Africa accounts for 2 per cent of global trade. Yet by early November, it is perfectly plausible that the head of the World Trade Organization will be an African.
For the world’s poorest continent, this would be a milestone. It would come at a time when much of the world is turning away from free trade, but when Africa itself is showing more commitment to trading its way out of poverty than at any time since independence.
Although the WTO director-general’s powers to influence global trade policy are limited, the platform would give Africa a chance to address, at least rhetorically, some of the iniquities of the world trading system that hold it back.
These include the massive agricultural subsidies in Europe, the US and Japan that have discouraged Africa, with its swaths of unused arable land, from planting wheat, cotton or sugar to export to the world. Africa sometimes uses this as an excuse. Still, it spends an unacceptable $90bn importing food each year.
Hippolyte Fofack, chief economist at the Africa Export-Import Bank, points to tariff escalation, where higher import duties are placed on processed goods, as a disincentive for African exporters. These make it harder to escape what he calls the “stickiness of the colonial economy, which has locked Africa into exporting unprocessed raw materials”.
There are other explanations for being trapped in colonial trade patterns, including a politically connected business class that finds it easier to make money through arbitrage than production. Still, Mr Fofack says the tariffs help explain absurdities, such as the US and India buying crude oil from Nigeria and Equatorial Guinea only to export it in refined form back to Africa.
Having an African spotlighting such irrationalities at the WTO would not be tokenism. In Amina Mohamed, Kenya’s culture secretary, and Ngozi Okonjo-Iweala, Nigeria’s former finance minister, Africa has two well-qualified candidates.
Of the two, Ms Mohamed has more trade experience. A lawyer by training, she chaired the WTO’s general council and as Kenya’s foreign minister she won praise for her chairing of the 2015 ministerial meeting in Nairobi that agreed curbs to agricultural export subsidies and a new deal on information technology.
Ms Okonjo-Iweala has less trade experience, but more international clout, particularly in the US where she is well known — and recently became a citizen. She also has a well-financed campaign behind her, not to mention strong support from the Nigerian government, which muscled other prospective candidates aside to clear her path.
Whoever becomes the next director-general — there are three other candidates — will do so at a time when the US and China are conducting a destructive trade war and protectionism is becoming more acceptable. Even Boris Johnson, prime minister of the UK, an erstwhile champion of free trade, is reserving the right to splash cash on strategic industries.
Africa is going the other way. This year, in spite of the pandemic, 54 African countries continued to hammer out schedules and rules of origin agreements for the African Continental Free Trade Area, which will now start formal operations next year. Tariffs on 90 per cent of goods will be cut to zero. Significant progress has been made on visa-free travel.
“It is well understood on this continent that trade is the future,” says David Luke, who co-ordinates trade policy at the United Nations Economic Commission for Africa. Trade should be a more important source of revenue than remittances, investment or aid, he says.
A paltry 17 per cent of African exports are intra-continental, compared with 59 per cent for Asia and 68 per cent for Europe. Intra-African exports have a higher value-added content. If that proportion were raised, Africa’s industrial base would improve and it would stand a better chance of integration in the global supply chain.
Neither a continental free trade area nor more favourable trading rules are enough. The continent, fractured into 54 countries — 16 of them landlocked — desperately needs better road and rail links, reliable power and far less red tape at borders. Only then can it attract investment of the type that Volkswagen is modestly undertaking, with pilot car plants in Ghana, Rwanda and elsewhere.
Having an African at the helm of the WTO might help on the margins. But whoever wins the position, Africa needs to stick to a strategy of replacing old extractive patterns of trade with ones that provide more jobs and income at home.