- Aug 17, 2020
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From a clear business point of view, what would these resources mean for the growth of one continent?
“Petrochemicals, Rubber, Gold, Manganese, Diamond, Ore, Bauxite, Aluminium, Natural Gas, Cement, Timber, Cassava, Maize, Millet, Palm Oil, Sorghum, Yam, Sugar, Medicals, Fruits, Wool, Leather, Automobiles, Aircraft, Coffee, Tea, Textiles, Bitumen, Cocoa, Flowers, Crude Oil, Cashew Nuts, Cotton, Mineral Oils, Mineral Fuels, Horticultural Products, Citrus Fruits, Gemstones, Electrical Components, Etc.”
Well, if you are wondering where the above tall list is taking us, these are the resources marshalled by only 10 of the 54 countries in Africa.
In no particular order, the above constitute the natural resources controlled by Nigeria, South Africa, Egypt, Algeria, Morocco, Kenya, Ethiopia, Angola, Ghana and Tanzania.
According to the World Bank Group 2019 report, the above constitute the first 10 countries with the highest Gross Domestic Product (GDP) in Africa.
All things being equal, poverty and economic hardships should not be part of the narrative of a continent with these rich resources. One wonders why this is rather the case on the continent?
The World Bank report cites the following as the main causes of the current situation: Wars and conflict, political instability, land tenure systemic problems, lack of a unified market and common currencies amongst other factors.
Unlike the Americans and the Europeans that were extremely successful in eliminating these negative tendencies, Africa, which mooted the idea of continental unity since 25th May, 1963 has been struggling to reach a consensus on creating unified regional market.
Yes, the idea of continental unity has been well slated but only on paper. This brilliant idea has remained a myth for about fifty seven years. The reality is yet to be actualized.
Trade amongst member countries has been woeful. In fact, it is far practicable for Africans to engage in intercontinental trade with foreign partners in the USA, China and Europe rather than trade across member countries.
To give a correct picture of this bizarre situation; a trader for instance in Nigeria would have to change the country’s Naira into South African Rand before carrying out a transaction in South Africa.
A South African on the other hand who intends to trade with a partner in Angola would have to change the country’s Rand into the Angolan Kwanza before doing so.
The Angolan who intends trading into Morocco would be forced to change his country’s Kwanza into the Moroccan Dirham before trading.
The Moroccan in like manner, who intends trading with Ghana would have no option than change the Moroccan Dirham into Ghanaian Cedi before trading, and the list goes on.
Suffice to say in all the above transactions, currency fluctuations, exchange rate differentials, customs protocols, uncommon language are some of the nightmares that bedevil the African intra trade.
The above factors paint a rather gloomy picture of the second most populous continent after Asia.
In measuring GDP by purchasing power parity (PPP), Africa Union’s economies garner a whopping $1.5 Trillion, 11th biggest worldwide, after Russia (World Bank Group Report, 2019).
With Africa’s natural resources fragmented all throughout the continent, making it extremely difficult for foreign partners to engage seamlessly in unilateral trade negotiations with its leaders, the idea of Continental Free Trade Agreement couldn’t have come at a better time.
A common free trade area would allow citizens of member countries to trade freely within the borders of its neighbours.
A common African currency would strengthen the rather weak currencies of individual member countries, hence positioning Africa to trade profitably with its international partners.
A free trade agreement would promote an equitable distribution of resources and allow citizens of member countries to migrate and trade freely amongst its members.
Kudos to the valiant men and women who kick started the implementation process.
With this exercise already belated, it is the expectation of traders on the continent, that all the convergence procedures would be completed on schedule for a smooth take off.