• Friday, June 21, 2024
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What does Africa produce?

What does Africa produce?

In the 1970s through the 1990s, during the heady days of pan-Africanism and dependency theory, it was taken as gospel truth that resources flow from a ‘periphery’ of poor and underdeveloped states to the ‘core’ of wealthy states.

In this structured global relationship, it is uncritically assumed that the ‘periphery’ supplies raw materials, agricultural produce, cheap labour, and markets for expensive manufactured goods from Metropolitan ‘core’ centres.

Although the theory has been shown to be vacuous and fails scientific and or empirical validation, many in Africa have continued to hold on to the basic tenets of the theory and parrot it at every given opportunity without taking into account the very nuanced and complicated reality of global raw material/agriculture production.

The Russian-Ukraine war is beginning to show many in Africa the real picture. Almost 25 African countries (see graph) depend on Russia and Ukraine for wheat imports and the war between the two has led to skyrocketing food prices and inflation across Africa (as low as 10% in Zambia and as high as 61.8% in Egypt) between 2022 and 2023. In 2022, many African countries were near breaking point and it took a UN-brokered grain deal to allow Ukraine to resume export of grains through the red sea for some stability to be restored.

To earn dollars or foreign exchange, Africans would rather focus on producing export or cash crops to be able to buy what it needs while ignoring its real needs

When Putin indicated he may void the deal, seven African leaders, in panic, rushed to both countries, practically begging Putin and Zelensky to allow the grain exports to continue, although giving their trip a thinly disguised official veneer of ‘peace mission’. While Russia and Ukraine laughed off their peace proposal, they nonetheless pitied the poor and unfortunate Africans and have allowed the exports to continue, for now.

But why does Africa have to depend on outsiders for grains when it is potentially able to produce all the food it needs? The data is clear: A significant part of African farmlands is dedicated to producing cash crops – coffee, cocoa, cottonseed oil, and flowers that Africa does not eat– for export while the main staple crops in Africa – wheat, rice, and even maize – come from outside the continent.

Africa’s food imports cost was put at roughly $81 billion and could rise to $100 billion in the nearest future. Yet, according to the World Bank, Africa could easily produce these food items.

The reason can be found in dollars, the global currency of trade even in Africa. To earn dollars or foreign exchange, Africans would rather focus on producing export or cash crops to be able to buy what it needs while ignoring its real needs. But Africans could integrate their economies and also trade within themselves.

Well, that’s a long shot. So, for example, Kenya would rather focus on producing cut flowers and coffee (that it doesn’t use) just to earn dollars to be able to import wheat from Russia and Ukraine or ceramics from China. But it could choose to produce maize, wheat or rice and sell to its neighbours, Uganda and Tanzania, and other African countries too. Well, it doesn’t trust they have the dollars to buy or so goes the rationale.

So, while African leaders go to Paris and Addis Ababa and talk tough, there is as yet no serious discussion on producing what Africa needs and focusing on intra-African trade to boost growth despite the signing of the African Continental Free Trade Area (AfCFTA).

Hichilema gets his deal in Zambia

On a positive note, Zambian president, Hakainde Hichilema, has been unusually focused on putting Zambia on a sound fiscal footing since coming to office in 2021 rather than exacting vengeance on those that were behind his imprisonment and torture in 2017 on trump-up charges.

Almost three years after officially defaulting on its debt, Hichilema has successfully negotiated a debt restructuring deal with key creditors – including China, that will free up funds from debt serving for investment in infrastructure and other aspects of the economy, and for job creation.

The deal, which frees Zambia from its $6.3 billion loan servicing obligations for three years, paves the way for Zambia to receive IMF funding and enter talks with private lenders for a separate restructuring deal of another $6.8 in private debts.

While his counterparts were busy delivering empty populist speeches and doing nothing, Hichilema has been singularly focused and determined to get this deal done to give Zambia breathing space to jumpstart its economy. This breakthrough may herald good news for other similarly distressed African countries like Ghana and Ethiopia to negotiate similar restructuring plans. I wish Hichilema could improve further on his transparency in governance to make a clean break from the past and become a shining example to other African leaders.

Botswana continues to show the way on natural resource utilization

Botswana, perhaps Africa’s only example of a state that has successfully bucked the resource curse syndrome, has extracted a far better deal from Diamond behemoth, De Beers, for a new 10-year mining and sales deal of rough diamonds in the country.

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The last-minute deal came after President Masisi’s government threatened to walk away from talks if it didn’t get a good production shares agreement. After protracted negotiations, which went to the wires, Botswana, which also owns 15 percent of De Beers, was able to extract a 30 percent share, which would rise to 50 percent by the final year of the contract. The deal, which is exclusive of taxes and royalties, vastly improves on a 2011 agreement that gave Botswana a 25 percent share, reports the Financial Times.

De Beers relied on the Southern African nation for 70 percent of its rough diamond supply last year. Diamond revenues, in turn, account for a third of Botswana’s Gross Domestic Product and have seen the landlocked Southern African country rise to become Africa’s sixth richest country per capita and an oasis of peace, stability and good democratic governance.

The challenge for Botswana now is to diversify its economy away from dependence on Diamond revenues. If the one-party dominant state manages to avoid fractious political battles – like the one currently going on between President Masisi and his predecessor in office, Ian Khama, it would be a model for perpetual laggards like Nigeria, Angola, and Equatorial Guinea among others.