Okonjo Iweala the Director General of the World Trade Organisation (WTO) in this interview reveals what countries in Africa must immediately do to attract foreign investment among several other issues. Iniobong Iwok brings excerpts:
Briefly tell us why trade is so important to the continent and its prospects?
The World trade organization is that organization that makes sure that countries within the world can trade among each other according to stable rules, fair and predictable rules.
This is very important because if you can just do what you like in trade it may not be favourable.
Meaning that if I’m a trader bringing goods into your country, it means you could charge me the import duty that you like when my goods arrive and that could make it more expensive for people in that country to buy and vice versa.
With the World Trade Organization, countries that are members agreed beforehand that there are tariffs we are going to charge when goods arrive in our different countries.
We keep this stable and fair, so that traders and those that import know what to expect at the other end when goods arrive.
So, the World Trade Organisation makes this possible and people don’t notice, especially when things are going smoothly.
But there has been criticism about Africa’s unbalanced relationship with richer regions or blocs in terms of the way the WTO operates. Would you say that is fair?
Let me say two things, at this point we have seen more protectionism, certain countries making it easy for goods to access their markets and therefore others responded by also doing the same.
That is protectionism; when you are raising the duties and the tariffs and that is not something we want to see. Like I said, the WTO role is to make sure that traffic is predictable and traders know what to expect. That is not something we want to see, certainly for Africa.
Secondly, you said Africa’s trade favours more of the rich countries than poorer countries in Africa, it is true, and Africa’s trade with the world has remained stagnant over time.
Africa’s trade with the world has remained at three per cent for many years now and that is not good enough.
But is it because of WTO trade or something else going on there that we need to think about? As an African, I have to tell you that in order to trade more or with other countries within the continent you need to add value to your products.
If you keep exporting the same products you have been exporting for decades, primary products which are vulnerable to price versatility in the world, you are not going to capture a large portion of the market.
Africa must add value to its products on the continent. Intra Africa’s trade is about fifteen to twenty percent depending on whose figure you are looking at.
So, it is not good enough and that has also been stagnant over time.
Do you think the Africa free trade zone would change anytime in the future?
Africa’s continental free trade zone is the best thing Africa has done, it would take time to yield its benefits but when you have a market such as 1.4 billion people that is saying a lot.
What do we do to take advantage of the Africa free Continental free trade zone by the WTO rules?
We must insist that everything we do, we must add value to it, process it in the continent. Africa must industrialise more; we must do more manufacturing.
We make coffee transform it; critical minerals are becoming more important.
This time around, Africa must not miss the opportunity by allowing people to extract the raw materials and send them away.
What the WTO is saying is that; you have to invest. You have to process the Litunium there.
You have to establish a factory that makes batteries there that ultimately uses the products and several countries can be involved in this and you have a supply chain that would create more jobs for our people.
Through then we export the finished products, we are going to make more money and our share of world trade would improve.
What would you like to see African countries doing to be ready to take advantage of these opportunities?
We have to make ourselves investment friendly, meaning we need to sweep away the bureaucracy involved in investment and secondly we need better infrastructure.
Part of the reason why it is difficult to produce in the continent is because we still have about 55 per cent people with lack of access to energy or power.
So, we must ensure constant power, electricity.
Many countries are now building industrial parks to accommodate those who want to build manufacturing plants, we must ask them to take as many licenses to invest in our country.
I’m not saying everything should be free, but let’s not put too much bureaucracy, and therefore give a chance for people to ask something under the table.
That cannot be swept away, so that an investor can come in and put in money to create the jobs, add value to the product and export. These are the things stopping us.
We need investment to help us with infrastructure and now we have a beautiful chance, because everyone wants to go green.
They are looking for green energy; green hydrogen and many countries in the continent have the potential to produce green hydrogen.
We could use them for ourselves in order to provide power for ourselves and the rest we can export, but let produce green energy to do that in many countries.
What can Africa do to take advantage of the many entrepreneurial potential in the continent that is untapped?
What we don’t lack is the entrepreneurial drive or spirit and among our youth.
I’m so amazed and that is what gives me hope, there are so many entrepreneurs in the continent, along with them trading digitally and digital trade is the wave of the future.
It is not really about capacity so much, as it is; it is about making the cost of investing in the continent lower.
You know sometimes investing in Africa is about adding three hundred per cent traffic on your goods and they tell you it is too costly.
I’m convinced that by the time we put proper infrastructure in place and we sweep away the barriers we would have more investment for the young people.
You said human capital is important and we must train them, but right now we have trained people that can be employed. So let us do what we need to do.
On the other hand, it is also not Africa’s fault that many investors think the continent is a risky place to invest in and I think that is exaggerated.
The risk premium that foreign investors think they need in order to invest in Africa is too high.
We need to do everything to convince them that that is perception not fact and that when you invest in the continent the returns can be high.
The returns can be up to thirty per cent, you can’t get that easily. So, we need to act to cut down the risk of investment to make it easier.
At the WTO we have the investment facilitation agreement that is being negotiated, it is almost at the conclusion stage, that would help sweep all the barriers for the countries.
I am very proud to say that most African countries have signed up to it and once it becomes effective that would also show investors that the continent means business; and that they don’t have to wait for it to be said.
I mean when you signed up to the agreement you are saying; I would make sure that you get a licence for everything you want to do except for the very necessary ones and that would make it easier for people to do business.
You are a former finance minister and first female head of the WTO; do you think that has brought a new perspective to the role?
In order to get a true perspective you have to ask my members, they are the ones who can tell whether my presence has made a difference.
However, here is what I think; being here as someone from a developing country has open my perception of what does not work for African countries within our rules.
For example, the agriculture agreement, you know that agriculture is so important for our countries, we need a breakthrough.
We are negotiating an agriculture agreement here and it is not going as fast as we want, because it would enable us to put those things that are stopping some African countries from being competitive in agriculture.
When other countries are giving subsidy to their products that we are also producing, and we don’t have the money to give subsidy that means we can’t compete.
I can see that, I am working to make sure we get a breakthrough. There is heightened perception: what does the continent need? What is it at the WTO that is not working for us that we can make better and what more do we need to do?
I am proud to say, there are one or two things we are doing now.
For the cotton producing countries who are experiencing stress in competing because of the subsidy elsewhere, we are getting an alliance with FIFA, with UNIDO and Afreximbank to come together to help those cotton countries to add value to the continent.
There should be no more exporting this, when you produce, turn it into textile which would create more jobs and sport apparels.
The sport apparel market, of which FIFA is a big member, is worth over $260 billion, if African countries can capture about $10 billion of that, that would do something.
We are working in partnership with them for us to clear the way, for us to grab a piece of the market and that is happening here at the WTO.
