Mike Simpson

AFRICAN ISSUES: A COMMON MARKET The United States of Africa – can we be a common market? It must surely be a dream for every African marketer, a continent-wide common market enabling a free flow of goods and services from the Mediterranean city of Tunis in the north to Cape Town in the south. But is it a fantasy or a realistic prospect? 48 strategicmarketingafrica Third quarter 2014 L AST YEAR THE RESPECTED London-based global news and business magazine, The Economist, suggested that an African common market would promote trade, ease bureaucracy, increase competitiveness and enhance long-term economic growth. “That would be a boon to trade, manufacturing and enterprise: it would also get rid of much of the petty corruption and save lives,” the publication said. “A recent World Bank report pointed out that Africa could produce enough food to feed itself; alas, too few subsistence farmers get a chance to sell their produce … why not re-kindle pan-Africanism by opening borders drawn in London and Paris? Africa needs a re-born liberation movement – except this time the aim is to free Africans from civil servants rather than colonial masters.” Subsequently, the respected AfricanAmerican scholar and philosopher, Molefi Kete Asante, has called for Africa to “take advantage of its strengths and become a powerhouse by uniting”. Asante, a professor at Temple University in Pennsylvania, USA and the author of more than 60 books, says he is convinced that “Africa must be united as one federative union”. Writing in Business Day, South Africa’s national business daily newspaper, and the Sunday Independent, a national weekly newspaper also circulating in SA, Professor Asante said the continent was not poor, although its people were often in poverty. “Africa has enough arable land to feed the entire world, yet in some countries people regularly confront hunger. This is what others have called the paradox of Africa: the richest land and the poorest people. Even taking into consideration the Sahara and Kalahari deserts, the continent can easily be supported by the massive savannahs, deep forest resources and great arable regions. It is a matter of organisation of resources, not a lack of possibilities.” Asante continued: “Africa’s mineral resources are fabulous. In some ways it is the richest continent on Earth. Desert minerals, grazing animals, oils for industries, petroleum and futuristic Africa must be united as one federative union minerals for information technologies are abundant. More types of wood can be found in Africa than on all the other continents combined. Half of the world’s diamonds are here.” He believed almost all of the continent’s problems could be traced to economic exploitation and cultural degradation. The declines in agricultural production in Africa over the past 30 years had, in most instances, been tied directly to how Western nations prohibited or reduced the natural competitive exporting behaviour of African nations. “Even today African exports have been sanctioned, and where they are not sanctioned they are heavily taxed. Consequently, in areas such as cotton production, the European and American nations have supported their own farmers and stifled competition from African farmers supported by their governments,” he said. “There is no lack of energy, capability or technical know-how on the part of Africa; it is strictly a lack of organisational and political power to see the continent’s economic interests protected.” Not a new idea The idea of a United States of Africa and a continent-wide common market is not new. Mohammed Gadhafi, the erstwhile Libyan leader, made such a call as far back as 1999, but failed to gain traction as many believed it was no more than a way to promote his personal vision of becoming Emperor of Africa. The late Top: At present, too few African subsistence farmers get a chance to sell their produce widely. Above: Former South African Finance Minister, Trevor Manuel, believes the continent needs to increase its efforts to become a common market Colonel failed to enhance his credibility when he suggested that even Western Hemisphere nations with populations of African descent – such as Jamaica and Haiti – could be brought into the fold. Zimbabwean President, Robert Mugabe, has embraced the concept of an African common market; so has Thomas Boni Yayi, President of Benin and past Chairman of the African Union (AU). Abdoulaye Wade, former President of Senegal, went as far as to suggest this could be achieved as early as 2017. Two years ago, Trevor Manuel, South Africa’s former Finance Minister and former Minister in the Presidency in change of national planning, said Africa needed to increase its efforts to become a common market. In the global economy, African countries would not be able to survive as individual entities, he noted. “It’s not about the EU, not about the US, not about the IMF (International Monetary Fund) and World Bank, it’s about us and Third quarter 2014 strategicmarketingafrica 49 AFRICAN ISSUES: A COMMON MARKET African companies are not proving competitive enough manufacturing, for example, in both intraAfrican and extra-regional trade has been falling over the last decade. This is due to a process of de-industrialisation. African companies are not competitive enough compared to Chinese products, for example, and too much focus has been placed on commodity exports,” LouwVaudran notes in her article. “Upgrading road and railroad infrastructure is, of course, essential. ‘Africa currently has fewer kilometres of roads than it did 30 years ago and the region has the highest costs for transporting goods in the world,’ says the [UNCTAD] report. All the usual issues that plague productivity, such as lack of sufficient energy supply and lack of skilled labour, play a role here and are addressed in the report,” she continued. Trucks waiting at the Kenyan border. Upgrading road and rail infrastrtucture is essential 50 strategicmarketingafrica Only 11% of Africa’s trade is conducted within the continent Third quarter 2014 exporting to Nigeria is up against an average protection rate of 66%, while a Nigerian exporting to Morocco is confronted with an average protection rate of 18%, the UNCTAD report states. According to Louw-Vaudran, too many African external trade agreements that take advantage of colonial trade patterns are another potential obstacle to intraAfrican trade. The UNCTAD gathering praised AU Commission chairperson, Dr Nkosazana Dlamini-Zuma, for announcing a moratorium on external trade agreements at its January 2013 summit. “This is a step in the right direction and should be welcomed and supported by development partners,” UNCTAD said. But regional integration has been slow, UNCTAD stated in its report. “The African integration agenda … is based on the linear model of market integration, in which groups of countries move progressively from a free trade area to a customs union, a common market, an economic union and eventually a political union, by reducing barriers to economic and non-economic transactions amongst participating countries. Although some progress has been made … the implementation record as a whole has been poor.” Instead, governments have been called upon to look at what the private sector is producing – and how. “The share of East African Community Common Market PHOTOS: SUPPLIED the way we relate to each other, and in this context it is fundamentally important that we talk to each other as Africans about some of the hard truths that confront us,” he said at a conference in Harare. “As individual countries, we will not make it in the world. We will be picked off and become markets for the rest. So we can’t look to the rest of the world. We have to look to each other in our neighbourhood and understand that’s where change will be driven from. As we learn from Europe we look at ourselves in understanding what we should not do.” In July last year, the United Nations Conference on Trade and Development (UNCTAD) in Ethiopia examined how to break the colonial legacy of exporting Africa’s goods to other parts of the world and raise the level of trade between African countries. “Intra-African trade – which is linked to greater regional cooperation and stability – has become quite a buzz word in Africa since it was pointed out that only 11% of Africa’s trade is within the continent – compared to Asia, where 50% of total trade is between countries in the region,” said Liesl Louw-Vaudran, a consultant with the Institute of Strategic Studies (ISS), an Africa-focused think-tank. In an article reviewing the UNCTAD event, she noted: “African governments have, over the past number of years, taken up the challenge and announced ambitious plans for mega continental infrastructure projects, development corridors and free trade areas – a continental integration seen as one of the essential drivers of African development.” But while Africa already has several free trade areas and customs unions, as well as a common market in the form of the East African Community Common Market, there are still numerous barriers to intra-African trade. How can it be that, for example, an Ethiopian company exporting to Tunisia faces tariffs of up to 50% on average, while a Tunisian exporter to Ethiopia faces a protection rate of 16%? A Moroccan The nations of Burundi, Kenya, Rwanda, Tanzania and Uganda formed their own East African Community Common Market in July 2010 in an effort to significantly boost trade and investments and make the region more productive and prosperous. This provides for four key ‘freedoms’ – free movement of goods, labour, services and capital. Forming a common market is the third stage of the regional integration process (the first two being a free trade area and a customs union) and the next milestones in the integration process would be monetary union and, ultimately, a fully-fledged East African Community political federation. But, four years in, the common market still has notable problems. According to an article on the East African news website, the integration process is due for full implementation by 2015, but “tough decisions” will need to be made for this to happen. “A new report by the EAC Secretariat shows that the East African partner states Too much focus has been placed on commodity exports to international markets, among them China are still lagging behind in the process of implementing the common market protocol at different levels,” the East African states. “The biggest challenge … is delays and commitment in harmonising national laws to fit with the requirements of the protocol.” Among the problems are inconsistent immigration laws and differences in crossborder commercial transport requirements. Given that the various other regional groupings on the continent – among them the Southern African Customs Union and the West African Economic and Monetary Union – are not yet even at the stage of the East African Community Common Market, it seems the dream of a United States of Africa will remain, for now, no more than a pipe dream. As Lindiwe Zulu, international relations adviser to South African President, Jacob Zuma, was quoted as saying by Britain’s The Guardian newspaper: “It is very desirable in the long term, but I don’t see it any time soon. There is a lot more to be done. We are still agonizing over sovereignty.” But Professor Asante begs to differ: “I am convinced that Africa must be united as one federative union. I like the title ‘United States of Africa’,” he wrote. “I want to be able to travel and work between Cape Town and Cairo, between Dakar and Dar es Salaam. I seek an Africa where young people can see themselves It remains an enticing dream for many African marketers Molefi Kete Asante ... I like the title United States of Africa as the owners of the land. This is not a foreign idea; it is an African idea. Its origins are deep in the history of the continent itself.” Given that a United States of Africa would offer a market of 1-billion people – third only to China and India in size – and be geographically more extensive than the enormous Russian Federation, it remains an enticing dream for many African marketers! Third quarter 2014 strategicmarketingafrica 51