Africa’s trade prospects by WTO chief Lamy

This is Africa/allAfrica

History has cast a long shadow over Africa’s trade performance, argues Pascal Lamy, director-general of the World Trade Organisation. Colonial patterns of trade prevented colonised countries benefiting from their comparative advantage in low cost labour. Africa’s trade profile has not changed much over the last half century – it remains dominated by fuel and minerals, and mostly flows along North-South channels rather than regionally.

Neither implies chronic poor performance. Brazil’s trade is also commodity-driven, and the rise of the Brics suggests the predominance of North-South trade is not likely to be the prevailing model going forward. What matters for Africa’s share of global trade are the choices of today’s political and business elites. Mr Lamy claims political energy is key.

“Where there is more energy, there are more results,” he argues, describing the East African Community as “ahead of the curve” with leaders who – while not agreeing on all trade issues – share a common conviction that deepening trade is a regional priority. “If I take central Africa and ECOWAS (The Economic Community of West African States), for the moment there is less political energy.”

Fixing the leaks

Trade liberalisation is a political hot potato, as domestic businesses fear being undercut by more efficient foreign producers. Mr Lamy believes businesses in Africa tend not to lobby for trade openness with the same intensity as those in Europe and the US, as well as Asia and Latin America. The reason, he argues, is that entrepreneurship is in a “pre-emergence” phase in Africa, and people running businesses have enormous day to day challenges, meaning they “have other fish to fry” rather than shaping policy or producing research advocacy in favour of trade changes. However, he points to the existence of a new generation of business leaders with a totally different mindset to the older generation of rent-seekers. While younger business people do appear more economically liberal than their predecessors, the claim that business communities in the West are pro-openness could be contested, of course. The agricultural lobbies in the EU and US, for example, are among the most powerful pro-protectionist blocs anywhere.  Read more…

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