The aid to Africa debate is back on the agenda as the world grapples with the economic downturn. There have always been two distinct schools of thought on the usefulness of external assistance to the continent: one was that aid was a good thing while the other view was that it was not. There are always passionate arguments from the two sides as they attempt to make their case.
I am of the view that although aid is a good thing, in the final analysis it will hold African countries back because governments on the continent appear to have become too dependent on foreign assistance – to the detriment of development. Aid does not encourage the sort of industriousness that is needed to move the continent forward. Aid dependence, in the main, has killed the enterprising spirit of Africans.
If the continent is to make the sort of progress that is now needed, it has to trade more than depend on aid. As we began the new century, the African Economic Research Consortium (AERC) and the World Bank published a report on trade policy that declared boldly: “To succeed in the 21st century, Africa has to become a full partner in the global economy.”
In a recent book dealing with Africa and the world trading system, it was noted thus: “All African countries are too small to thrive on their own or even through regional integration alone. Indeed, it is for this reason that trade has always played a major role in their economies.
“And yet, while previously closed parts of the world open up and already active traders extend their involvement in global commerce, Africa is in retreat. It is losing market share in most traditional exports while failing to diversify into new product lines and services. While a few exceptions to this rule can be found, the overall picture is discouraging.”
It is, therefore, not surprising that many African countries cannot wean themselves from aid after all these years of independence, whereas most Asian countries have reduced their dependency on handouts and are flourishing economically. Indeed, everyone is now going on about how Ghana and Malaysia started on equal footing 50 years ago, and how the Asian country is now miles ahead of Ghana economically. In fact, the prognosis then was that African countries would find themselves in the position that the successful Asian countries are today while the latter would be mired in the state that most African states are in currently.
The difference is that while African governments were depending on earnings from the continent’s immense natural resource base, Asian leaders, aware that their countries did not have such natural wealth, concentrated on developing their industries to trade globally.
But all is not lost for African countries. There are opportunities in the 21st century for them to make amends and enter the global economy, as the World Bank suggested in the publication I mentioned above. The World Trade Organisation (WTO), for one, has presented the platform for African countries to launch themselves into the global market. For now, though, the whole process is in deadlock because of differences over farm subsidies.
The WTO arguments are a bit more complex so let’s move to something less complicated: economic partnership agreements (EPA). These are the agreements that members of African, Caribbean and Pacific (ACP) countries are supposed to sign with members of the European Union because the WTO does not approve of the Cotonou Partnership Agreement signed between the two blocs in 2000 because it excludes non-ACP least developing countries.
Under pressure from these non-ACP developing countries, the WTO forced the EU and ACP to reassess their trade relationship, and that’s how the EPA was born. To all intents and purposes, it is WTO compatible. So, when the CPA was signed in June 2000, it was clearly stated that the various regional groupings, such the Economic Community of West African States (ECOWAS), should start EPA negotiations in September 2002 and conclude them no later than December 31, 2007.
What do we now have? Just before the deadline, the ECOWAS Secretariat announced that it was not prepared to sign an EPA, even though it had been given seven-and-a-half years to prepare. This is not how a body charged with economic integration should behave. Maybe ECOWAS was influenced by the arguments of non-governmental organisations that claimed that EPAs were detrimental to the development of developing countries.
These NGOs then undertook a vigorous campaign to derail the process. One objection was that EPAs called for developing countries to open up their markets to the EU, which has already done so for ACP countries. This, the objectors argue, would lead to “superior” goods from Europe flooding the markets of developing countries, thus putting local industries at risk.
But, opening up markets does not necessarily force countries to buy goods from Europe. Capitalism being what it is, it is basically a matter of choice for the consumer. If African consumers do not buy goods made in Europe, local industries will thrive.
What about the other side of the coin? Why shouldn’t Africa take advantage of duty free access to Europe and export? What I’m suggesting here is for African countries to attract European industries to set up factories that could export to Europe. These are capitalists who don’t care where they make their money; and with lower costs in Africa they would jump at the opportunity to make a killing.
But, alas, the policies of many African governments do not encourage such inward investments. If electricity supply is erratic, how will factories function? If the water supply is constantly shut, how will the industries operate? All these lead to unnecessary added costs that invariably increase the price of production and make manufactures from say, the ECOWAS region, very expensive and uncompetitive.
Even so, as you can see, I do back EPAs and I commend the governments of Ghana and Cote d’Ivoire for signing interim EPAs. It is now up to these governments to take advantage of the opportunities that the EPAs present for them to become full partners in the global economy.
Indeed, things are already looking up for Ghana. In a recent interview with Inter Press Service, MP J.B. Danquah complained that the objectors to EPAs were not ‘‘on the ground’’ and did not understand the issues involved. Ghana’s signing of an interim EPA had been “beneficial” to the country, he said. “We were able to save about 40,000 jobs. In addition to that, over $200 million worth of produce would have suffered if we had not signed.” I rest my case.
Desmond Davies is former Editor of West Africa magazine in London.