against Capitalism

In 1989, when Williams’ book came out, South Africa was still run by the white-minority government. Both the African National Congress (ANC) and the South African Communist Party (SACP) were banned. Their leaders were either in exile or, like Nelson Mandela, in prison. Communism was very much alive and engaged in an ideological struggle against free nations throughout the world. South Africa, meanwhile, faced international sanctions and opprobrium.

The black majority lacked political representation while the economy was over-regulated and increasingly dominated by state-owned enterprises.

To ease the economic and political consequences of isolation, the government portrayed South Africa as a Western bulwark against communism. The communist threat in Southern Africa was real enough, but that did not make South Africa a free country. The black majority lacked political representation while the economy was over-regulated and increasingly dominated by state-owned enterprises.

South Africa’s racial history is, to put it mildly, complicated. In some provinces of what became the Union of South Africa in 1910, Africans lacked most of the basic political and economic rights. In contrast to Transvaal and Orange Free State, Africans in the Cape Province enjoyed greater equality with whites, including the right to vote.

Race relations in the country deteriorated, rather than improved, throughout the 20th century. That happened for many reasons, including, most obviously, white racism and, less obviously, the catastrophic performance of newly-independent African states to South Africa’s north.

Among the reasons for the deterioration of race relations in South Africa was the now largely forgotten “problem” of economic competition. As South Africa urbanized and industrialized, African workers poured into the cities and started competing with white workers for lucrative jobs in the mining sector. On average, black laborers were willing to work for lower wages than white laborers, and South Africa’s industrialists were only too happy to cut their costs by hiring Africans.

White workers took to the streets under a banner that read, “Workers of the World Unite for a White South Africa.”

As blacks displaced whites, white resentment grew. Egged on by the SACP, which catered to the needs of the white proletariat, white workers took to the streets under a banner that read, “Workers of the World Unite for a White South Africa.”

The so-called Rand Rebellion of 1922 spread like a wildfire, threatening the survival of the government. General Jan Smuts, the Prime Minister, had to resort to using 20,000 troops, artillery units, and even aerial bombardment in order to survive.

That said, the Rand Rebellion succeeded in its primary objective. The government was forced to institute the so-called “Colour Bar,” which reserved certain jobs for “Europeans only,” thus protecting the white workers from black competition.

With time, the Colour Bar expanded into a large body of laws and regulations that were intended to re-engineer the South African society along racial lines. That system of laws and regulations came to be known as apartheid.

No Apartheid, but Still Struggling

A quarter-century after the end of apartheid, South Africa’s economy is once-again groaning under a vast and complex system of racial quotas and preferences, which, this time around, favor the black majority over the white minority. The government composed of the ANC and SACP (which now caters to the black, rather than white proletariat), explicitly rejects meritorious advancement in favor of “racial representativity” in all aspects of political and economic life.

The government’s statist economic policies, incompetence, and venality have resulted in low growth, ballooning debt, higher taxes and, worst of all, an explosion in unemployment. The worsening economic conditions have, in turn, created fertile ground for Marxist ideologues in both parties, who seem to be on course to commit economic suicide by expropriating private property without compensation.

In South Africa’s War against Capitalism, Williams observed,

it is readily apparent to any observer that the mere elimination of colonialism was not a sufficient guarantee for the personal liberty and higher standard of living hoped for by the African common man and woman … the experiences of post-colonialism should serve as a caution for post-apartheid South Africa. Compassion requires that we seriously entertain questions and thoughts about what kind of system is going to replace apartheid. Will such a system promote the kind of liberties and standards of living hoped for by both South African and Western opponents of apartheid?

Looking back, it must be admitted that neither South Africa’s post-apartheid government nor the plethora of Western do-gooders, including governments and NGOs, heeded Williams’ warnings. Thirty-two years after Williams’ trip to South Africa, the country teeters on the brink of economic destruction and possible wide-spread political violence. It is now more important than ever for South Africa to look to free enterprise as a solution to its problems.

Reprinted from CapX.

Marian L. Tupy South Africa Capitalism Apartheid
Marian L. Tupy is the editor of HumanProgress.org and a senior policy analyst at the Center for Global Liberty and Prosperity.

This article was originally published on FEE.org. Read the original article.

Project using R&D is changing wheat farming in Africa

By Verenardo Meeme

Wheat farmers in 12 African Countries – Benin Republic, Cote d’Ivoire, the Democratic Republic of Congo, Eritrea, Ethiopia, Ghana, Kenya, Lesotho, Madagascar, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, Sudan, Tanzania, Uganda, Zambia and Zimbabwe – are benefiting from a project aimed at increasing production and reducing demand gap of the crop’s products.

Wheat is an important source for vitamins and minerals as well as carbohydrates, fiber, magnesium, vitamin B, folic acid, antioxidants and phytochemicals. These nutrients can help prevent many of the chronic diseases plaguing Africa.

However, wheat production in the continent is still low and facing challenges that include poor seed varieties, climate change related impact such as prolonged droughts and pests and diseases.

The continent heavily depends on imported wheat, a burden on the scarce foreign exchange reserves. For instance, 80 per cent of the wheat hectarage in Kenya is cultivated by small scale farmers who produce only about 20 per cent of the country’s total productivity demand.

But with the help of Support to Agricultural Research for Development of Strategic Crops in Africa (SARD-SC) project introduced in 2013 and funded by African Development Bank (AFDB), scientists from the 12 African countries are now sharing knowledge and experiences on how to cut down wheat production challenges using new technologies such as developing new wheat varieties, and progresses are being made.

According to Solomon Assefa, SARD-SC project coordinator, Africa produces only 40 per cent of what it consumes yet the continent is only at 10-20 per cent of its potential.

Scientists, since the introduction of the programme, have released 21 varieties for use as well as researched on 25 candidates along with their crop management practices to find varieties suitable for various agro-ecologies of Africa.

This piece was produced by SciDev.Net’s Sub-Saharan Africa English desk.

 

This article was originally published on SciDev.Net. Read the original article.