Time was when calls to Cotonou from Lagos – a distance of only 121.5 kilometres, had to be routed, first through London (6, 769.1 km from Lagos), then Paris (6, 309.3 km from Lagos) before it is connected to Cotonou. While today, this may not sound reasonable, it made perfect sense for the European colonial masters. They were in Africa for the benefit of their countries and so roads, railways and other communication infrastructure were built not to connect or enable inter-African trade or interaction, but to enable easy movements of goods to the sea where they would be transported to the metropol.
Unfortunately, little has changed since independence. The bulk of the continent’s trade is still with Europe and America, and more recently, Asia. Intra-African trade has improved only marginally, despite the existence of several regional economic and trade communities. The statistics is stark: inter-African trade, at just 12% is the lowest in the world. In comparison, inter-European and inter-Asian trade stands at 60% while inter-American trade stands at 40%. Transport and other infrastructure that will enable intra-African trade and communication are still underdeveloped and in many cases, worse than they were during colonial times.
Trade, by its nature, generates growth and is the fastest and most effective means of lifting people out of poverty. However, the aforementioned benefits would only occur if trade is conducted between or among equals/partners. Sadly, Africa has always been at the receiving end of trade with Europe and America. Constrained by the international division of labour, Africa specialised only in the production of raw materials while it imported finished and mechanised goods from the West. However, shortly after independence, the prices of primary products/raw materials collapsed in the international market due partly to the development of synthetic substitutes while the prices of its imports (mechanised/manufactured goods) kept increasing by the day. Expectedly, the centre could no longer hold and the economies and public finances of most African states collapsed. With no alternative sources of income and with economies and a population that depends almost exclusively on state funding, most African states had to approach the International Financial Institutions for loans and assistance. This opened the way for aid inflow into Africa with the attendant huge debt burdens and malfunctioning economies that depends on imports for survival.
Sadly, foreign aid, on which some African states now depend on for survival is, by nature, an instrument for promoting the donor country’s economic and foreign interests. It may benefit the receiver, but the benefit to the giver is real and indubitable. It is used usually to create beneficial trade avenues and new markets for donor countries just like the Marshall Plan helped open the European market to the United States after World War II. In her book Dead Aid, the Zambian Economist, Dambisa Moyo, gave a compelling account of how aid is hurting Africa. For her, what may even appear as a benign intervention on the surface can have damning consequences. With a simple example of a mosquito-net manufacturer (who is put out of business by foreign supply of free mosquito-nets), she describes how aid kills African local industries and encourages government abdication of responsibility. With the example above, more Africans get to die from malaria as the aid is usually a ‘one off’ measure or for a short period. However, since the mosquito net manufacturer has been put out of business, the community is left at the mercy of mosquitoes.
Recent figures from the OECD show that a great chunk of aid budgets gets spent in donor countries and not in the countries they were meant for. A shocked Guardian Newspaper recently listed some items the British government spent overseas aids budgets on in the UK to include: global citizenship lessons in Scotland, campaigns to boost public support for UK overseas development, education and immigration services, payment of pensions to former colonial officials, and salaries and other costs of experts and consultants.
That is not all. Aid funds, when they do reach the recipient countries, provide quick avenues for corruption. From Congo DR, to Zambia, to Malawi, to Nigeria, government officials brazenly steal aid funds without fear of repercussion. Mobuto SeseSeko was estimated to have stolen $5 billion. Malawi’s former President Bakili Muluzi was charged with embezzling aid money worth $12 million, while in 2011, aid donors raised alarm over the mismanagement or total embezzlement of about $45 million (N72.9 billion) given to Nigeria over a period of seven years for the control of HIV/Aids, tuberculosis and malaria.
What is more, aid encourages government irresponsibility and undermines efforts to develop a strong taxation system without which no country can truly claim to be developed or self-sustaining. It has undermined democracy by making African governments accountable to donor countries and agencies rather than to their own people.
Intra-African trade however, has the capacity to foster large-scale capital investment, enhance economic efficiency, and improve competitiveness of national enterprises before exposing them to the rigours of global competition. Economic literature suggests that such kind of intra-regional trade among equals promotes economic growth and development. More importantly, it will reduce Africa’s over-dependence on Western aid and consequently, the West’s unwieldy influence on the continent.
The need for intra-African trade has not been more compelling. Even till this day, the European Union and the US have continued to use punitive tariffs to prevent African countries from exporting finished products. As reported by Calestous Juma, the Harvard Professor, in 2014 Africa – the home of coffee – earned nearly $2.4 billion from coffee while Germany, a processor, made about $3.8 billion from coffee re-exports. How is this done? The EU placed a stiff tariff barrier of 7.5 percent on importation of roasted coffee. Meanwhile, non-decaffeinated green coffee is exempt from the charges. Naturally then, Africa’s export is dominated by unroasted green coffee.
Even more vexatious is the charge on cocoa (30 percent for processed cocoa like chocolate bars or cocoa powder and 60 percent for some other cocoa refined products). Consequently, Cote d’Ivoire, which produces 33 percent of the world’s cocoa, earns only $2.5 billion from the export of cocoa in 2015 while Mars Inc, a cocoa processing company in the US, made a whopping $18 billion in 2015 as net income.
But Africa cannot trade with itself when African countries don’t even have contact with one another. Intra-African travels are one of the most difficult. Some time ago, Aliko Dangote, Africa’s richest man with a chain of investments in more than a dozen African countries, openly complained that despite his status and his vast business empire in Africa, he finds it very difficult to get visas to other African countries. He said he needed 38 visas to move around Africa and had to rely on informal networks to get those visas. Time is ripe for Africa to wean itself from dependence on Europe and US!
Christopher Akor
