Why Intra Africa Trade matters

madagascar

not the movie but the country

madagascar is a an island of the east

coast

of the african continent it’s

interesting to note that this country

features

in our daily lives and most of us are

not conscious

of that many of us in this room are

wearing perfume

many of us in this room may have shared

birthday cakes with loved ones

many of us in this room may have had

a nice scoop of ice cream on a hot

summer’s day

or lit a fragrant candle during your me

time

as you relax in all those moments

madagascar has been present

and the way madagascar has been present

in those moments

is through its key commodity export

vanilla the vanilla pod

you see madagascar as a country

supplies 80 percent of global vanilla

requirements of all the vanilla that is

consumed in the world

eight zero eighty percent of it

originates

from madagascar so madagascar is quite

key to industries

that require this commodity

however what is curious is that

madagascar exports the majority

if not all of the vanilla pods

that it grows all the way to europe

the pods are exported to europe when

they get there

they are further processed and they are

then integrated

into different industries the perfume

industry

the confectionary industry and the like

these products then find their way back

to the african continent and we buy them

at a premium

because they’ve got higher value that

has been added to them

and this madagascar vanilla story

is the quintessential story of the manna

in which

the african continent trades with the

world

i can give you many examples i can give

you an example

of copper from zambia

that will be exported to china and come

back

to the continent in the form of copper

cables and copper wire

and we buy it at a premium

i can give you an example of the cocoa

from west africa

cote d’ivoire ghana that will be

exported to europe

and come back to the continent and we

buy it as delicious belgian chocolate

this is the story of the african

trade interface

i want us to begin to get

to the grips with the reason why

our structure of trade as a continent is

the way it is it’s been mentioned

previously that

the level of trade within the african

continent is very low

16 percent if we compare this level of

in trafficker trade to

for example how europe traded itself

sixty percent of european trade happens

amongst european countries six zero

sixty percent forty percent

of trade in north america happens

amongst the north american countries

similarly with asean it’s over 30

percent

so there’s a lot of room for growth in

this space

and there’s an urgency that africa needs

to begin to trade more with itself

precisely because of the value and the

benefit that trade brings

to economic prosperity if our continent

is going to grow

if we’re going to create the jobs that

we need to create particularly

as part of our post-covert

reconstruction we have

to make sure that we use trade as a key

instrument for transformation of the

african economy

madagascar still remains one of the

poorest

countries in the world

this country that exports 80 percent of

vanilla to the world

still has a per capita income of 1

700 u.s dollars compare that

to u.s per capita income of 63 000

compare that to even south africa of 13

000

that means that this profile of africa

of continuing to trade with the rest of

the world

sending primary commodities whether

they’re agricultural or mineral

and buying back value-added commodities

is keeping us in the perpetual poverty

cycle

and this is an issue that we need to

confront

and to address as african economies

why is the african trade profile like

this

it’s important that we embed our current

trade profile as a continent in our

history

because we would be remiss if we do not

acknowledge the fact that we are still

perpetuating

colonial patterns of production

colonial patterns of consumption and

colonial patterns of distribution

on this continent

in the 1800s when colonial

masters from different parts of the

world

europe and everywhere else landed on the

african continent

it was part of of course the extension

of the imperialist agenda

but the priority was one and one alone

to exploit africa’s natural and human

resources

for the betterment and the growth of

countries outside

of the continent and that’s exactly how

then the trade profile of africa

was set up it was about extracting

natural resources

and sending them to other countries to

help

with their development and

industrialization

it’s a pity that we still have somewhat

a similar profile that we’ve had

since the colonial times and that is why

it becomes urgent that we address

this fundamental challenge the

fundamental challenge of reversing

the colonial patterns of production

consumption

and distribution on the african

continent

one of the key things that we need to

look at when it comes to production

is the fact that we as africa we

represent

seventeen percent of the global

population

but we only contribute two percent to

global manufacturing

and we only have a share of three

percent of global trade

this confirms the fact that our pattern

of production

is still very much in the manner in

which it was set

a long time ago we remain still

largely exporters of raw materials

and we still remain importers

of value-added products let’s look at

our patterns of consumption

similarly there’s still a fundamental

preference

for products that are coming from

outside of the continent this is

reflected in the fact that we are not

trading too much with one another

eighty-four percent of our trade is with

the rest of the world

even if we move beyond the trade realm

levels of intra-african investments

themselves leave a lot

to be desired then we go to our

distribution patterns all you need to do

is to take a bird’s-eye view

at the infrastructure map of the african

continent and you’ll begin to see that

our

infrastructure is still structured in a

way

that it leads from a natural resource

point out

to the nearest exit port

even today it’s a very

extractive plan of infrastructure

there’s very little infrastructure that

connects

different african countries and

functional viable infrastructure that

does the same

if for example you’ve got a rail line

that moves from one country to another

that could possibly facilitate trade

you then are confronted with issues of

gauges

that the gauges don’t match so the

interconnectivity is interrupted

some of the roles are overburdened so

even in terms of our own infrastructure

planning there’s still a lot

to be done to make sure that we have

cross-border infrastructure

that we start to build and to create on

the african continent

what are the implications of

all of this to us

if we continue to not focus on adding

value to our primary commodities

we are costing ourselves as africans

critical jobs

we’re costing ourselves critical skills

we’re costing ourselves

an ability to move up the value chain

and become a viable

player in the global economy

we cannot even begin to start talking

about participation of africa in the

fourth industrial

revolution if we are still struggling

with the second

industrial revolution matters

it is therefore very urgent that

all of us as the african citizenry begin

to address

the issue and redress

and and correct the colonial patterns

of production consumption and

distribution

on the african continent

now how can we work together

as governments as

citizens as the global community even

to address this matter and to contribute

to increasing

our levels of inter-africa trade

our african leaders african union

leaders will be holding

an extraordinary summit on the 5th of

december

this year in about two weeks time

and the priority of that summit will be

to look at how

we activate our continental

free trade agreement

it’s going to be quite a seminal

conversation it’s going to be quite a

seminal summit

that our leaders are going to have

because there has been a recognition

that indeed inter-africa trade is

important

and in the form of the continental free

trade agreement

we have begun as africa

after many many years to really put

and activate our into africa trade

agenda

the vision is that this inter-africa

trade

agreement continental fta

will begin to operate on the 1st of

january 2021

but i must mention that the continental

free trade agreement

at this point we’ll mainly focus on

addressing the issue of tariffs

to simplify taxes that we we we pay

when we trade amongst ourselves

that goes a long way of course in

facilitating our trade

but we still need to go deeper

if we’re going to improve our levels of

trade on the continent

we have to prioritize the issue of

infrastructure development

on the continent and i my

my urge is that when the leaders of

africa meet

in december the priority

focus is how do we begin

to create an infrastructure build on the

continent

that is cross-border in in nature

because the only way that we can begin

to facilitate trade on this continent is

if we have the right infrastructure

that joins the countries

and it’s not just about the extractive

infrastructure build so i encourage that

our leaders take a firm decision

on this matter because many many african

countries as we speak

have infrastructure plans for themselves

as part of recovery and economic

stimulus post but the question is

are the countries talking to one another

so that whatever infrastructure plan and

build

stimulates trade and is not just ins

isolated to to one country

so it’s important that our leaders begin

to have these conversations

because cross-border infrastructure will

also force us to deal

with functionality of borders themselves

so that the transit of people movement

of goods

at the borders the the the regulatory

requirements that we have we begin to

look at them strategically

and cooperatively

and it will take us having a

cross-border infrastructure plan for

africa

to get to deal with all those issues

on the issue of reversing the colonial

consumption patterns

i think it behooves us as african

citizens

to begin to demand african-made products

this preference as well for external

products

and not encouraging enough industries

and not encouraging enough african

industries

and consuming african products it’s also

not

very helpful because trade happens where

there is demand

and we need to be deliberate as africans

in so far as

they demand

finally the on the issue as well of

production one of the key areas that we

need to look at as africans

and also as a global community

is the issue of facilitating

intra-african investment

particularly in the productive sectors

africans need to begin to invest in each

other’s economies

so that we can raise the levels of

production

and begin to produce product that we can

trade amongst ourselves

it’s one thing to have frameworks that

facilitate trade among ourselves

it’s one thing to build the

infrastructure that facilitates

trade among ourselves but if we do not

produce

and if we’re not deliberate about the

facilitation of investments that are

going to make sure that we produce

again that is not going to help us to

reverse

our current situation

so the call to action really to the

african diaspora

to african consumers to african private

sector

is to look at ways that we can aggregate

intra-african investments to look at

ways that we can

raise the level of production on this

continent

so in conclusion i think all of us need

to internalize the fact that

it is our responsibility to reverse

these patterns

of production consumption and

distribution

on the continent that we inherited from

colonial times

and each of us have a role to play

be it investments be it how we consume

be it decisions and infrastructure

planning and

integration planning that we take at

political level

we all need to work together to make

sure that this works

we all need to make sure that the

intra-africa trade

agreement the cfta

is a functional agreement and we all

have to make sure that we protect it

in any way that we can because in

intra-africa trade matters thank you

you