Africa, it’s time to raise the bar

required to become competitive internationally and have challenges associated with small size and small markets. That story is known.
That is why, through successive agreements, African governments have committed themselves to the pursuit of greater integration. These commitments, however, have not always proved easy to implement. In practice, national priorities have often trumped regional needs, a phenomenon not unique to Africa of course. As a result, the opportunities of regional integration have not been fully exploited. Yet today as yesterday, trade still holds tremendous unrealised potential as a driver of growth. Not only growth, but also for such things as improved food security, jobs and poverty reduction.

In short, while intra-African trade has more than doubled over the past five years, figures vary between 15 and 22 percent depending on how you count. It is far below potential. Most people would agree about four pervasive challenges: First, Africa’s lack of adequate hard infrastructure, in particular transport, connectivity, energy; Second, problems with the infrastructure, the institutions and regulations to facilitate trade links, and this includes the overall business environment; and all the problems impeding free movement of goods, capital and talent. Third, a myriad of firm level challenges that affect our private sector, the emergence and sustainability of exports, such as quality, meeting standards. Fourth and final, access to finance, trade finance and the financial infrastructure that supports trade.

Of emerging urgency are railways and maritime port capacities. Much of our railway network dates back to the colonial era, and the costs of ageing systems with multiple gauges are now a real impediment. Few rails have been done since independence.
As for maritime ports, a key piece in the regional integration as well as international trade, capacity is now a major obstacle. The volume of freight that they handle has increased dramatically in recent years; most of these ports were not designed with a regional market in mind, and many of them are rapidly running out of capacity, especially with increased mineral exports. As a result, they operate at well below international norms, resulting in higher costs and longer processing times.

Today, we need to ask ourselves a different question: since we all seem to agree on the principles and even the road map, what impinges on faster progress? How can our legislatures help in that process?
Many African countries have celebrated their golden jubilees. There has been much celebration, indeed, but also much soul-searching. There has been acknowledgement of progress, as well as disappointments. However, like all celebrations, there is the “morning after”.

Where did we go wrong? Could we have charted a different path? While we are all always the wiser in hindsight, there is no doubt we could have made better progress. The new global environment definitely dictates we do better. As Africa enters this new era, we have only two options: a paradigm shift, or a new period of muddling through, pleading some sort of African exceptionalism. Our founders laid the basis: political liberation.

They achieved much, including the epic struggle to free Africa of the last vestiges of colonialism and apartheid. Like all pioneers, they often made mistakes, sometimes costly ones, and you know the results, the history: military dictatorships, one-party states and economic experimentation. In between, often economic meltdown, blood, mayhem, and even genocide in my own country. There can be no question, there is much unfinished business politically: building peace, security and rule of law. However, most people would now agree the colossal struggle in Africa must be that of economic liberation through integration. There is also now quasi unanimity that this outcome is not possible with 54 balkanised states, economically speaking.

Nations the world over, we all know, developed through trade and investment. Of course not always: some developed by exploiting other nations’ wealth and labour, and imposing on other nations economic policies which they themselves did not follow at earlier stages of their development. I am not by any stretch of imagination saying we Africans should also explore the second option. What I want to suggest is different; it is an affirmation that many of the regions also grew by integration.

Former president Julius Nyerere of Tanzania, one of the founding fathers of the OAU, had this to say in Accra at Ghana’s 40th independence anniversary. I seek your permission to quote this illustrious son of Africa in extenso. Referring to African unity, he said in his own words he had a confession to make:
“The confession is that we of the first generation leaders of independent Africa have not pursued the objective of African unity with the vigour, commitment and sincerity that it deserved.” He goes on to say, “If numbers were horses, Africa today would be riding high!
“Africa would be the strongest continent in the world, for it occupies more seats in the UN General Assembly than any other continent.” Mwalimu Nyerere goes on: “So this is my plea to the new generation of African leaders and African peoples: work for unity with the firm conviction that without unity, there is no future for Africa.”
“I reject,” he said, “the glorification of the nation-state that we inherited from colonialism and the artificial nations we are trying to forge from that inheritance. At the heart of it we are all Africans but we are all Africans trying very hard to be Ghanaians or Tanzanians. Fortunately for Africa, we have not been completely successful.

“The outside world hardly recognises our Ghanaian-ness or Tanzanian-ness. What the outside world recognises about us is our African-ness.
“Reject the nonsense of dividing the African peoples into Anglophones, Francophones, and Lusophones. This attempt to divide our peoples according to the language of their former colonial masters must be rejected with the firmness and utter contempt that it richly deserves.
“The natural owners of those wonderful languages are busy building a united Europe.” President Nyerere concludes: “My generation led Africa to political freedom.
“The current generation of leaders and peoples of Africa must pick up the flickering torch of African freedom, refuel it with their enthusiasm and determination, and carry forward Africa’s integration.”

These are powerful words from Mwalimu. And if I quote him in extenso, it is because the case he makes was valid yesterday, today and is now more urgent than ever given the development in the global economy. When one takes a longer-term outlook beyond dealing with the current turbulence in the global economy, there are four new features of this landscape with large implications for Africa:

A realignment and dispersion of economic power;

A redefinition of the North-South relationship;

The declining effectiveness of multilateral solutions;

A definite end to ideological economics.

On the first point, while North America and the Eurozone still account for two thirds of the global output, that is shrinking; indeed, in the last few years much of the growth has come from emerging countries.
It is as if the global economy, after years of domination by a few countries, is beginning a long process of “economic democratisation”, a process in which wealth is no longer concentrated in a few regions, but is now spread among the G8, non-G8, OECD countries, the Brics, the Gulf region, and other emerging countries in the G20 and even some outside the G20.

Dispersed as we are in 54 relatively small economies of varying endowments, our possibility to take advantage of this new momentum is very limited indeed. Limited to supplying raw materials such as oil, gas and minerals. It is a choice we can make or unmake but the choice we make has long-term implications. An example: at this point, Africa’s total external reserves is equal to half a trillion dollars! But we continue to rely on the outside world for soft loans and grants. In so doing, our potential strength has actually translated into a weakness.
The second feature of the new global landscape is the redefinition of the North-South relationship. The last 50 years have shown us how the model of co-operation, as it is called, between North and South, must now evolve. The current global realignment has provided Africa with an opportunity to break free, to diversify its partnerships, and to maximise Africa’s own internal potential, its resources, its talents for the continent’s own development. Again, it is a choice we must make. If we don’t do that we run the risk of making the same mistakes, not because we want to, but because we are divided, or breaking out on a new path or staying stuck in dis-empowering relationships necessarily leads to that outcome.

The third feature of the current global system refers to ineffective multilateralism. For far too long Africa has put much reliance on multilateral solutions. From climate change, the Doha trade round, reform of the UN, voice and representation, and of course increased ODA levels, and even something called “mutual accountability”.
For better or worse, the current global crisis has pushed all nations back into a search for national solutions. There is no global leadership to ensure a conclusion of the Doha trade round, or a deal on climate change — the two things we need to trade our way out of poverty. We cannot do much about climate change. We now know that a Doha trade round, despite coming so close, is unlikely in the near future.

In short, at a time when the fiscal positions in rich countries constrain aid flows and multilateral solutions, free trading among Africans, free circulation of capital, of goods, of skills and talents is not only now more urgent than ever. It is the only solution. Integration is more than infrastructure. It is also about institutions and facilitation and many other areas of focus, such as financial integration, such as the capital market, as well as common services. These are obstacles we must overcome.

This is where our legislators have a major role from immigration laws, taxation, customs investment laws, etc. The impact of your decisions can be far-reaching. The kind of delays we see at our borders, the red tape hampering movement of people and trade, are impeding the optimal use of even the limited infrastructure we have. I have often heard it being said that we don’t trade as much because we produce the same goods or that greater integration will automatically result in losers and winners. These types of zero sum calculations are fallacies and a misunderstanding of what drives today’s modern economies: the modern supply value chain, which we must analyse carefully.

The last feature of today’s global economy I want to refer to is the end of what I call ideological economics. One of the things which hindered Africa’s development in the first three decades of independence was that, among other things, Africa was not only a battleground for the Cold War, but also for foreign ideas and ideologies including economic doctrines. We viewed our economic challenges through the prism of others. As a result, we had Liberal Capitalists, Marxists, Social Democrats and the rest, notions which have their origin in Europe’s Industrial Revolution and with limited relevance for Africa. We continued to cling to those ideologies, sometimes even when their original owners had discarded them.

If you look at the G20 today, you realise how countries have come up the ladder through different models of development. There was no blue print. Some have made it through laissez-faire capitalism, others through different types of state capitalism, and others by muddling through. Africa, now freed of those straitjackets, has a chance to chart its own path. We now know that there is not one way to development. Each country must chart its own path and search for that which works for every country economy.

Integration is not easy. But why should it be? Liberation was not easy. It was a battle hard won and so must economic integration. That is where MPs come in. Why is the free movement of Africans’ skills still so difficult? Of course our talents end up on Wall Street and we call it brain drain. Why is it that some projects have difficulties taking off, even when financing is available? Believe me I have many examples of such projects, which suffer everything but finance.
Let me now conclude on the issue of finance. We know the numbers, the volume of financial resources needed for our infrastructure. International organisations have played their part. For AfDB, about US$2 billion a year, US$11 billion in the last five years. Many African countries individually have made significant progress in funding infrastructure investment through domestic revenues and local capital markets. Others have successfully accessed international bond issues, and syndicated loans; the price has in some instances been high, and maturities too short, reflecting market perceptions of risk, but this is changing.