Boosting Intra-African Trade Essay

Africa is lacking in intra-regional trade far behind other continents, and to comprehend why it is so. One has to go back in history to re............

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 Made in Africa:
Boosting Intra-African Trade Essay 

Nyambe E.N
 Student, School of Law,
The University of Zambia,
Lusaka, Zambia.
16 September 2021

Africa is lacking in intra-regional trade far behind other continents, and to comprehend why it is so. One has to go back in history to reflect on how Africa’s customs and trading routes were disengaged by Europeans. They called Africa the black continent because they wanted to legitimize the exploitation of Africa’s resources to combat their long economic depression. After Great Britain’s advance on Africa, the attention of the world focused on it. For imperialists at that time, the opportunity to get free labour to capitalize on their pockets fat and build their nations presented itself through slavery. As years went by, with the African’s resistance, pressure and guilt amongst imperialists arose sparking the abolishment of slavery only to pave the way for a new kind of evil referred to as colonialism.

Colonialism, however, blindly gave way for a paradigm shift as the few Africans educated by Colonists orchestrated a way out of colonialism. With Colonialism gone, some African countries are still poor because all that they knew was to export resources to the colonist’s motherland as all the roads and rail networks were built to do just that. And also, colonists in their former colonies were so clerical with their exploitive activities that they did not establish institutions that nurture economic development (Thompsell, 2021: SAHO, 2019 ). Meaning, although liberated, resource-rich, pre-imposed trading system of resource to colonist motherland at low prices in Africa still has to take place. Until all of Africa establishes self-sustaining economies that will increase industrializations and rewire its intra-regional trade which is at 12% to catch up with Europe’s 70%, Asia’s 60% and North America’s 50% (Parminder, 2021). Although promoting a culture of buying Quality African Goods and Services will increase Intra-Africa Trade (IAT), this desired end has both benefits and challenges.

Firstly, an amplified IAT will ensure accessibility to trade information. As it will provide a single market for all traders’ investors and consumers all over Africa to freely explore a variety of opportunities readily available. It will bring about transparency and transparency lowers prices in trade and increases the predictability of how much goods a producer is required to produce thus safeguarding entrepreneurs from the risk of under or overproduction.

The Unification of Africa is likely under increase IAT. As economic interest plays a contributory role in uniting people to form a nation. For example, the unification of 13 states of America after revolving against England for their financially exploitive tax (William, 1992). The Unification of Africa will yield a variety of benefits ranging from political stability by Resolving Internal Conflicts, protectionism through a common currency, access to seaports by landlocked countries.

Increased IAT will result in more affordable and conveniently accessible goods. As integrating policies such as the ones implementing the liberalization of trade in services and removing 90% tariffs on goods as suggested by the African Continental Free Trade Area Agreement (AFTRA) will increase religion trade and bring Africa Gross Domestic Product (GDP) up to $3 trillion (Songwe, 2019).

The advancement of IAT will reduce the dependency syndrome of African countries on foreign markets. By providing a better African market that is interlinked, advancing on new technologies and full of innovations. That may produce the 85% imports of food from foreign continents to ensure that the $35 billion that African nationals spend on importing food elsewhere (Akiwumi, 2020) is retrenched to the African market to catalyse the creation of industries that will provide quality jobs.

Increased IAT will fuel Africa’s smart protectionism. Africa has been facing a lot of inequalities on the global market, for example, product dumping by China because of its economic dominance is devastating the infant local industries. With an increased IAT, African countries’ economies will be self-sustaining enough to put up smart protectionism policies that will shield the African market from the inequalities in international trade (Tafirenyika, 2016).

An Increased emphasis on IAT will attract foreign direct investments. As it will create a large market which is good for investments. And with foreign investment coming into African nations' industrial and services segment, the creation of jobs and increase of domestic revenue is inevitable.

An increase in IAT will curb the meddling of donors in African countries’ economies. Many African countries classify donor’s grants to be their source of revenue to alleviate budget offsets. And this often puts African countries in a tight position as some of these grants come with conditions that constrain African countries internal economic structure as its leaders fear to “pursue bold economic policies out of fear of antagonizing donors” as stated by Tafirenyika (2016). However, with an increase in IAT, this dependency by many African nations on grants by manipulative donors will diminish as the increase in IAT will increase the GDPs of the African nation and allow African leaders to put up policies that are solely state-led without fear of budget offsets (Tafirenyika, 2016).

On the other hand, IAT faces the challenge of political instability in most African countries affects the principle of free movement of people and goods to promote IAT. It’s a security risk for one to trade in a country that is experiencing a civil war, coups, riots or revolutions.

Many African nations have inadequate infrastructure to cope with IAT. As IAT will require the use of new technology, power, good roads, rail and air transport, reliable telecommunication services to handle the day-to-day business of IAT. However, countries like Libya, Burundi, Burkina Faso, Guinea, Sierra Leone, Chad and Angola still lag in terms of these aspects (Daly, 2014).

African countries have different trade policies. Mainly, these policies are built upon different levels of economic development. On average, countries on the same economic level often trade more than countries on different levels. To achieve IAT would mean every African country regardless of its economic development would have to relax its trade policy to lower protective tariffs. However, critics of liberalized trade as alluded by Matume (2002) reduction on tariff neither increase trade nor boost it and in some cases, they worsen.

African markets on average still lag in terms of the quality of goods. Therefore, relying on foreign goods as it is right now is not a bad choice. Although they threaten local producers, their availability provides competition for local producers by setting standards high. This is beneficial to consumers as the respective producers strive to outbid each other in terms of quality to satisfy the consumer.

Unbearable demand. African nations’ agricultural sector cannot handle the demand of the African food market in the event of a rapid increase in IAT. Most African nations have not achieved food security because they rely on weather conditions to grow crops.

Many African nations lack the diversification of exports. Export in African is mainly compromised of raw materials, and many African countries are not interested in raw materials but processed goods. Zambia, for example, is the second-largest producer of copper in Africa. Copper generates about 27.77% of Zambia’s public revenue (EITI, 2021). Hypothetically if Zambia was manufacturing copper finished products. Its income will likely double and so as its trade with other African nations.

The marginalization of the informal sectors undermines IAT. Most African nations have a large informal sector with little or no control over them. The informal sector's role to IAT is crucial. And if an informal sector of a nation is not regulated and sustained, its chances of survival are little and, according to Bizimungu (2016), The informal sector employs the bulk of Africa's young and provides support to millions of homes. As a result, its demise is a severe barrier to IAT.

In a nutshell, developing a culture of purchasing Quality African Goods and Services will increase IAT, this anticipated end brings about accessibility to trade information, the likelihood of the Unification of Africa, obtainable goods, reduction on the dependency syndrome of African countries, Africa’s smart protectionism, foreign direct investments and protection of the African economy from exploitive donors. While on the other hand, progress on IAT faces challenges that include political unsteadiness, insufficient infrastructure, different incompatible trade policies, low quality of goods, unbearable high demand, lack of diversification and marginalization of the informal sectors.

Kindly note the above views are solely the author's opinions and findings subject to correction, addition and review.

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Law Student, The University of Zambia

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