Why Trade is Important to Africa


As important as development assistance and debt relief are, no African person or government wants to rely on foreign aid for the provision of basic needs. Africans want a fairer system which lets them trade with the rich nations and earn more money, so they can grow their economies and pay for their own education and healthcare. But instead of earning more money to invest in improving the lives of their people, Africa has been earning less and less. In 1980 Africa had a 6% share of world trade. By 2002 this had dropped to just 2% despite the fact that Africa has 12 % of the world's population. If Africa could regain just an additional 1% share of global trade, it would earn $70 billion more in exports each year - several times more than what the region currently receives in foreign aid.

Rich countries are very interested in talking about the importance of trade as the primary motor of economic growth in developing countries, yet there's been no real action because these rich countries heavily protect their own markets against exports from the poorest countries through import duties and quotas. Furthermore rich countries continue to subsidize their own agricultural sectors to the tune of a billion dollars a day, making it impossible for African farmers to compete internationally. What rich countries fail to realize is that fairer trade is not just an opportunity for Africa but for the all countries—even them.

Africans in turn know they need to diversify their exports from unprofitable basic crops such as coffee and cocoa and into products which earn more money such as clothes, textiles and manufactured goods. But Africans could also earn more from basic crops if they were allowed to process these for export. For example Ghana can export raw cocoa duty free to Europe, but a 25% tariff is imposed if they process that cocoa before exporting it to Europe. It is this processing (tinning, roasting, labeling) which helps a country earn more money and develop its manufacturing base - and which allows its economy to grow. While fair trade could be Africa's ticket out of the vicious cycles of poverty, unfair trade rules like these trap Africa at the gates.

These double standards have to end. It is important to have rules - but not ones only written by the rich. The World Trade Organization (WTO) is the place where these rules are written. But of the 38 African nations which are members of the WTO, 15 nations have no representative at all at the headquarters in Geneva, and 4 nations have an office of only one person. Most rich nations have dozens of staff to protect their trading interests.

WHAT MUST HAPPEN

  • The richest nations must open their markets quota and duty free to African exports and remove agricultural subsidies which hurt African farmers.
African countries must be allowed to harness the power of trade in their own way to maximize poverty alleviation and economic growth - there is no "cookie-cutter" trade policy to force on poor countries.