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Building capacity to help Africa trade better

Even as the West turns its back on the world, Africa must embrace free trade

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Even as the West turns its back on the world, Africa must embrace free trade

Even as the West turns its back on the world, Africa must embrace free trade
Photo credit: Joseph Kiptarus

How fast the world changes. There was once a time when global financial institutions pushed neo-liberal policies on African economies, even as my organisation, Unctad, repeatedly warned of the potential dangers of opening up to globalised markets. And we were right.

Unregulated capital markets eventually wrought enormous damage in Latin America, Southeast Asia and Africa. No wonder this period produced the phrase “casino capitalism.”

But now the tables have turned. The global North is fast emerging as the heart of resistance to globalisation. It has seen how free markets widen social inequality and learnt that effective regulation makes markets work better for people.

But these lessons have not been learnt fast enough. Economic uncertainty and the decline of the middle classes have brought us Brexit, isolationism, and the worrying growth of protectionism.

Many Africans, on the other hand, have come to embrace the benefits of global trade. This is especially true for commodity-exporting countries, which, in the space of a decade, have helped to move our continent from “the hopeless continent” to “Africa rising.” Some African countries saw double-digit growth for more than a decade.

But our world is now deeply interconnected. As economic growth has slowed in the North, it has in turn slowed in China, then in Africa too.

The global commodities boom may have felt good to many in Africa. But it has finally run out of steam. Tumbling currencies and mounting debt suggest that many African countries are in for a period of stagnation in growth.

Part of the reason for this is that African countries have still not managed to diversify their economies and continue to spend too much of their commodity cash on consumption. They should have built capacity to produce and manufacture instead. As commodity prices have dropped, economic growth has also slowed.

The dangers should be evident. Indeed, the Middle East has shown us all how dangerous young populations can be when suffering unemployment and frustrated expectations. African policy makers must learn the lessons quickly, because if we want to achieve the Sustainable Development Goals, political and social stability are essential.

Conflict, on the other hand, extracts a disproportionate cost. Civil war undercuts a country’s trade volumes by as much as 12-25 per cent in the first year of conflict alone. And it can take 25 years to return to pre-crisis levels.

Consider, for example, that between 1960 and 2000, sub-Saharan Africa suffered an average of 20 coups per decade, then six in the 2000s, then just four so far this decade. With this extra political stability, governments have been better able to focus on the task in hand: Governing for the people. 

Countries such as Angola, Rwanda, Ethiopia, and more recently Liberia and Sierra Leone, offer tangible evidence that peace brings many benefits. This stability creates its own cycle of virtue.

The continent must protect that virtuous cycle of peace and growth. If we want to generate enough jobs and business opportunities for the 17 million Africans who join the labour market every year, nearly 70 per cent of them under the age of 25, then we need political stability to get back on track with sustainable growth and development.

Globalisation offers excellent opportunities in this respect. And even if Northern governments come under popular pressure to turn their backs on the rest of the world, we must demand that our African leaders turn their backs on narrow rejectionism and maintain the spirit of inclusion.

This can be tricky. Globalisation produces losers as well as winners, but the examples of Rwanda and Ethiopia show us that by making the right policy choices, governments can grow their economies and societies even when a slowdown in global growth makes conditions hard for many.

These countries have been using evidence-based policy to unlock trade and boost productivity. This ensures that the maximum number of people benefit, giving rise to a positive collective spirit.

As Africans, and as part of a wider global community, we must all of us maintain this collective spirit. Unctad can certainly help.

As a UN agency, one of our greatest strengths is our extraordinary convening power, such as the ability to organise a conference whose participants include a wide and healthy diversity of governments as well as civil society and private business - exchange ideas and experiences of evidence-based solutions that benefit us all.

This past week’s Unctad 14 meeting in Nairobi was an important moment for us, not just because it was about technical ideas.

In this complex, globalised world, we will need partnerships to propel us on the long, uphill road to enhanced global trade, productivity and prosperity for all.

Dr Mukhisa Kituyi is secretary-general of Unctad, the United Nations Conference on Trade and Development.

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