Africa must accelerate intra-continental trade

Africa Day was marked on May 25. The continent is endowed with vast natural resources, human capital, fertile soils and a climate that allows for extensive cultivation. Yet, despite all these advantages, Africa remains the world’s poorest continent. How can socio-economic challenges be addressed? Some analysts believe salvation will come from powerful economies such as China, the United States of America and the European bloc. But CEO Africa Roundtable chairperson Oswell Binha (OB, pictured) this week told Zimbabwe Independent correspondent Nkululeko Sibanda (NS) that answers to the continent’s economic problems will have to come largely from the acceleration of intra-Africa trade rather than a knight in shining armour from overseas. Below are excerpts of the interview:

NS: The world is battling the coronavirus pandemic. What is the CEO Africa Roundtable’s assessment of the situation?

OB: Africa has not been severely hit by the pandemic as initially anticipated. This is obviously attributable to early lockdown and restrictions, among other factors, despite the resultant significant economic downsides.
However, some schools of thought attribute it to non-disclosure and inaccurate statistics. Some countries in Africa did not fully lockdown — there is the example of Malawi — and the impact thereof is still to be recorded.

NS: There has been talk of strategies to combat the pandemic. From a roundtable point of view, which strategies have been effective and which ones have not?
OB: Africa as a continent appears to have benefitted from favourable external environmental conditions, early warnings and indigenous remedies though not scientifically proven. Madagascar is a case in point.

However, from the pandemic containment view, the lockdowns and travel restrictions have been very critical in combating the spread of the virus, particularly what is termed as import cases. So, one can argue to say, yes, our economies have receded but this has been an effective tool in containing the spread of the virus, especially from foreign sources.

Levels of preparedness have also cast doubt over our ability for effective Covid-19 case management capacities. The general information dissemination and cross-fertilisation of knowledge may have been instrumental in collective efforts to reduce the effects of the pandemic.

NS: South Africa has started easing the lockdown and other countries are likely to follow suit. Does the roundtable feel we have arrived, as a continent, at a stage where we can open up our economies and return to normal life?

OB: We are confronted with a situation where decisions to strike a balance between pandemic management and economic survival need to be made. Evidently, there is a real danger of the re-emergence of the pandemic. Africa, in general, suffered the biggest knock from imported cases and any recklessness in opening up economies and borders may come with disastrous consequences.

But, look, this is a very tough call for our leaders as there is need to balance the health concerns with the economy.
Most African economies and Zimbabwe, in particular, have been very weak even prior to the pandemic. Perpetuated lockdowns have dire economic collapse effects which we may not recover from, hence the gradual easing of the lockdown is preferred even in our perspective.
Zimbabwe cannot afford further lockdown. We are better positioned to manage our borders for earlier detection of possible imported cases and concerted efforts in random testing.

NS: What would you make of resources deployed by governments towards the fight against the coronavirus?

OB: Most governments do not have the necessary capacity to adequately respond to this pandemic. Remember we had resource difficulties even prior to the pandemic mainly due to poor prioritisation and resource governance.

As we speak, companies and citizens who are already hit hard are shouldering the costs associated with protective personal equipment and the testing of employees. Certainly, more could have been done to channel more resources in sectors associated with fighting this pandemic.

In Zimbabwe’s case, business had instituted a robust lobby process under the banner of Business for Covid-19. Concerted efforts to encourage government to consider reduction of statutory deductions and contributions, tax relief for industries, six-month holiday on National Social Security Authority payments, six months tax holiday on Pay As You Earn, reduction of Value-Added Tax (VAT) to 5% on locally made goods, and a six-month holiday on VAT for essential commodities — a comprehensive list of these commodities would have been submitted.

Business also believed deferment of capital portion of loan repayments by one year would provide an appropriate recovery base for private sector. Deliberate, sincere social partners’ convergence to ensure building confidence and trust is necessary. A comprehensive paper was developed and shared with all arms of the state. Some of the key recommendations were taken on board, though not sufficiently so.

NS: Analysts believe African economies have slid 100 steps backward as a result of Covid-19. In your view, how do African economies recover to the levels where they were before the virus broke out?

OB: The continent is not a conglomeration of uniform states and therefore I do not think the impact will be uniform amongst the African countries. Looking at Zimbabwe and given the background of an already underperforming economy, 2020 will go down in history as another lost year.
The year 2020 was already written off despite sustained assurances by Treasury that government had turned a crucial corner in fiscal consolidation, among other variables.

It was not even clear before the pandemic whether we were on the right course to economic recovery and indeed the coronavirus pandemic has made that problem more intricate. The reality is we are in for a long ride albeit with the new socio-political developments where the country is misunderstood to be riskier and politically unstable.

NS: With most African economies looking eastwards and westwards for economic survival, how does Africa regain its feet when the same regions it looks to for assistance are affected by Covid-19?

OB: This is the elephant in the living room. If one takes a closer look at several bilateral and multilateral arrangements entered into by most African states, it is so glaringly instructive that most of them disadvantage the continent. This phenomenon has always been an African problem of voluntary dependency on the East or West for African economic solutions.

Sadly, Africa’s competitiveness on a global scale has continued to be below optimal with all economic indicators at the lower levels of the indicator tables. With over 1,2 billion people and over a trillion US dollars of gross domestic product, Africa should now realise that looking inward and negotiating effective terms of trade with the world, structuring African projects to make business sense and indeed enumerate levels of economic benefit we derive from these arrangements, produce our own goods and services using our own people and capital, is the way to go.

Africa’s prosperity can only be driven by Africa. The continent must exploit internal mechanisms of expanding continental trade and industrialisation. Further, intra-Africa trade shall bring us relief at this point in time. Trade arrangements under Agoa, WTO, EPA among other initiatives must play an underdog role whilst prominence in given to accelerating intra and inter-African trade.

Strangely, you may know that intra-Africa trade accounts for less than 15% of recorded trade by Africa. The irony of it is that our governments, for reasons best known to themselves, for many years have made doing business amongst ourselves difficult compared to dealing with Chinese or Europeans. African regional economic communities have failed to significantly deal with this problem.

The advent of the Continental Free Trade Area (CFTA) gives fresh hope to boosting intra Africa trade. However, this will be underpinned by political will to open up our economies. I personally consider that uniting Africa politically should precede economic integration because the absence of political will has been the biggest downside to economic integration.

NS: In terms of re-opening economies, what strategies would you suggest to African governments as the best to employ?

OB: There is need to be cautious and avoid a rushed re-opening. There is need to utilise researched data to make informed decisions.

It is also of essence to ensure that people’s livelihoods remain alive to avoid other social vices associated with the lockdown. In doing so, employers should be implored and even incentivised to ensure necessary conditions to avoid the spread of the virus are met at workplaces. More importantly and where possible, governments need to assume the cost of complying with these preventative measures.

Economic players do play an important role in minimising the negative effects of lockdowns. Governments may need to consider traditional revenue-related benefits to unlock seamless re-opening of productive sectors. These may come in the form of softening traditional tax heads, loans, opening a government order book, tight monetary controls and, indeed, reduction of government debt where possible.

NS: We see African governments shutting down the smaller sectors of the economy such as the informal sector. Is this sustainable?
OB: As much as I agree that the unorganised business could be more susceptible to the coronavirus, it is also true that they are the hardest hit by the lockdown effects. Given the high informalisation of our economies, it also follows through that the significant urban population have lost significant incomes thus compromising their livelihoods.

Given the adequate support from government to support families in this sector, continued exclusion of this sector from opening will certainly bear serious consequences. I therefore suggest they be allowed to open under strict preventative conditions.

NS: On a scale of one to 10, how would you rate the uptake of African governments of advice that your members have proffered with regards the Covid-19 pandemic? If they are not heeding expert advice, why has this been so?

OB: Most governments have been more receptive to views from business and other stakeholders during this pandemic than ever before, despite the resource constraints. At least there was a common enemy, the coronavirus. Though we feel the government could still do more in cushioning business from the coronavirus effects, I would give African governments a rating of four out of 10 in handling this pandemic.

NS: Does this mean the powerful nations have not been very helpful to Africa during Covid-19?

OB: Look, in the strongest sense, Africa has been on its own and in some cases is its own enemy. The work of Chinese, Europeans, and Americans has never been genuinely to develop Africa, but to plunder African resources. Any of these continents pursued plunder and economic interest rather than the much-talked-about development partnerships. This is evidenced by the resistance by the donor community to support initiatives such aid for trade.

I am not a proponent of aid, whether it is from the East or the West, it is dead aid. Africa as a whole is wrongly integrated in the global economy and this has to shift if we are ever going to enjoy our true potential. We have witnessed resource plunder in the Great Lakes region, southern and central Africa with countries such as the Democratic Republic of Congo, Angola, and Mozambique being the most recent casualties.

Terming systematic resource plunder “friendship with Africa” does therefore not exist in strict terms; it’s all propaganda.