Free Africans for global trade

World Bank’s Doing Business report says acquiring a construction permit in sub-Saharan Africa is expensive, giving way to informal plans. Photo/FILE
World Bank’s Doing Business report says acquiring a construction permit in sub-Saharan Africa is expensive, giving way to informal plans. Photo/FILE 

Yet another session of the World Trade Organisation’s Ministerial Conference on Monday, November 30, will hear appeals to save the crumbling free-trade Doha Round from US and EU farmers’ subsidies — but that boring news hides an exciting fact: Africans can free themselves.

Many African intellectuals and activists blame globalisation for the continent’s numerous ills.

Starting from the assertion that some multinational companies can do what they want in Africa, they conclude that globalisation must be the cause of African underdevelopment — in fact, it’s the lack of it.

There is no doubt that a few multinational companies can sometimes exert some sort of monopoly, buy a corrupt political clique or cover up their activities.

But this is cronyism, not capitalism or free trade.

To get public contracts they had to pay officials, feeding corruption at the top of States that do not respect the rule of law, propping up unpleasant regimes and fostering the legitimate resentment of local populations.

But is this really globalisation?

Globalisation, capitalism or free trade is in reality openness, competition, freedom of movement and of opportunities, all under the rule of law.

Far from foreigners flocking to Africa to exploit its opportunities, the United Nations Conference on Trade and Development says Foreign Direct investment (FDI) in all Africa in 2008 equals 3.42 per cent of all FDI in the world: merely half of what goes to France alone.

Yet many in power in Africa and the Western aid industry still blame globalisation for Africa’s ills.

They even argue that Africans are not ready for the idea, manufacturing and commerce, which would only make sense if Africans were too lazy or too stupid to improve their own lot.

In fact, Africans are more than ready, full of energy and innovative ideas.

African roads often form a single big market for miles and miles.

In Treichville, Abidjan, for example, a foreigner cannot walk around without being hassled by youngsters trying to do foreign exchange on the street — entrepreneurs that is.

The idea that Africans do not have the spirit of commerce is mainly spread by African bureaucrats, rulers and even economics professors, along with Western aid agencies, to legitimise paternalism and its bureaucracy.

In reality, in Africa most governments and their bureaucracies are stifling, not protecting, the people and the economy.

Entrepreneurs cannot freely do business and develop their nation.

A glance at the Doing Business report of the World Bank shows the administrative cost of launching a company in sub-Saharan Africa is about 100 per cent of per capita income.

A construction permit?

Nearly 2,000 per cent: 20 years of income.

So most entrepreneurs are forced into so-called informal markets.

This lack of legal status prevents economic development, legal contracts, bank loans, letters of credit and foreign trade.

No wonder then that in Africa what is decried as globalisation seems to benefit only the ruling cliques and big business: amid such cronyism only big companies, often international ones, are able to pay the high price of doing business — giving the impression of doing what they want. Poorer people are excluded by cost.

Yet many Africans would like to have a formal business and to benefit, at last, from global markets.

But in many countries they are not allowed to.

Hence the figures: exports of goods and services from Africa represent 2,87 per cent and 2,52 per cent of global trade.

And trade within Africa is no better: agricultural products from other African countries face an average 34 per cent import duty and 21 per cent on manufactured goods.

No wonder less than 10 per cent of African trade is within Africa.

Removing these obstacles could unleash regional trade worth $1.2 billion.

Failed job

Another favourite culprit for the ills of Africa is the international organisations that have promoted globalisation since the ‘80s, with the World Bank and the IMF seeking liberalisation and budgetary reforms.

The idea was that the private sector would take over the failed job of building economies.

But these reforms could not work without better governance, focusing on the ease of doing business, corruption and the rule of law.

The job was half done, badly, with unintended consequences.

With more of the real globalisation that Africa needs — not just international trade but local and regional free trade — there would be more competition, more local businesses.

But this presupposes the liberation of Africans’ energy and innovation: unshackled Africans can then seize the opportunities they deserve.

Dr Martin is an economist and editor of the Francophone free-trade project