Tag: foreign policy

2023 from an African policy perspective: opportunities amidst global headwinds and risks.

There is an old joke about Russian history, that every chapter ends with the sentence “and then it got worse.” Its an apt joke when thinking back on 2022 and looking ahead to 2023. In large part because Russia making things worse has been a feature of the last 12 months and will continue to be so in 2023.

From an African perspective, 2022 was a tough year. Just as the world was opening up and getting control of the Coronavirus, Russia invaded Ukraine sparking off a geopolitical and energy crisis, stoking already rising inflation to alarming levels. This prompted western central banks to respond by raising interest rates and the value of the dollar soared, hurting Africa by increasing the cost of all imports, fuel and food included.

And then it got worse.

2023 will be another tough year in many respects. Inflation, energy turmoil, China’s economy will not prop up the global economic growth and, geopolitical competition between the US, China, and Russia will continue play out in Africa.

Thus, policy makers on the continent must navigate these global headwinds. However, as I have written about before, there is opportunity in crisis and if policy makers on the continent are brave enough and imaginative enough, a bleak global picture can be turned into one of green shoots for Africa.

The Economy – growth can be found

The economic challenge facing Africa this year is not to be envied. Inflation will continue to be a significant problem across most economies continuing to make food, fuel, electricity and other necessities more expensive straining households and businesses alike. Debt crises already in progress in Ghana and Zambia are likely to spread to other countries on the continent who have over borrowed and spent irresponsibly. Sluggish global growth (or recessions) will drag down growth on the continent. Add to this Africa’s two largest economies, Nigeria, and South Africa, will be focused on two general elections.

Thus, policy makers have two goals. First, to navigate a tough economic environment. This must involve blunting inflation through a combination of short-term interventions that protect citizens and business from the worst impact and long term strategies to fix structural issues that make Africa vulnerable to imported inflation (you can read a more detailed analysis here). Second is the debt problem, like Zambia, countries at risk of debt crises must proactively engage their creditors, and bond holders to get ahead of crises and maintain confidence in their economies and if possible, get some debt forgiven or terms changed to make their payback less burdensome. In addition long term debt frameworks should be put in place to end the cycle of debt accumulation, crises, begging, and forgiveness, otherwise, in another decade we will be back in the same place. Finally, the need to cut unnecessary spending and combat corruption is obvious but I will not spill any more ink on the subject.

The second economic imperative is to find growth, and this is where imagination and boldness is needed. If growth is not going to be driven by the global economy, borrowing or government spending we must find it with innovative policy home, domestically and regionally, and there are a number of strategies that can be employed.

  • On the regional front, this is the perfect opportunity to double down on the African Continental Free Trade Agreement (AfCFTA), to build continental trade links that can be alternative source of growth. If this is aligned with the strategic investments in areas like warehousing  intra-African trade could be significantly stimulated.
  • An area of untapped potential is tax reform. Our complex, badly policed tax systems leak revenue and offer opportunity for corruption. Reforming our tax systems and moving towards an African multinational tax consensus could unlock revenues for governments and unleash the potential of African business.
  • Reforming domestic credit policies to unlock lending to MSME’s and small farmers could unlock the significant potential of Africa’s small businesses and small farmers that could drive employment, business growth and agricultural productivity.
  • Finally, International capital markets will be distorted for some time with many unwilling to invest in Africa. It will thus be important to put in place policies that encourage domestic investors (e.g., pension funds, mutual funds, etc) to engage with and invest in African businesses and commodities.

Global economic conditions will be unfavourable for some time. However, I firmly believe that should not hold Africa back. With intelligent and creative economic policy, Africa can stoke growth in its domestic and regional economies.

Geopolitics – wary opportunity

This is a subject I have written on previously. The world is changing, the USA is more focused on competition with China and containing Russia, and this great power competition will be played out on the continent as well. The EU and Britain are concerned with solving domestic issues such as immigration and energy access and this will shape their approach to Africa. And there is rise of regional powers (India, Japan, Brazil, turkey, Australia, Saudi Arabia etc.)  who will all be interested in expanding their relationships with the continent.

From a geopolitical perspective, Africa first must be wary. During the cold war we became a playground for superpower competition and that cannot be allowed to happen again, African interests must come first, adventurism must be resisted.

However, this also opens opportunities. If we can understand the interests and goals of various geopolitical players, we can use that to our advantage where interests are aligned. For example:

  • As the US and West seeks to diversify its supply chains and sources of raw materials outside of China, Africa could use this to attract investment into alternative industrial supply chains in Africa, and better deals for raw materials especially the rare earths, cobalt, and lithium critical for electronics.
  • Deeper engagement with the middle powers and attracting their investment could give Africa an alternative source of investment outside of China and USA and dilute their influence.
  • Strategically leveraging the fifty-four votes at the UN and other global bodies could be used to put African voices in strategic places (the UN security council, G20, COP, IMF etc.) to help shape the global agenda.
  • Critical issues, like immigration in Europe or the need to offset carbon emission in the middle east or Australia can be used to leverage investment in critical areas on the continent. E.g., immigration can be stopped with job creation, or carbon emissions could be offset by green energy in Africa. Where can the funding for that come from?

2023 – tough but doable

2023 will be a tough year not just for Africa but the world. This is should not be an excuse for a lack of progress and development on the continent. We must use our own agency and through policy. With intelligent, forward looking and sometimes creative policy, we can achieve positive results despite an unfavourable global environment. In crisis and adversity there is opportunity, it is time for Africa to start taking advantage of those opportunities and 2023 is the perfect time to do so.

Africa needs its own CoP

“No more empty promises, no more empty summits, no more empty conferences. It’s time to show us the money. It’s time, It’s time, it’s time. And don’t forget to listen to the people and places most affected.” – Vanessa Nakate Ugandan Climate activist

In November 2021, the world came together for the 26th meeting of the Conference of Parties, CoP 26, in Glasgow. To build on the Paris climate change agreement and work towards keeping global temperature rises to 1.5 degrees or below. The outcome of summit was a disappointing agreement with weak promises to “phase down” instead of phase out coal, and a reaffirmation of the Paris agreement. Much of the progress hoped for at the summit was again punted down the road for finalisation at a future summit.

More relevant to us is to ask whether Africa’s goals were met. Frankly, no (you can read more here). On climate finance and technology transfers from the developed world to poor countries old unmet promises were remade, while African countries are already spending billions on climate adaption. On climate responsibility developed countries refused to accept responsibility for historic emissions and climate related losses.

The CoP process is not working for Africa, which despite being responsible for only 3.8% of emissions will be hardest hit by climate change, and through 26 CoP processes the progress on Africa’s climate agenda has been marginal. There is no reason to expect CoP 27 in Egypt in 2022 will be any different. In an earlier article I wrote about the need to strengthen African multilateralism, and climate change is an area that is ripe for that sort of initiative. Africa needs its own CoP, tailored around its climate needs and goals, mobilising climate finance and driving global climate action.

What should AfriCop look like?

Since 1992, world governments have met to forge a global response to the climate emergency. Under the 1992 United Nations Framework Convention on Climate Change, COP stands for conference of the parties under the UNFCCC, the supreme decision-making body of the Convention.

This can be replicated under the African Union, all that would be needed is a resolution under the Heads of State Summit establishing an African Conference of Parties. The key question is what would this AfriCop do what should be its purpose?

1.Get rid of the begging bowl

There are two realities of climate funding that Africa must deal with

  1. It is clear that the developed world cannot be relied on to keep its promise to provide $100 billion a year of climate funding. I
  2. Despite promises made by multinationals and hedge funds, the private sector cannot be relied upon to provide adequate climate funding or investment. The case of the UN backed climate fund launched with much fanfare and promises on the brink of collapse is emblematic of this.

As a result, it is time to get rid of the current funding strategy of holding out the begging bowl and develop a new funding model. This can and should be a core mandate of an AfriCop and there are several options available to Africa:

  • Africa could use its vast Fossil Fuel resources. Not by digging up the coal, oil, and gas, rather by selling it as a carbon offset. Realising the potential earnings and profits from these resources, while keeping that carbon that would otherwise have been emitted into our atmosphere in the ground. I explore the idea in more detail here.
  • Africa’s mineral wealth goes beyond hydrocarbons, lithium, cobalt, copper, and rare earths that are critical for the manufacture of green technology are all found in abundance in Africa. This resource extraction, where it leaves continent, needs to be taxed properly closing off avenues for transfer pricing and other tax avoidance strategies. Something I wrote about here
  • In 2016 the AU decided to implement a 0.2% levy on imported goods to finance the AU and reduce dependency on donor funding. This is an idea that can be revived, by imposing a tax on the carbon content of goods imported to Africa from industrialised economies most responsible for historic greenhouse gas emissions, the tax could potentially be waived if they meet their climate funding promises.

All these mechanisms would create funds in individual countries which they could use these as they please, maintaining the agency of those countries to decide what is most critical for them. A portion potentially going to one of the regional or African development banks to disburse to climate related projects or programs that have a continental or regional impact.

2. Develop and drive an African Climate agenda and voice

A dedicated AfriCop would be in the unique position of focusing on Africa’s climate needs and African solutions to climate change. And this presents two critical opportunities.

First to develop a much stronger foundation for the African Group of Negotiators when representing Africa at global summits and treaty negotiations, a stronger more united African voice would have a much greater impact on the world stage and would weaken the efficacy of divide and rule tactics.

Second, to build bridges and common positions with the other developing world countries and regions that face a similar climate dilemma (largest impacts with the least resources to mitigate or prevent them) developing strategies and proposals that can be put forward and pushed at a global level for the benefit of the so-called Global South.

Third, AfriCop can provide a constant consistent African voice on climate both on the continent and on the world stage. Not just coordinating and pushing an agenda but telling Africa’s story on the impact of climate and what we are and can do about it.

Conclusion

Some of you may be reading this thinking that Africa does not need yet another organisation to add to the plethora of regional and continental organisations across the continent that do little. I share that scepticism; however, of all things the Covid-19 Pandemic gives me hope.

After the Ebola crisis of 2014, the 26th Ordinary Assembly of Heads of State and Government to improve coordination among health institutions among African Union member states in dealing with disease threats set up, The Africa Centres for Disease Control and Prevention (Africa CDC) as a public health agency of the African Union to support the public health initiatives of member states and strengthen the capacity of their health institutions to deal with disease threats. The Africa CDC has exceeded the expectations of many throughout the pandemic, it has worked to coordinate responses across the continent, collectively acquire PPE, resources, and vaccines for the continent, spread learnings and experience from one country to all and worked to help government across Africa more effectively manage the pandemic.

Climate poses a similar challenge to health threats. Those threats pose a challenge to us all, second no individual country has the capacity and resources to face the challenge alone. Third, this issue affects aid and grant giving nations and like the pandemic, when they are under threat, Africa is an afterthought at best. Thus, similar conditions exist in climate policy as they did in health for a pan-African institution or initiative to find wide acceptance, buy in and cooperation among African governments and publics to make it viable. Africa needs its own CoP, its way to drive an Africa focused agenda both at home and on the global stage, and the elements exist for it to be viable and successful.

After Ukraine: Africa in a new world order

For the times they are a-changin’ – Bob Dylan

In 1956 Britain, France and Israel invaded Egypt. Their goal was to regain control of the Suez Canal and to remove the Egyptian president Gamal Abdel Nasser, who had nationalised the Anglo-French owned Suez Canal Company, which administered the canal. However, pressure from the USA, USSR and UN led to the withdrawal of invading forces. More importantly the episode humiliated the British and French governments, it signalled the end of the era of the Western European powers as the worlds major powers directing global events and using gunboat diplomacy to get what they wanted and confirmed the Cold War powers the USA and USSR.

On February 24th Russia invaded the Ukraine, setting off the first large scale inter-state war in Europe since the end of World War 2 in 1945. Not only does this action break the post-war European security settlement, but the weak response of the West imposing piecemeal sanctions that have neither stopped or deterred Russia, like Suez in 1956, signals the end of the post-Cold war world dominated by the West. That while the USA and EU remain global military and economic powers, they are not, as George Bush once put it, “the deciders”.

A new world order is emerging, where there is no pre-eminent power like the USA, but one where there are two global powers (the USA and China), regional powers (Russia, India, UK, Japan, Brazil) and supra-state alliances like the EU all competing to satisfy their interests and goals. Where does Africa fit in this new world order? How does Africa position itself and work to ensure that its agenda is met and is Africa’s voice is heard on the world stage?

1.   What will this new world look like for Africa

Russia has shattered international norms that have existed since the end of Second World War and signalled the beginning of the post war settlement.

  • In the face of a much more assertive Russia the West, specifically the EU/NATO will itself have to be a lot more assertive and will look to match or outcompete Russia not just in Europe but across the globe including in Africa.
  • While the USA will still be a global superpower, it will not be the only one as it has been in the past. It clearly sees its main competitor as China, and while the main theatre of competition will be in the Pacific. The USA is already keen to compete with China in Africa where it sees China as having gained an advantage.
  • For China they will be looking to continue growing their influence and footprint on the continent especially in relation to the USA and Europeans.
  • In addition to the big 3 (USA, China and the EU) regional powers, Russia, Japan, India, Brazil, Turkey and the Gulf States will all be looking to grow their influence on the continent.

What does this mean for Africa, what is this influence that these world and regional powers are looking for. As has always been the case, the world continues to covet Africa’s resources, the traditional resources of oil, gas, precious and industrial metals, but more than that Africa has the resources (rare earths, lithium etc,) that are needed for the green transition. With the worlds largest population of young people, Africa is also a critical market for the future and access to those markets is becoming increasingly important. In short, Africa is strategically and economically valuable and as a result in a multipolar world there are significant risks around how the rest of the world engages with Africa. However, if Africa rises to the challenge and is smart about how it navigates this new reality there is a significant opportunity reshape Africa’s influence and place in the world.

2.   Learn from the past, stand apart from the competition

During the Cold War when the USA and USSR were competing for global influence and Africa became a theatre for this competition. With the superpowers throwing their considerable weight behind various regimes to support their own strategic or ideological interests, despite those regimes being the opposite of the principles espoused by the superpowers. As result the West backed the apartheid regime in South Africa, and Mobutu in Zaire while the Soviet Union backed regimes like the Derg in Ethiopia, and both sides pursued proxy wars in the Congo, Angola, Algeria etc. making conflicts bloodier and more tragic than they otherwise would have been.

It is critical to avoid this happening again. Africa must be truly unaligned, which means having cordial and open relations with everyone but not being a formal ally of anyone beyond the Afro-Caribbean bloc that would put Africa in the cross hairs of the global powers. Not only will this maintain our neutrality when conflicts break out among the global powers, it will prevent Africa from again becoming a theatre for the proxy wars of the great powers, where African blood is spilt to achieve the strategic goals of foreign powers. Finally, true neutrality will enhance our voice on the global stage positioning the continent as an honest, neutral voice in global affairs, something that has had value throughout history.

3.   Strengthen African Multilateralism

In his speech at the UN Security Council after the Russian invasion of Ukraine the Kenyan Ambassador stated that “Multilateralism lies on its deathbed tonight. It has been assaulted today as it as it has been by other powerful states in the recent past.”. Between Trump and Russia’s recent actions, global multilateralism is in indeed on its deathbed. However, that does not mean African multilateralism cannot play a significant role. By African multilateralism, I mean a set of norms and ways of engaging with the outside world that are agreed upon through pan African institutions, namely the AU and ACFTA. African states will not agree on everything and have different priorities. If Mali prefers a Russian security alliance to a French one, that is their choice, if Djibouti chooses Chinese economic investment over American that is their decision. However, we should all be able to agree what the boundaries of acceptable behaviour from outside the continent are and a set of measures that should those boundaries be breached can be implemented with wide consensus. Much in the same way that ECOWAS takes measures when there is a coup in their region, the AU or CFTA could impose sanctions (e.g., restricting trade in critical goods) on the offending states.

Doing so would set a tone for how the world engages with Africa and impose consequences for those looking to turn back the clock and act in an “imperial” manner.

4.   Unite on core issues

Though not every African country will agree on anything there are some things that we can agree on such as:

  • The need to grow Intra-African trade and change the terms of African trade with the wider world.
  • The need to act on climate change and fund resilience, mitigation, and the green transition in Africa.
  • The need to change the international tax system to be fairer.

Around these core issues on which African states agree there is the opportunity to craft a common position and push that on the world stage as one. Building common cause with other nations to drive joint priorities. Focus on these core issues where global powers cannot play divide and rule would further entrench Africa’s position as a serious player on the global stage.

This time must be different

The Russian invasion of Ukraine is the death knell of the Post-World War 2 and Post-Cold War settlement that has given the world an unprecedented period in which states rarely went to war with each other.

As the new multipolar world order emerges and takes shape, Africa cannot let what happened in the past happen again. We must make sure that Africa is not a venue for exploitation, extraction and proxy wars. This will require deliberate, smart, coordinated and flexible foreign policy from African states. Acting in concert where possible, and where not, within an agreed upon set of norms and practices. If we do so, Africa can ensure that not only does it navigate the new global reality but helps shape the terms of this new reality in are

Making it through the crisis: Africa’s crisis response policy

A few weeks ago I wrote a piece on what Africa can do to kickstart its economy and drive long term growth after the coronavirus crisis has ended. What’s becoming clear is that the crisis will be longer and deeper than many had first thought. This poses the question, what policies do we need to put in place so that when it ends, we are in a position to kickstart a recovery.

African governments do not have the financial firepower or operational capability that developed countries have deployed. But I do not believe that means we are hobbled. As policy responses around the world are showing, what was previously thought impossible, too expensive or too complex is doable. The same applies to Africa. To make it through the crisis we must abandon the art of the possible and attempt the impossible. This crisis presents critical obligations to African policymakers, that we must be bold and creative to save lives, livelihoods and possibly the state itself. This crisis also presents policymakers with an opportunity, to redefine what policy in Africa can do, particularly when health, wealth and well-being of its people are at its centre.

The Nature of the crisis

This crisis is unlike anything Africa has seen before. Its effects are multiple, simultaneous and intense.

First, this crisis will last longer than many of us thought. Until there is a widely available vaccine or cure, we will continue to see outbreaks, travel restrictions, social distancing, quarantines etc. In various parts of the world and Africa as governments try to avoid a second wave. Considering the staggered way in which the virus has spread across the world, it’s estimated that the most severe restrictions will continue for the next 3-6 months and various restrictions could remain in place for up to 18 months until medical solutions are widely available.

Economically the World Bank predicts the continent could lose between $37 billion and $79 billion in output and face a recession of –5.1% (negative 5.1%). Furthermore, agricultural production (the most important sector in terms of output and employment on the continent) could contract by between 2.6% and 7%. This is an economic disaster for the continent. The formal sector will be defined by falls in productivity, revenues and severe job losses. In the informal sector which accounts for 89% of employment on the continent, its traders, farmers, vendors, MSME’s, tradespeople who rely on daily incomes are facing disaster if those incomes are disrupted endangering their ability to afford food and shelter not just for them but also the people who rely on them.

This crisis will also stretch our healthcare systems, in many cases past their breaking points. Endangering, the lives of those with Covid-19 and the lives of those who need medical attention for things other than Covid-19 (expectant mothers, HIV-AIDS patients, cancer patients, malaria patients etc.).

Internationally, help (financial or technical) from the traditional donor/development aid community will not be as forthcoming, as it has been during previous crises, as they try to deal with the crises within their borders. Thus, Africa cannot rely on the international community as we have become accustomed to doing.

With all these effects, in responding to this crisis we have to have a core goal. That we have to keep our people fed, healthy and secure livelihoods as far as is possible. Which means designing and implementing a mechanism to enable people to keep themselves fed and secure. Providing lifelines to the informal and formal sectors, so that people have livelihoods to sustain themselves in the long run. Restructuring how our governments communicate with the public to ensure that the measures taken are as effective as possible and provide a foundation for re-forging our societies.

Keeping people fed and secure

This is probably the biggest headache facing African policymakers in their response to the crisis, and many will default to what they know, distributing foodstuffs. However, what we need in a situation like the current crisis where millions of people who were ok now fall into vulnerability, is a solution that is big, simple and fast. One solution that encapsulates all three is cash transfers. Give vulnerable populations money and trust them to know how best to use it. As I have previously written, cash transfers are effective, and people are rarely irresponsible with them. With innovations like mobile money which has permeated across much of the continent, it is possible to get money where it needs to go and to do it quickly. And, it avoids the mess of corruption and delays associated with government procurement. Finally, it puts money where the economy needs it. In the hands of consumers who buy their food and other essentials from the informal economy, keeping those value chains alive.

How do we pay for this? Simple, print money. The UK is doing this. Those afraid of inflation should note that the money would be replacing depleted economic activity, thus limiting the inflationary impact.

Reinforcing health systems

First, African countries need to devote more resources to public health. For decades we have let public health fall into a state of disrepair and underfunding. Over the short term, this needs to be remedied by immediately ramping up funding, and resourcing over the short term to fund the immediate Covid-19 response. As well as thinking through how to implement public health measures in an African context. Rather than lockdowns, how can we make markets which are critical nodes of the food system sanitary and credibly social distant? How do we make informal settlements where people share multiple spaces as safe as possible?

But it also represents an opportunity to start long term investment in community health. If we want to keep hospitals free to treat Covid-19 we need to deliver care to people in their communities. This means public health communication and education, provision of basic care at a grassroots level and investing in preventative infrastructure (sanitation, water, clean cooking etc). That could over the long-term form the basis of a viable universal healthcare system.

Paying for this will require shifting resources for normal noncritical spending (non-salary and critical operations) to the health systems, delaying or freezing development projects and tapping into capital markets (borrowing) where possible.

A lifeline to the economy

Through no fault of their own, businesses across the continent are suffering as demand falls, export markets go into lockdown, their supply chains are disrupted, and their consumers stay at home. To save jobs, livelihoods and in some cases whole industries. Many governments have already put in place tax holidays and encouraged banks to renegotiate loans with businesses. However, in a recession predicted to be deep, more is needed, and this could consist of several measures such as:

  • The utilisation of domestic private sector capacity by the government as part of the crisis response. Using streamlined public procurement to buy goods and services (e.g. Masks, logistics and transport, beds etc.) that are needed by the government to respond to the crisis. This will help keep some local businesses alive and build local capacity.
  • An SME loan program divided into two tranches. The first tranche would be given now, to keep SME’s alive and the second tranche would be given when the WHO declares the crisis over to enable SME’s to quickly restart their operations. This can be done by the banking sector backed by a guarantee given by the central bank in case of defaults. The guarantee would have 2 conditions: low-interest rates and a 6-12-month grace period before the loan payments start to give SME, breathing room. This would have the effect of giving SME’s working capital and keeping the credit system alive.
  • Safe business programs. Many businesses require social interaction such as open markets, salons & barbershops, restaurants bars and clubs, etc. We should be developing guidelines and rules for safe interactions in these businesses that integrate sanitary measures and social distancing (where possible) to enable these businesses to reopen as early as possible without endangering public health.
  • Utility bill and commercial rent holidays to ease pressure on businesses with reduced cash flows. Utility providers and commercial landlords can be provided with tax credits to offset the reduced revenue. I

Communicating with the public

I have written previously on the need for effective and persistent communications strategies to be built into policy design. This is critically important during a crisis, where not only do the public need to know what is happening, they need to buy into it, trust what their governments are saying and understand that it is being done for the public good. For that to happen governments have to change how they communicate with their publics from talking at them to engaging with them, this means:

  • Be honest. Now is not the time for bluster or false assertions. If governments lie and people die as a result, trust will be fundamentally broken, and people will be unwilling to listen again. Thus, governments must lay out the truth to their people, what this crisis will do to every one’s health, livelihoods and general welfare and why they are implementing exceptional measures.
  • Explain your thinking. Governments will be implementing measures that will affect people’s lives in a multitude of ways. As the heavy hand of government, intervenes in people’s lives in unprecedented ways, the government must explain why, what drove the thinking, and what they are hoping to achieve
  • Accept and respond to criticism. No policy response will be perfect. Being able to acknowledge where something has not gone as planned or was not implemented properly and communicating real action taken to fix it, will build trust and support.
  • Communicate often. This is a constantly evolving crisis; people need to be updated regularly. In times like these, there is no such thing as talking too little.
  • Engage across channels. To reach everyone, you must go where they are, which means going beyond traditional media onto social media, and breaking language barriers. If information is inaccessible, then it may as well not exist.

Communicating, honestly, effectively, and openly will help reshape the relationship that has been characterised by a lack of trust between opaque African governments and populaces that have long been indifferent to whatever pronouncements and declarations those governments make. Rebuilding trust can be the basis for rebuilding the sense of community and society that too many African countries have lost, reinforced by genuine efforts to assist people.

A pan-African response

Though the international community may be pre-occupied, it does not mean the pan-African community cannot respond. Though we may not have the money or the resources that the developed world can deploy, we can cooperate to ease the pain of the crisis. Critical areas of cooperation would be:

  • Sharing data and information on how the pandemic is evolving in each country. providing public health officials and policymakers valuable data on the epidemiology of the virus within similar demographics that can help every country fine-tune their response.
  • Sharing policy responses. What measures have implemented in other African states, how effective have they been, can they be adopted elsewhere.
  • Sharing resources. If the crisis has eased in one country but is ramping up in another, they could provide resources (equipment, personnel, money) to help in that fight.
  • Buy Africa first. Stimulating the African private sector by encouraging African governments to buy what they cannot find at home (e.g. if there is a food shortage) in other African countries before looking abroad.
  • Engage the world as one. While African states do not agree on everything, this crisis will bring us together on various things. One of the most important of those things is Debt. Africa needs debt relief to give it the fiscal space to pay for the virus response and a post-crisis stimulus. Rather than have each African country go to its bilateral and development partners on its own to beg for debt relief or a payment pause. The message will be much more powerful if the continent speaks and negotiates with one voice, increasing its bargaining power and the momentum behind the issue.

Unprecedented crisis – an unprecedented response

This crisis is unlike anything Africa has ever seen before. Even the Ebola crisis of 2014 did not threaten the whole continent and had significant international assistance. It is hampering our health systems, economies and socio-cultural way of doing things on a scale we have never had to deal with.

This is by no means a comprehensive look at the policies that can or should be implemented. The policy interventions I have presented are a few among many that a lot of talented and clever people are thinking of across the continent. What I have tried to lay out in this piece is that this dual health and economic crisis is a threat to us all. And responding to this crisis requires a multi-pronged approach that is big and bold. That will need African governments to get out of their comfort zones and implement measures such as cash transfers which they have termed too expensive or too hard,  shift money from cherished infrastructure and other projects to the health system, invest in the private sector especially SME’s in new ways and talk to the public in a more genuine way.

If we do not respond in a big and bold manner, many African nations will emerge from this crisis hobbled, suffering extended socio-economic aftereffects and much more likely to suffer civil and political unrest. If we can respond with boldness then we could lay the foundations for a genuine recovery after the crisis, a public health system that isn’t an oxymoron, a reset of the relationship between private enterprise the and public good and a  much more positive relationship between the government and its peoples. I’m hopeful that maybe, this time, African leaders and policymakers will recognise this crisis for the threat it is and start thinking big and acting boldly.

Policy lessons for the Africa Continental Free Trade Area

On May 30th, 2019, thirty days after the 22nd African state had deposited the instruments of ratification, the African Continental Free Trade Agreement (AfCFTA) came into force. For many, the AfCFTA is a cause for significant optimism. As the wider world (mainly the west) is increasingly questioning globalisation and integration, Africa is moving closer together. The AfCFTA is at the centre of that, a pan-continental free trade area that the African Development Bank thinks ‘will stimulate intra-African trade by up to $35 billion per year, creating a 52% increase in trade by 2022; and a vital $10 billion decrease in imports from outside Africa’.

The ambition is incredible, “a single continental market for goods and services, with free movement of businesspersons and investments”, but, as they say, the proof is in the pudding. Africa has tried this before (although on a smaller scale). There are a number of Regional Economic Communities (REC’s), around the continent. However, when it comes to trade, they have never quite hit their potential.

Figure 1: African Regional Economic Communities approved by the AU

 

For the AfCFTA to work we need to learn from the lessons that have held our own REC’s back as well as lessons from economic and trade areas such as the EU. Most important is that we must be the understanding that for the AfCFTA to meet its potential it must be designed with people at its centre and the social, economic and political realities of the diverse continent in mind.

1 – The Brexit lesson: a people-centred union

When it comes to trade unions, the elephant in the room is Brexit. One of the main drivers behind the Brexit vote was that it was seen as a project of the elite, benefiting certain people and groups while leaving another behind. If it is to work the AfCFTA cannot be seen as an elite project, it must be centred around the people that it is intended to serve this can be done in three critical ways.

First and foremost, African’s must be involved in the technical design of the AfCFTA. This means the team putting together the rules, regulations and policies that will govern the free trade area, must consult African people, civil society and business both big and small. Their input will be critical to ensuring that it is designed around the needs and aspirations of African’s.

Second, freedom of movement must not just apply to goods and money. If people cannot travel, meet, learn and engage with each other, the continent will not be able to pull together at a grassroots level. Thus, the AfCFTA must not just be about trade but about African’s coming together as well.

Third, it’s not just enough to sign a trade agreement, you must engage and educate people about them. In a previous post, I wrote about how good communication is a critical part of any policy this applies to the AfCFTA. People and business across the continent must be educated on what it is and how they can take advantage of it.

2- Learn from the EU: equality, flexibility and tempered ambition

After two devastating wars that had engulfed the world, integration was seen as the antidote to the rivalries and interstate competition that had been so destructive. As the world’s most successful trade union (despite its recent troubles) there is much that Africa can learn from the EU as it embarks on its own integration.

The first takeaway is matching ambition to reality. The first organised form of economic integration that emerged in Europe after the war was the European Coal and Steel Community. Which established a common market for coal and steel between 6 countries (France, Italy, Belgium, The Netherlands, Luxemburg and West-Germany). Though the Community was limited it went on to form the core of what we now know today as the EU, an ambition that the architects of the community held but knew they had to work towards. And therein lies the lesson for Africa. We are an incredibly diverse continent, with various countries pursuing development in their own way. Institution an all-encompassing trade union on July 1st, 2020 may be too much of political and economic shock for many to take. However, if – like Europe – we start a little smaller, with a group of goods and services that everyone can agree should be traded freely. We can, together, build the trust, institutions and relationships that will allow a wider system to succeed. This does not mean shelving the dream of a pan-African trade area, rather it means working towards it, building and expanding our common experience of it until it matches the vision.

Second, is that the political and economic power of the big countries must be balanced. As can be seen below the AfCFTA has the greatest levels of income disparity of any continental free trade agreement, and more than double the levels witnessed in blocs such as ASEAN and CARICOM.

This means that smaller countries must have genuine power in the institutional and decision-making design of the AfCFTA. The EU has historically faced a similar problem, Germany, France and the UK (though not for long) as the big political and economic powers in the union could dominate it. However, the political institutions of the EU are structured in such a way as to require consensus from all countries and that ensures that all countries have a say. It can be cumbersome and time-consuming but has been largely successful. Furthermore, the EU has been willing to be flexible, allowing some countries extra time to comply with certain rules, or like the UK to stay outside the Schengen and Euro. What this does is give some allowance for the political and economic realities of various states, thus making itself more acceptable to a wider section of the populace.

Africa’s diversity will require flexibility. We will not be able to move at the same pace, and the very real concerns that people have of being dominated by the two economic giants of the continent must be taken into account. Furthermore the aspirations and ambitions will differ from country to country, Kenya may want a trade deal with the USA but that shouldn’t mean it cannot trade with the rest of Africa within the framework AfCFTA. Flexibility allows for diversity, through which different countries and economies can develop different strenghts and specialisations. Combined, this diversity will boost trade within the contient, and beyond as Africa will be able to compete in a number of industries and products.

3- learn from ourselves: empower SME’s

Most businesses on the continent are Small or Medium Enterprises. If the AfCFTA is to be a success, it must learn from the existing regional economic communities, specifically what they fail to do – foster trade, by and between SME’s. The AfCFTA must put African SME’s front and centre. Doing this will require some imagination and bold policy moves as i have written about previously. This also ensures that the trade area won’t be the preserve of elite big businesses, and hopefully some of those SME’s will take advantage of the opportunity to grow.

Policy to make a dream a reality

I am not a sceptic. In fact, I am incredibly excited by the possibility that the AfCFTA can bring, I am in awe of the ambition and vision behind it and as an African, I am immensely proud that not only have we managed to get this far, but we are on the cusp of implementation.

However, the realist in me is afraid that if we do not get the design of the AfCFTA right it will be another in a pantheon of acronyms that litter the continent, shadows of the intent and ambition they were supposed to fulfil.

This need not be the case, if we learn the lessons from the failures of Brexit and the successes of the EU, and endeavour to keep the aspirations and endeavours of Africa’s people at its centre the AfCFTA can be the game-changer that we all hope it will be.

 

 

Which Way for Africa? Development Policy in a changing world

Global political-economic realities are shifting. China’s economic growth has slowed to its lowest levels in 26 years. And in the rest of Asia key economies such as India and Japan are also facing lower than expected growth. Germany, Europe’s biggest economy is cutting growth forecasts as the EU struggles to find growth and grapples with Brexit. In South America, the two largest economies of Brazil and Argentina are struggling with a recession and debt respectively. And while the US economy is riding high at the moment it is beset by recession fears, and dominated by nationalist sentiment. Politically, the geopolitical certainties that have defined the post-cold war world (a strong and engaged USA, a non-aggressive China, a stable Europe, powerful multilateral institutions, and global norms that are respected and adhered to) are crumbling. All of this implies that the global economy and geopolitics that will be less stable, less cooperative and more competitive, right at the time when the global challenges of climate change, inequality and poverty require cooperation and consensus.

These dynamics have significant implications for African policymakers and leaders. As Africa is confronted by a changing world, we need to change our approach to and strategies for our development. We must ask ourselves what these changes mean for Africa, and how can we, as African’s take advantage of the oppurtunites and mitigate the risks.

What does this all mean for Africa

For Africa, these shifting global dynamics have three significant consequences.

  1. The path to development exploited by the Asian tigers is likely closed. This path relied on increasingly open global trade and capital flows to drive export-led development and Foreign Direct Investment. Globalisation is under pressure from an increasingly protectionist developed world that is seeking to protect its own stressed working and middle classes by restricting trade (or engaging in trade wars) and the decline in the influence of global norms and institutions that had sought to broaden the reach of global markets. This means that development strategies based on the Asian model of export-led growth driving industrialisation, employment and growth are less likely to succeed.
  2. The increased geopolitical competition will see Africa become a stage for global power competition, as they search for access to new markets, resources and diplomatic allies. This dynamic is already in full swing if one looks at the competing Africa strategies of the USA and China and a new focus on Africa from the EU and Russia.
  3. The traditional multilateral forums and institutions, like the UN, World Bank and IMF that helped drive development and have in large part defined development economics and policies since the 1950s, are losing influence and relevance. This means (hopefully in my view) that there will be more space for innovative approaches to development.

A shifting approach

A changing world requires a changing approach to the world from Africa, including our approach to development.

More space for new thinking

As stated earlier, the global multilateral institutions that have defined development thinking for decades are losing their influence and thus relevance. Beyond this, the great powers (namely the USA, China, EU and Russia) are primarily focused on domestic issues like faltering growth, fractious populist politics, inequality, and geopolitical competition in the Middle East and Pacific. What this gives Africa is the ideological and intellectual space to redefine development. Rather, than follow the lead of the World Bank or try to copy the Asian tigers, we have the opportunity to Africanise development (something I have previously talked about here). To decide what matters to us, how African’s envision their future and how we are going to get there.

Internal markets

As globalisation falters and countries become more protective around issues of trade, immigration and capital flows, we cannot rely on global trade and FDI to drive our development, something that African countries currently spend a lot of time trying to attract. Furthermore, outside of Asia, there are no significant high growth markets where we can build demand for African goods. What this means for us is that we can focus more attention on our own internal markets. On policies that foster intra-African trade, promote the growth of SME’s, enhance Agriculture, investing in science and technology and face up to the challenges of climate change together.

Focusing on our own markets and fostering growth that isn’t dependent on western capital looking for returns or Chinese demand for raw materials, will likely prove to more sustainable over the long term. It won’t be instantaneous and no one should expect miracles in the short term, but African markets are one of the last underdeveloped markets with high growth potential if we do not take advantage of our own markets someone else will.

Engaging smartly with competing powers

As the world shifts from being a unipolar dominated by the west/USA to one where there are competing world powers and interests, African leaders would do well to learn from the lessons of the cold war, and not latch themselves to one side or the other for better or worse. Rather, we need to understand and engage with the West and East strategically and cooperatively, acknowledging our own relative weakness in terms of economic, political and military power and having very clear achievable strategic goals. Using, smart consistent engagement with world powers to get the capital we need to help fund development.

A whole new world

A changing world can be seen as a problem or an opportunity. For Africa, I see it as an opportunity. One where we can reshape the development of the continent to one that happens on our own terms with the benefits accruing at home. However, it will be a problem if we do not change our approach to engaging with the world and development in a new global context. We may find ourselves at the mercy of global powers, with wasted investment in development strategies that are not applicable anymore. For the opportunity to become reality will require a coherent vision and then the boldness and imagination to execute it from our policymakers. Something, I have no doubt the continent possesses, the trick will be to harness it.

Seizing Africa’s Climate change opportunity

Saving our planet, lifting people out of poverty, advancing economic growth… these are one and the same fight – Ban Ki-moon former UN Secretary-General

On the 8th October the UN Intergovernmental Panel on Climate Change released a report and  its frightening. The report warns that there are only 12 years for global warming to be kept to a maximum of a 1.5C rise set by the Paris accords. Anything beyond that will radically increase the risks of flooding, droughts, and extreme heat. Keeping warming to 1.5C is possible but will require concerted global action, something that has been elusive thus far.

For Africa the situation is dire, the continent will bear the brunt of climate change. As CarbonBrief  points out the heat waves will get hotter, the rainy seasons will become more erratic and droughts more likely. For a continent largely reliant on rain fed agriculture it means yet more cycles of drought and famine. The implications of climate change for Africa, if we do nothing, will further entrench poverty for another generation, and displace millions creating climate refugees.

However, this does not need to happen. Climate change is not a good thing, but as the saying goes ‘you should never let a good crisis go to waste’. Climate change is a crisis for Africa, but it is also an opportunity. Rather, than hold out our proverbial begging bowl for money and technical assistance to foster resilience, which is the strategy of most African governments at climate change summits. We can use climate change as the spark for transformation, as we actively seek to mitigate its effects and minimise the continents contribution to climate change. It can be an opportunity to harness science and technology and equip our farmers with tools to feed the continent in an era of shifting weather patterns. To leapfrog fossil fuel energy and lay the foundation of Africa’s economic and social development on green sustainable energy. And to take up the mantle of leadership where the worlds advanced nations have failed to do so. In previous posts (here and here) I have advocated for a conception of development in Africa with the dignity of all Africans as its core goal. Anybody thinking about development in Africa in the 21st century has to account for climate change, as climate change not only endangers our environment but our development and dignity as well. However, with smart, forward-looking policy it need not be a disaster.

Harnessing science to transform agriculture

Agriculture is the employer and source of livelihood for about 60% of the continent. The impact of climate change on agriculture in Africa will be significant and we are already seeing it. This is only the beginning, as pointed out earlier, the bigger the increase in warming the more pronounced these effects will be. This poses a challenge to African states, farmers and consumers; how can we ensure that we can grow enough to feed a growing continent. A large part of that answer lies in investing in science and technology to empower African farmers. To give them the tools (such as GM crops which I have written about previously) that can handle the changing climatic conditions and boost yields. Using technology to give farmers better knowledge about weather, soil and water conditions so they can improve yields, access to markets so they can get the best prices, and access to storage facilities so that we can cut post-harvest losses.

Investing in science and technology would not only help farmers and feed the continent it could provide the push we need to grow our scientific and technological capabilities on the continent. Industrialisation, development, science and technology are intimately linked and if Africa is to succeed in the 21st century digital and knowledge economy it must develop its STEM capabilities. Confronting the challenges of climate change, such as the ones it poses to agriculture could be the African moonshot, that spurs innovation and industry throughout the economy.

Leapfrogging dirty energy

Leapfrogging is the idea that less developed regions, countries or companies can advance rapidly through the adoption of modern systems without going through intermediary steps. The classic case of this in Africa is mobile phones. Mobile phones allowed most of the continent to skip expensive copper land lines, and the embrace of the technology has revolutionised many aspects of life and the economy. Like phone lines we have the ability to leapfrog fossil fuels. Renewable energy is now getting to a stage where they are almost as cheap and will soon be cheaper than fossil fuels. There are some who would argue that fossil fuels like coal are cheap and readily available, however that is increasingly untrue and African countries have free and broad access to the sun and wind. There are others who argue that developed nations used fossil fuels to industrialise and thus why should Africa be disadvantaged by not using them. But that sounds like a petulant child arguing that they too should be allowed to misbehave because everyone else did, frankly Africa has to be better than that. By investing in green ways of generating energy and innovative (e.g. mini-grids) of getting it to the people who need it, Africa can lay a sustainable foundation for its development. We can leapfrog the dirty fossil fuel generating plants and possibly even the expensive centralised electricity grid systems, most importantly we can develop our economies not at the expense of future generations but with their welfare in mind.

Leading the world

We may be a poor continent but that does not mean that Africa cannot lead on key issues. From the 1960’s onwards African nations led the international and diplomatic fight against apartheid South Africa. Boycotting international events, helping South African exiles and the ANC, getting the apartheid government banned from international fora and sports, sanctioning and boycotting their economy, it took a while eventually the rest of the world caught up and the apartheid system fell. The developed world has displayed a remarkable lack of leadership on the issue of climate change. Australia and the USA have leaders in charge who, despite the mass of evidence, deny climate change. Canada and the EU talk a good game but are yet to make those hard choices that would have a real impact on carbon emissions (like taxing carbon). There is a gap which Africa could fill. With policies, like putting a tax on the carbon emissions content of imports. with actions and putting our money where our mouth is, such as investing in green energy instead of fossil fuels. And smart diplomacy – combining our voice on the global stage to help build consensus, shame others into action and forge constructive engagement with the issue of climate change. Not all global leadership issues require a big wallet, or a big gun, determination and concerted effort can make a difference. This is not just wishful thinking on my part, as the continent in line to bear the biggest impacts of climate change, utilising whatever influence we may have to get global action is effort well spent.

Climate opportunity

The 2018 winners of the Nobel prize for economics were Paul Romer and William Nordhaus. Both won for their work on economic growth over the long term and though they did not work together, the work they did does dovetail. Romer’s work looked at how innovation and new technologies come about, and he found that by investing in innovation (like funding research and development initiatives) you can boost economic growth in the wider economy. Nordhaus’ work looked at the connection between the economy and the environment and the impact of climate change on the economy and wider society. Their work comes together in a rather simple way, to combat climate change, to shift our societies and economies to low-carbon ones, will require innovation, new technologies and new policies. We need to invest in the knowledge and ideas that will combat and mitigate the effects of climate change.  Most importantly what Nordhaus and Romer’s work suggests is that by investing in knowledge and ideas and implementing them you can generate long-term growth. Thus, by combating climate change we could actually stimulate economic growth.

For Africa this is an opportunity to do the right thing for current and future generations, and to lay the foundation for the development that we have been chasing for the last half century. Climate change could be a disaster for Africa, or it could be the thing that forces us to pursue a path that leads to long-term, sustainable growth. It will require us to be innovative with our policies, to rethink our ideas of development and industrialisation and to invest in the ingenuity, knowledge and innovation of African’s from all walks of life. Climate change will be one of the defining issues of the 21st century and Africa faces a choice, we can be a victim, or we can take the initiative, take responsibility and make it the springboard to a sustainable successful future.

Focus on FOCAC: what was missing.

Last week the triennial Forum On China Africa Cooperation (FOCAC) took place Beijing. The summit came in the midst of growing questions (particularly from the western media, academia and governments) about China’s ‘debt diplomacy’ and pushback from China that the west is simply trying to paint a growing and beneficial relationship in a bad light. Debt diplomacy, simply put is the perception that China is using debt as a strategic tool to get strategic assets or trap developing nations desperate for investment (such as African states) in debt laden subservience to China (you can read this if you are interested in further exploring this line of thought). The summit also showed the growing disparity between the West’s diminishing clout in Africa and the growing influence and importance of China. While Angela Merkel, Theresa May who visited Africa, and Donald Trump (who was visited by President Kenyatta) made optimistic statements about being committed to investing in Africa, China pledged cold hard cash, 60 billion dollars to be exact, as the proof of its commitment.

As you will likely notice about both these narratives (debt diplomacy and China vs the West in Africa) is that they are driven by foreign (Chinese or western) concerns and interests. Africa is (worryingly like in the days of the cold war) a battleground for the interests and ambitions of two increasingly competitive power blocs. There is little concern given to the needs and aspirations of African’s, nor how the actions of China or the West can tie into development policy. I blame this on Africa’s leaders who have failed to properly articulate the concerns of African’s in the broader China-Africa relationship, and to strategically think about how to integrate and utilise Chinese investment and geopolitical policy into our own development policy. Secondly, in response to the renewed optimism at the money pledged by China, the devil is in the detail and we got very little of it, beyond speeches and headlines. Third, FOCAC did nothing about the image problem, of both African’s in China and the Chinese in Africa. While our leaders may talk about each other in glowing terms, how their respective peoples view each other and interact will define the relationship going into the future. Fourth, Africa’s debt is a problem and both Africa and China, if they are indeed sincere, need to come up with viable policies to ensure that Africa does not find itself in a debt trap again.

The recent FOCAC summit was notable just as much for what was missing as for what was said. The China-Africa relationship will be a defining feature of Africa in the 21st century, whether its positive will need African policy makers and political leaders to be more thoughtful about that relationship and the policies that actualise it.

1.  Speak up Mr President

49 African heads of state made their way to Beijing for FOCAC, more than went to the last US-Africa summit or TICAD (Japans equivalent of FOCAC) symbolically this just how important China is to Africa. This is not surprising; China has invested and is committing to invest vast sums of money in Africa. In addition, China is offering cooperation and assistance in several areas such as security and combating poaching. While it is not surprising it is also worrying. Worrying because there is no clear articulation of the African position from individual African nations or from regional or continental bodies. What are African countries looking to get out of China, what are Africa’s nations visions of development, and what do we see China’s role in it being, and what we see as a mutually beneficial relationship. African presidents in various forms gave the usual platitudes about the importance of investment and infrastructure, the value of Chinese partnership and their commitment to economic development. There was no clear articulation of the African perspective and this is a problem, because it means that Chinese interests and concerns are driving the relationship and even if there is no malice involved, a one-sided relationship is still detrimental. Even if Africa is the junior partner, a sufficiently articulate, determined and smart junior partner can play a large role in defining a relationship. That is what was missing at FOCAC from Africa’s leaders, a clear conception of a balanced Africa-China relationship, not just an acceptance of a lopsided China-Africa dynamic. What that looks like is up for debate, (I gave my ideas In a previous post), but without a vision we are lost and ripe for exploitation.

2.  The devil is in the details

60 billion dollars. That, amount slightly larger than the GDP of Kenya, will be the figure that defines FOCAC. That China has pledged 60 billion dollars of aid, concessional loans, credit lines, debt relief and grants to the African continent over the next 3 years, and that there will be no vanity projects paid for by that money. Beyond the, 60 billion there were also commitments around security assistance, climate change resilience, anti-poaching among others. However, as with any great promise the devil is in the details.

On the 60 billion dollars what’s needed is specifics of what China considers a concessional loan, what the conditions are for debt relief, the conditions for access to a credit line and the interest payment terms and periods for that credit and what, in the eyes of Beijing, constitutes a vanity project.

On the issue of security assistance. Is it training? More Chinese bases on the continent? Is it domestic surveillance and tracking technology or internet suppression tools (which should scare any African concerned with human rights).

Such, questions abound on a number of areas announced and committed to at FOCAC, unfortunately there are few policy papers, bi-lateral and multi-lateral agreements available to the public or being debated in parliaments around the continent. The devil is in the details and the devil cannot be seen. We have no idea what African leaders have committed in Beijing, thus there is no way for African’s to fully assess and appreciate the relationship with China.

3.  The image problem – race, rhinos and chopsticks

How do the Chinese (the people not the government) view African’s? Judging by the depictions of African’s and black people in Chinese popular media such as the widely watched lunar new year’s show, or the art show which compared black people to animals. It is clear that race is an issue. It is an issue that doesn’t just manifest itself in China but in Africa as well. Around the continent there are numerous instances of African workers on Chinese projects being treated unfairly and even cruelly (as recently came to light in Kenya), building a perception among many African’s that the Chinese are exploitative and disrespectful, and at times this has boiled over into protest .

Stereotypes, unfortunate interactions and cultural misunderstanding are a rather prominent feature of China – Africa relations when you look beyond the high-level government get-togethers. Rather than avoid the issue, issue hasty apologies or outright deny or rationalise the issue of negative perceptions, racism, cultural misunderstandings etc. between ordinary Chinese and African’s, governments on both sides should be attempting to address it head on. This could involve to building contacts that go beyond high-level summits and infrastructure projects. Create spaces where people can interact (such as university exchange programs), where African’s and the Chinese can learn about each other, their diverse histories, cultures, their common experiences of western imperialism, and the different experiences of life across both Africa and China. FOCAC could be the start of a broader relationship between China and Africa that isn’t just about government to government bi-lateral agreements, but a broader relationship between two peoples which could go a long way to providing the basis for a long term mutually beneficial relationship that can go beyond sovereign debt.

4.  The debt dilemma

Despite the Chinese contention that the debt diplomacy narrative is a western fiction meant to paint a negative picture of China to audiences around the world. The truth is that it is a problem. African countries are finding themselves once again straining under increasing debt pressure, and Chinese debt plays a significant role in that (links/graphics). For African nations there is clearly a need to make Chinese financing more sustainable, and unless China is as utterly cynical as former secretary of state Rex Tillerson suggested, then they too have an interest in coming up with ways to make Chinese financing more sustainable for African nations.

This is not something that must or should come from China. The first realisation that must happen in the finance ministries of Africa, is that China is not a benevolent Santa Claus, handing out wads of cash. Debts must eventually be repaid. Second, is coming up with a viable, mutually acceptable framework for financing going forward. This could include a set a of criteria that projects must meet before getting funding or the Chinese Foreign Ministry and EXIM bank working with the African Development Bank, Afriexim bank or the regional development banks to help African governments assess and structure loans to ensure their sustainability. These are just two ideas, fundamentally the point is that China and Africa are not locked into a debt trap path, and with some innovative policy the debt problem could be defused.

Rebalancing China-Africa

I have recently taken my own advice and been reading up Chinese history to gain a greater understanding of a truly extraordinary people. In doing so it is hard not to draw parallels between the past and the present. Around 2,100 years ago Emperor Wu of the Han dynasty established many of the routes and relationships that would come to known as the silk road. He did so with a mixture of diplomacy and conquest. At its height, China under the Han dynasty was trading with the Rome and Parthia to the west and numerous vassal states paid homage to the emperor. Today its President Xi (emperor in all but name) is, through a canny mix of diplomacy, ‘conquest by debt’ and the almighty dollar building a new silk road (it is no coincidence that the Chinese government itself drew explicit comparisons between the ancient silk road and the belt and road initiative). And it was not hard to see the (number) of African presidents in Beijing for FOCAC there to pay homage to the emperor of the rejuvenated 21st century middle kingdom.

China’s ambitions may not be as imperial as its history, however by looking at what was missing from FOCAC, it is clear that not only is the narrative of China in Africa skewed, the reality of the relationship is lopsided as well. This is not due to evil machinations from China. Rather it is due to a failure from African leaders to try and define that relationship beyond the headline figure of how much money Beijing is pledging to invest in the continent. Rebalancing that relationship will require African leaders to develop a vision of what a mutually beneficial relationship between their countries and China looks like. Doing that will require African leaders to develop a coherent vision of what their development goals and aspirations are based on those of their people (something I have talked about at greater length in this post). Once there is a vision it can be articulated, negotiated and integrated into a mutual and more equal relationship between the Peoples Republic of China and the many republics of Africa.

I do not subscribe to the western view that what we are seeing is a cynical 21st century imperialism from China. Neither do I ascribe to the view that China is a completely benign partner for Africa and is not pursuing its own strategic interests. What I am is an African, who wants to see our continent develop a mutually beneficial relationship with a remarkable nation, that is a world power and will likely be a superpower. Doing so requires being realistic about Africa’s relatively weak bargaining position, but it also demands vision and strategic thinking, which will form the basis of policies that will ensure that Africa does not find itself holding the short end of the stick again. I sincerely hope that African leaders and policymakers are not thinking about what happened in Beijing last week, but rather are thinking about what could happen at the next FOCAC in 2021.

 

African Foreign Policy: looking East with a strategy.

Africa should not just wait to be exploited or influenced. No. We should be part of the conversation. We should raise ourselves to a level where there are certain terms we dictate in the conversation because we have a lot to offer – Paul Kagame, President of Rwanda

Over the past couple of decades, the world has been changing. The extraordinary economic development of nations in Asia has seen the emergence of new powers, most notably China, who are now challenging the global hegemony of the West. Crucially, for Africa this has meant the emergence of new partners in trade, and development aid, which the African countries has been keen to take advantage of. However, the headlong rush for loans projects and deals is putting the continent in the awkward position of ever-deepening debt and obligations, without significant regard for the implications of this for the future of the continent or the motivations of the Asian powers. Making Africa’s relationships with China and India more advantageous for itself will require African countries to adopt a much more strategic and thoughtful approach towards its relationship with these powers building a partnership that can not only further the continent’s development but also help carve out a greater role for Africa on the world stage.

Understanding the East

To construct a coherent and beneficial foreign policy, you first have to understand the motivations and history of the nations that you will be dealing with, and there are two key things that can help African policy makers understand the intentions and motivations of the rising Eastern powers to Africa.

The first is their history. Asia has its own history of colonialism (such as the British Raj in India) and western domination (e.g. the century of humiliation in China), this gives them a far better understanding of Africa’s own history as well as a much healthier respect for sovereignty and an aversion to neo-colonial interference in the domestic affairs of others. This has led to much more cooperative relationship with Africa so far. Unlike Western states China does not impose programs or projects in the name of development, rather African states go to them with requests and they consider them. This gives African states agency, a voice in development partnerships and this is vitally important as it gives Africa the ability to determine its fate.

The second key issue is their needs. China, India, and the other rising economies of the east need resources to fuel their economies, markets to sell their products to, transport routes to move their products along and diplomatic partners who will help them shift the global balance of power. Thus, they need Africa. And Africa needs the development funding, markets and the diplomatic support of the rising powers. Mutual needs that could form the basis of a mutually beneficial partnership.

Because understanding East is at the core of developing a coherent foreign policy, Africa will need policy makers, specifically foreign policy experts who understand the East. To that end African governments need to make the effort to educate and train a new cohort of Asia specialists. People who will learn the languages, history, politics, culture and customs of the rising powers in the East and provide the continents leaders and decision makers with the expertise to craft policy and negotiators who will understand their counterparts.

What should African countries be looking for?

The second aspect of constructing an effective foreign policy is defining your own strategic interests, which begs the question what are Africa’s strategic interests? I would put them in two broad categories. Development and gaining a greater voice for Africa on the global stage.

In terms of development, Africa’s needs are pretty clear-cut. The first is funding for expensive items such as infrastructure, which luckily China and others have proven willing to fund. In this regard, the onus is on African states to use the funding prudently, picking the right projects that will have a beneficial developmental return rather than vanity projects such as presidential palaces or Parliament buildings. In other words, African states must strategically choose the projects that will have the biggest bang for the borrowed buck.

The second need under Africa’s development interest is investment in its economies, where African states must think beyond resource extraction and seek to attract investment in areas of the economy that will further industrialisation and development such as industrial, and generic drug manufacturing. In short investment in areas that will create jobs and provide a base for future economic growth.

The third developmental need that Africa must fulfill is market access. Asian markets offer an unparalleled opportunity for African products, which we already export such as agricultural produce. Opening agricultural markets in Asia, would provide a significant boost for the agricultural sector which employs the most people on the continent.

The fianl area of strategic interest for Africa is gaining a greater role on the world stage. A globalised world faces global challenges, such as climate change, economic crises, insecurity and trade issues. All these affect Africa, sometimes disproportionately so, yet the continent has little diplomatic clout with which to help shape global responses to these issues. In a previous post I outlined how, by working together African states could take advantage of the West’s current state to change the status quo to become a more consequential player on the global stage. The rising powers of the East are also challenging Western hegemony, and they need international partners to do so. African states acting as a collective could be those partners, providing vital votes in the UN and other international fora and enacting policies that help further this agenda. In return for their support African states would require that key areas of interest to them such as changing the international trade and tax regime and mitigating against the consequences of climate change be placed on the global agenda with the backing of the Eastern powers.

Strategic partners and benefits from the east

The emergence of new powers from the East is changing the global landscape. Unlike much of the current commentary I do not see a new set of powers involved in a new scramble for Africa, I see opportunity. The opportunity to partner with them to the benefit of the continent. However, this will require strategic thinking from African policymakers rather than the opportunism we have seen when African presidents troop to Beijing or New Delhi to get funding for their pet projects.

Strategic thinking requires that African leaders and policy makers understand the interests of the emerging powers as well as their own, and use those to craft a foreign policy that would help create a mutually beneficial relationship between Africa and the rising East. A relationship that would help fund and drive development on the continent and finally give it a meaningful voice on the world stage, while providing the eastern powers with the resources, markets and diplomatic allies they need. With strategic thinking behind a smart foreign policy Africa need not be pawns of the West or the East.

African foreign policy: looking west together

It is clear that we must find an African solution to our problems, and that this can only be found in African unity. Divided we are weak; united, Africa could become one of the greatest forces for good in the world. – Kwame Nkrumah

Africa’s history with the West (when I refer to the west I am referring to Europe and the USA) is a tortured one. Slavery, colonialism, neo-colonialism, Cold War proxy conflicts all colour a set of relationships where the West still holds the upper hand. Whether it is trade, security, or healthcare policy, through aid, loans, the IMF, the World Bank, the WTO Africa still gets raw deal on the international stage.

The West however, is in a peculiar moment, both Europe and America are turning more insular. In America this is embodied by Trumps ‘America First’ policies which are alienating allies and narrowing American interests and engagement around the world. Sec. Tillerson’s recent trip to Africa was centred on security and criticism of China, but unlike previous administrations there was no Power Africa or PEPFAR (The President’s Emergency Plan For AIDS Relief) nor much talk about democracy or development, clearly the US agenda on the continent has narrowed. Europe is grappling with Brexit, populist right-wing politics, holding the EU together, a retreating America and a resurgent Russia. Their major engagement on the continent also centres around security with the addition of stemming the flow of migrants. Some in foreign policy circles see this shift inwards from the west as a problem for the continent. That without western money and support the war on terror will lag, aid and development funding will shrink and advocacy for democracy and human rights will be blunted. However, I see this as an opportunity, the perfect time for Africa to start playing a greater role on the world stage and pursuing its key interests. Africa can only do this if it works together, no one African country has the clout to be a player on the world stage but acting in concert as a continent Africa can make real changes to the terms on which the rest of the world deals with it and benefit people around the continent.

Too small to matter

Sub-Saharan Africa has a combined GDP of $US 1.5 trillion[1], which may seem large but is less than half of the US$ 3.9 trillion[2] spent by the US government last year. The largest economy in Africa is that of Nigeria with a GDP of US$ 404 billion[3], the most valuable company in the world is Apple with a stock valuation of over US$ 900 billion[4]. I cite these figures to illustrate a point, individually on the world stage African countries are economic rounding errors, Africa is largely talked in terms of natural resources or as a market with potential. The fundamental issue with this is that African economies operate in a world where the rules of the game are still dominated by Western nations and institutions. Trade rules are governed by the WTO, banking rules by western regulators, investment treaties are lopsided against developing nations, and development spending and their associated policies conform to priorities and ideals of the states that fund institutions like the World Bank. That African nations operate at a disadvantage on the world stage is not news, the key issue is what policies can African nations adopt to rectify this.

A united front: trade, tax and investment

While Africa is currently a bit more than just a drop in the ocean in terms of economic size, the continents GDP is projected to grow to approx. US$ 30 trillion[5] over the next 40 years and Africa will matter. However, the continent cannot afford to wait that long, the lopsided terms investment with which Africa deals with the west will continue to siphon off much-needed income and asset ownership off the continent, and trade rules continue to limit policy options (such as protecting infant industries) for African governments. Individually African nations have no hope of changing the status quo, as a continent with a smart policy approach at a time where western engagement in the world is limited by their own domestic focus, things can start to change.

Getting African countries to act together is a well-known headache. Africa has for over fifty years heard big talk from leaders on broad pan-African cooperation, numerous regional and trade blocs and the OAU and AU with ambitious agendas, though they never seem to get too far. In my view this is because African leaders have bitten off more than they are willing to chew with ambitious programs which have neither the political support, funding or organisational capacity to succeed. Rather than overambitious agendas, it may be more productive if African countries coalesce around a defined set of issues which are cross cutting and beneficial to all, making it easier to form and maintain a joint agenda. When it comes to a prospective joint African foreign policy to the west there are 3 issues which cut across all countries and which they could stand to benefit from; trade, taxes and investment treaties.

Trade, taxes and investment treaties.

Trade – unfair terms of trade faced by African countries, taxes – the inability to tax profits made in Africa and investment treaties which unfairly disadvantage African states in international arbitration and de-emphasize the link between FDI and development. These may seem narrowly economic and non-people or development focused agenda, however these issues have real impacts on people’s lives and livelihoods. Unfair terms of trade put African farmers and businesses at a disadvantage and restrict the policies that government can employ to support private sector growth. The ability of global corporations to avoid and transfer taxes off the continent means Africa loses out on more than US$ 50 billion[6] a year in tax revenue. If that were an African economy, it would be the 10th largest on the continent. Bilateral investment treaties which are an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state, protect the investments of foreign companies from what they see as unpredictable local courts and politics, forcing disputes to be settled in international arbitration centres which usually rule in favour of the investor over other concerns such as development, the environment or labour rights.

Why these three issues? First, these are three issues upon which the West is still the most influential, if we can force changes in western policy it can change the way others around the world and key institutions engage with Africa. Secondly these are three issues which can be connected to wider and more pressing concerns that the West has around security and migration. With better terms of trade and fairer investment, Africa has a much better chance at creating more and better jobs, governments will have more development policies open to them, and more revenue will allow governments to invest more in job creation, and anti-terrorism initiatives. Third, with tax evasion a priority even in the West making tax evasion in Africa part of the narrative is not an impossibility. Finally, this set of issues is narrow enough and beneficial enough to most African states that a coherent negotiating position can be built out of it.

So, what exactly is it that Africa should be aiming for with this new focused foreign policy. On trade the goal is twofold, first shielding African farmers from the hefty agricultural subsidies that western farmers get and allows them to dump cheap produce on the continent and second is loosening the rules that stop African nations from adopting industrial policies such as infant industry protection and product imitation that both the West and East Asia used. On taxes, the goal is to tax profits where they are made with the goal of ensuring that money made on the continent pays its fair share. On the investment treaties it would be impossible to change them whole sale rather the goal would be to insert clauses that make protection of the environment, labour and development into the body of the treaties rather than just as principles in the preamble.

To achieve these goals African countries would have to present a united front, combining their influence, negotiating teams and knowledge to match those of western nations. Crafting and deploying public narratives in Africa (that together they are fighting to free the continent from restrictions and better the lives of African citizens) and in the West (that doing this wont cost strained public finances anything and has the potential to stop the migrants and contain the security threat).

For too long African foreign policy has either been a tool for the West or the weak entreaties of states wielding no influence. The West is weaker and less united than it has since at least the 1930s, facing challenges externally while dealing with internally divisive politics and social cleavages. This is the perfect time for Africa to start changing the status quo, to start changing the terms on which the West sees and deals with Africa. To do so Africa must look West but do so together, around a common set of focused objectives that everyone can rally around and that would resonate with the wider public at home and abroad. Even if only half the agenda succeeds it would be a victory for the continent and the first step towards an African foreign policy agenda finally free from its western past.

 

 

 

[1] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=ZG

[2] https://www.cbo.gov/publication/52408

[3] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=NG

[4] https://uk.reuters.com/article/us-apple-stocks/apple-market-value-we-may-need-a-bigger-chart-idUKKBN1D20BQ

[5] http://blogs.lse.ac.uk/africaatlse/2013/12/05/african-wealth-will-double-every-decade-for-generations-to-come/

[6] https://www.theguardian.com/global-development/2015/feb/02/africa-tax-avoidance-money-laundering-illicit-financial-flows