After two decades of negotiations and despite early opposition from Nigerian labor groups, 54 nations in the African Union (all but Eritrea) have signed onto the new African Continental Free Trade Agreement (AFCFTA). The newly created Continental Free Trade Area incorporates over 1.2 billion people and a projected annual GDP of over $2.5 trillion.
Under the agreement, the plan is that 90% of existing tariffs will be removed by July 2020 – with more to come over time. This creates immense new trade potential and trade routes in a continent in which today intra-African trade only constitutes 18% of the continent’s total trade – an abysmal rating compared to the European Union’s (EU) 70%. [CFACT noted in a 2006 article that Africa then had 13% of the world’s people but accounted for only 2% of the world’s gross domestic product.]
The guts of this agreement had been worked out a year earlier, but Nigeria, which sports the African Union’s largest economy, pulled out over concerns expressed by both its business community and its trade unions. While Nigeria had a lot to gain from increasing access to its goods and services to a wider African market, many of those consulted also feared increased regional integration would lead to unfair competition for jobs and the goods they produce. After much consultation, Nigeria agreed to sign onto the pact – a major coup for African free trade.
For the older generation, the free trade deal is the culmination of decades of dreams for a more integrated continent. It transcends old artificial borders imposed arbitrarily from the top-down by colonial powers. For the younger generation, the prospects of free trade open the doors to improvements in transportation, communications, and other vital sectors of modern economies.
Garreth Bloor, President of the Canada-Africa Chamber of Business, was a key participant at the recent Extraordinary Summit of the African Union in Niamey, Niger, where Nigeria joined the other 53 nations in signing the agreement. According to Bloor, “free enterprise prevailed – as did the human spirit.”
Bloor further stated that “the sphere of morals and ethics is foundational for the enduring success of free trade. Beyond technical discussions, the civil society delegates saw deliberations on this very theme quickly dominate our discussions at the trade talks. And rightly so.”
Samuel Gregg, Research Director at the Acton Institute for the Study of Religion and Liberty, also championed the new agreement, which free-market think tanks like Acton have worked to help create. In Gregg’s words, “thick moral arguments in defense of free societies and free trade have been absent from many arguments by proponents of market economies. Too often superior material outputs and improved GDPs have been deemed sufficient, without reference to human flourishing and a notion of the common good that gives preferential concern to the poor.”
Gregg cited movies like 2014’s “Poverty, Inc.,” which featured free-market advocates like Hernando De Soto, Magatte Wade, and Paul Collier, and Acton’s 2007 film “The Call of the Entrepreneur.” Both, he said, were instrumental in inscribing into the African mindset the essential foundations of human flourishing, of which free trade is one vital component.
“Poverty, Inc.” follows the butterfly effect of our most well-intentioned efforts and pulls back the curtain on the poverty industrial complex – the multi-billion-dollar market of nongovernmental organizations (NGOs), multilateral agencies, and for-profit aid contractors. The film asks the question: ‘Are we catalyzing development or are we propagating a system in which the poor stay poor while the rich get hipper?’”
Bloor further argues that “the success of free trade matters because the capacity for human creativity, an outcome of our inherent dignity, should be freely shared and exchanged across borders.” Africans need to trade with one another – and the seeds of free trade planted in the 54 nations entering into this agreement in the hearts of the billion-plus people who will see its benefits will provide “the firmest foundation for an enduring African Continental Free Trade Agreement,” Bloor concluded.
Of course, signing the treaty is just the first step in a long process of integrating economic development. As Matthew Davies of Africa Business Report put it, key questions remain to be answered, including “How quickly can such an agreement be put into practice?” And “When will it make a difference on the ground?” Until a business can move its goods from any country in the Free Trade Area to any another, almost as if borders don’t exist, the proclamations on paper will count for very little.
Davies says that now that the agreement is signed, the next stage is to create a customs union, where each country would have the same tariffs with the outside world and low or no tariffs between each other. Then comes a common market, where goods, services and labor move tariff and quota-free between the countries and the bloc has a common trade relationship with the rest of the globe. Further integration might involve political union and a unifying single currency.
There is some concern in the West that China will be the largest beneficiary of the new African free trade pact. China has been a major broker in the deal, using its diplomatic, political, and trade clout to harness nations into signing onto the pact. And with good reason.
As China expert Chris Devonshire-Ellis, founder of the international trading firm Dezan Shira & Associates, asserts, “The future writing is on the horizon: low-cost manufacturing over the next decade will start heading to Africa, and China still needs to buy cheap and reliably produced goods.”
Devonshire-Ellis notes that China’s Belt and Road initiative has for over a decade been its gateway into African governments (including building numerous presidential palaces), and that China has already committed to purchase African goods. China is also at the forefront of energy,
telecommunications, and transport projects throughout the continent.
That African nations are more favorable to China than to their former European colonizers is not surprising. African nations have long rejected overtures from Europeans (and Americans) to sacrifice their economic future to “save the planet” from “global warming.” Back in 2013, as CFACT President (then Executive Director) Craig Rucker pointed out, the Bonn Council of the Parties meeting collapsed once environment ministers from the 54 African Union nations stated they were not obligated to use their lands to mitigate carbon emissions since in their view Africa has not been responsible for climate change. They wanted no part of a “climate policy to pay a poor African to remain poor.”
A decade ago, African writer Dambisa Moyo warned in her book Dead Aid of the inverse relationship between receipt of government-to-government aid and economic growth and prosperity. Among the many reasons that aid has hurt, rather than helped, ordinary Africans, Moyo listed: (1) aid fuels corruption; (2) aid encourages inflation; (3) aid increases the debt load of recipient nations; (4) aid kills exports; (5) aid causes civil unrest; (6) aid frustrates entrepreneurship; and (7) aid disenfranchises citizens.
Dead Aid also warned of the growing Chinese hegemony over African development. While lauding the Chinese for their all-business approach to African investment, Moyo expressed concerns that the increasing Chinese presence in Africa would eventually place the West in economic and even political peril.
Indeed, CFACT had warned the Europeans years earlier that their continued insistence on treating African nations like colonies would eventually backfire – that Africans would find other ways to grow their economies despite Europeans’ desires that they remain undeveloped (except for wind and solar projects, perhaps).
In the Autumn 2006 issue of European View, CFACT’s principals (with assistance from this writer) wrote that , “The answer to Africa’s needs … is in creating a new class of entrepreneurs from among the poorest Africans and affirming the value of market principles, a reliance on sound science, and a re-commitment to the Judeo-Christian principle that ‘all men are created equal, endowed by their Creator with certain inalienable rights, [among which] are life, liberty, and the pursuit of happiness.’” In short, that Africans had the same rights to prosperity as anyone else.
The CFACT article went on to state that, “Thanks in part to the almost universal access to cellular telephones and the Internet, Africa is maturing politically and economically, even in countries where oppression is widespread.” We continued, stating that, “Many Africans are tired of 400 years of colonialism and its ongoing vestiges in the post-colonial era, and others are responding to their cries to ‘let my people go.’”
We stated boldly that the cities of the Third World and the former communist countries are teeming with entrepreneurs; that the inhabitants of these countries possess talent, enthusiasm, and an astonishing ability to wring a profit out of practically nothing; and that most of the poor already possess the assets they need to make a success of capitalism.
CFACT warned the Europeans (and their American fellow travelers) that inaction or continued (hard-headed) paternalism would surely allow unscrupulous developers to enter Africa, further despoil the environment, and further frustrate the desire of many Africans for freedom and respect as full partners in economic development and environmental protection. That same year this author explored the possibilities of a true Africa-wide highway system that would enable the transport of goods and services, and people, from one country or one part of a country to another – and create jobs and prosperity along the way.
We recalled that David Wheeler of the World Bank’s Development Research Group had unveiled a proposal calling for construction of a 100,000-kilometer road network that would link every sub-Saharan capital on the African mainland and 41 other cities with over half a million people with all-weather highways at a total cost, including maintenance and overhead, of about $47 billion over 15 years.
Years later a young African journalist (tragically killed in a bus accident in 2017) named Steven Lyazi posed a powerful question as a challenge to Westerners who still saw his continent as their playground. Lyazi cited calls from European activists “for us to live ‘sustainably,’ use wind and solar and biofuel power, and never use fossil fuels, are a demand that we accept prolonged starvation and death in our poor countries.”
He then asked, “When will politicians and activists who say their care about the world’s poor stop worrying about global warming, pesticides and GMO crops – and start helping us get the energy, food, medical facilities, technology, jobs, and economic growth we need to improve our lives?”
The good news just a few years later is that African nations persisted and found their own path to an integrated economic future built on market principles. The bad news is that the Europeans long ago provided the Chinese with the opportunity to spread the gospel of their view of “free trade” (that is, trade favorable to China) across the African continent.
Perhaps now that Africans are taking full charge of their own futures we will see the development of such a highway system, along with the “energy, food, medical facilities, technology, jobs, and economic growth” that Steven Lyazi envisioned as essential for improving African lives.