Harnessing Africa’s external trade partnerships for ‘Agenda 2063’
In the context of the African Union’s 50-year vision, Agenda 2063, this paper provides an analytical account and critical assessment of Africa’s strategic trade relations with two of its most important traditional partners, the European Union and the United States; and with two of its most important emerging partners, China and India.
Based on the insights these provide, the paper identifies some emerging global issues which could have an impact on Africa’s trading position and its prospects for industrial development. This is followed by indicative policy considerations that could provide strategic guidance to African leaders as well as highlight opportunities and challenges for realising the goals of Agenda 2063. The paper concludes by examining the implications of the changing dynamics of Africa’s key trade relations.
Agenda 2063 represents a transformative vision and a policy framework to achieve ‘an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the global arena’. It is an aspirational document whose practical expression seeks to promote a high standard of living, modern and liveable habitats, transformed and climate-resilient economies, and a modern agricultural sector. There is also an emphasis on democratic values, capable institutions, gender equality and empowered youth, as well as an Africa that can finance its own growth and development. We should not ignore the strong synergy that exists between Agenda 2063 and the Addis Ababa Action Agenda’s commitment to implementing the United Nations Sustainable Development Goals (SDGs).
Agenda 2063 has been developed through a broad-based consultative process among a range of African stakeholders, and builds on a history of planning and strategic templates such as the Lagos Plan of Action, the Abuja Treaty and the New Partnership for Africa’s Development (NEPAD). It is sensitive and takes into account the changing continental and global environments. In Africa, growth and development challenges have multiplied and become more complex with regard to addressing the legacies of poverty, unemployment and inequality, which are compounded by the collateral effects of political instability, environmental degradation, food insecurity, rising urbanisation and a demographic youth bulge. Globally, there have been tectonic shifts in power, wealth, and equality which reinforce the divisions and cleavages between rich and poor countries, while emerging powers such as Brazil, Russia, India, China and South Africa (BRICS) are increasingly reshaping the contours of international relations.
Africa continues to be marginalised in the global power hierarchy, such that global governance has become a metaphor for weak multilateralism and systemic exclusion. However, against this backdrop, Africa can no longer be described as a ‘hopeless continent’; its collective economy is on track to be worth US$3 trillion by 2030, and 19 countries are expected to grow by more than 5 per cent in this period. These positive strides represent a promising structural evolution, while there has also been considerable progress with democratisation, political liberalisation, good governance and popular electoral participation. However, economic conditions are likely to remain difficult, particularly with regard to domestic sources of resource mobilisation, welfare distribution, capital flows, terms of trade, the political climate and the regulatory environment.
Adding to the raft of issues, there are institutional deficits and implementation shortcomings which have impeded substantive integration and related development strategies. Four considerations are germane here: the ambiguous and imprecise legal frameworks for integration; regional and continental blueprints that are far removed from real facts as far as levels of poverty, inequality and unemployment are concerned; normatively and institutionally disparate regional economic communities (RECs) with their own integration agendas which do not speak to or conform with continental initiatives; and the absence of enforceable rules, norms and practices to do so. The great diversity of the eight officially recognised RECs, their complex administrative and unwieldy organisational configurations, and their uncoordinated nature render their functional efficacy as building blocks for continental integration very problematic. At the level of the African Union (AU), there is also an institutional and capacity vacuum, particularly with regard to driving key areas of integration such as agriculture, industry, energy, environment, transport, human capital, development finance and so on.
A major dilemma is that Africa has laboured under a planning and policy paradox: the more frameworks and programmes have been adopted, the more their outcomes and effectiveness have been dictated by the law of diminishing returns. Indeed, there is now a sobering admission that ‘post-independence plans yielded only modest results in terms of the overarching objective of structural transformation. The failure of plans was largely due to discontinuities in the planning process, stemming from political instability, institutional and bureaucratic weaknesses, poor plan design and implementation, and over-ambitious targets’.
Africa’s integration dynamics and challenges also have to be situated in the role and shifting interests of external trade and development partners, which have to be taken into account in realising the goals and objectives of Agenda 2063. This relates particularly to the historically defined engagements of the European Union (EU) and the United States of America (USA), which have only served to reinforce and underline Africa’s marginality and dependence as forms of ‘collective clientelism’. The effects of the EU’s Economic Partnership Agreements (EPAs) must be properly understood for their balkanising consequences, while the USA’s African Growth and Opportunity Act (AGOA) is based on a number of market access conditions which can be revoked on the basis of (real or perceived) poor political and economic performance by African countries. The external engagements are rendered more challenging with the entry of BRICS onto the African geopolitical landscape and the extent to which they represent an alternative set of instruments for trade and development co-operation.
Given this compendium of challenges to and constraints on regional integration in a continent of 55 countries, and with great political, economic and cultural diversity, there is an imperative to ‘walk on three legs’. This means expanding the size of markets and promoting economies of scale, production efficiencies and competitiveness; collaborating more intensively through multilevel partnerships to build productive and industrial capacity; and developing affordable and effective services and infrastructure to lower transaction costs. The challenge for the custodians of Agenda 2063 is to create a broadened policy and institutional environment among all stakeholders, and a consensus on what constitutes an Afrocentric integration process, with a focus on those factors and capacities that could improve the competitive position of African countries with respect to innovation, skills development and equitable labour market policies.
The element of competitiveness through regional integration takes on added significance in view of the fact that 80 per cent of all global trade occurs through value chains. The systemic challenge for Africa is how to strategically and systematically locate its economies and business cycles in relation to more productive and upstream regional and global value chains, with due regard to its manifold factor endowments. Only then will African countries be able to extract maximum value addition with positive developmental impacts, since ‘value chains have become the dominant feature of the world economy, involving countries at all levels of development, from the poorest to the most advanced’. There is a shift in the discourse about Africa’s development, with emphasis now directed at the need for its countries, especially the 35 classified as least developed countries (LDCs), to undertake measures in policy and practice that would yield structural transformation in the letter and spirit of Agenda 2063.
What this means is giving life to new and productive activities, and shifting from traditional rent-seeking and extractive sectors to more value-enhancing activities that are capable of engendering nascent forms of industrialisation based on Africa’s comparative advantages in manufacturing, services and agriculture. The imperative for structural transformation is driven by the realisation that resource extraction has reached a point of diminishing returns and may be limiting Africa’s long-term growth and development prospects.
Against this introductory overview, this paper will assess Africa’s trade relations with two of its most important traditional partners, the EU and the USA, and with two of its most important emerging partners, China and India. Based on these analytical portraits, it will identify some emerging global issues which could affect Africa’s position in trade and which could have direct implications for its industrial development such that these issues require some thought and reflection. This is followed by indicative policy considerations, which African leaders could use for strategic guidance and which also highlight those opportunities and challenges which arise from the Agenda 2063 framework. The conclusion then sketches some implications of the changing context of Africa’s key trading relations.
Dr Garth le Pere is Visiting Professor at the University of Pretoria, South Africa, and a Senior Associate of the Mapungubwe Institute for Strategic Reflection.