Trade over Aid: The African dilemma

As discussions in regards to Africa’s role in the World Trade Organization (WTO) and other trade related issues are being discussed this week, one has to look back at trade and aid paradigm in Africa. Trade in Africa has always been at an impasse with unfair trade and protectionist regimes sidelining progress in commerce. In fact governments in Africa have relied so much on aid and handouts that Africa has literally turned into an aid junky. Africa is so hooked on aid that aid now comprises a huge part of national budgets. Aid in Africa is driven towards alleviating the symptoms of poverty - but does nothing to solve Africa’s underlying problems that make it uncompetitive in markets. The continent will only reduce poverty in the long term through industries that make things the world wants to buy. Giving free primary education and healthcare are nice, but will never deliver what Africa needs to grow. In so doing we actually exasperate the situation aid distracts attention from the harder and more vital questions of why aid has not worked effectively thus far.

Africa does in fact produce products in that are in dire need by the rest of the world. In addition, it produces some 65 % of the world’s raw material needs. Africa is one of the growing markets for commodities both from the West and the East. There is growing interest in Africa not seen before probably parallels can be drawn from the colonial eras. So, where do Africa’s problems in trade lie? Easy, it emanates from two directions internal and external. The internal aspect includes corruption, lack of economic liberalization, transparency, good governance, bad protectionist policies, lack of capital and a lack of clear-cut reforms. In the external sphere, we have the subsidies, the hefty tariffs, heavy taxation, stringent regulations and of course lack of political will. We have all heard about the rhetoric in these two cases and all too often Africans have gone into campaigns towards alleviating these bottlenecks.
The past few years we have heard a different rhetoric from our governments calling for ‘More trade than aid’ but we still see our governments dragging their feet towards doing their part to facilitate the process. Africa must be accommodated to compete in the world markets it is after all courtesy since Africa has been doing the same. But from our part, getting the competitive edge requires finesse in business, a trait that comes from professionalism and knowledge and not based on bribery or nepotism. Issues of quality control, packaging, and market projection still need to be thoroughly instilled in the African production processes. This can be done only when there is commitment and will from the governments and the private sector,
The advantage of more trade best hits home when one quotes the remarks made by Florizelle Liser, US assistant trade representative this week in Addis Ababa, “Africa now has a 2 % share of global trade. If it could increase that to just 3 % that would mean additional 70 billion USD in revenue- nearly three times the current level of development assistance”. Imagine a measly one percent increase in trade could bring about an overwhelming change; Can we not bring this change? Well the question is not directed to any particular individual or group but to all of us. After all Africa is 700 million plus strong.
Aid instead of addressing short-term needs should be geared towards jump-starting economic development. rich countries should be prepared to fund ‘aid for trade’ schemes to enable poor African countries to meet economic and social costs of adjusting to a new and more competitive international trading climate. The work done by AGOA and similar initiatives is praise worthy but more has to come, as these initiatives should be considered as drop contributions to a need the size of an ocean. Assistance to meet internationally accepted trading standards and practices is an area where Africa can eventually wean out of the ‘Most preferred trading partner’ or ‘Developing market’ statutes. Africa needs to stand on its two feet, we should not use the past and historical grievances as crutches but use term for long term goals that should have self reliance in its core.
January 20, 2007