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It’s cold out here: UK’s predicament a handy lesson in implementing AfCFTA by Andrew Mold

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In the past few weeks, the United Kingdom’s economic and political woes have dominated a lot of space in the media. In just four months, the country has had four finance ministers, three home secretaries, and three prime ministers. Although apparently unrelated, this whole sorry episode does have a lot of lessons for Africa and the African Continental Free Trade Area.

To understand this, it is necessary to turn the clock back over three decades. When the European Union agreed to its Single Market Programme in 1986, a series of studies were commissioned under the collective name of the Cecchini Report. These studies basically calculated the “Cost of Non-Europe” — the counterfactual for Europe of not choosing to integrate further through the Single Market Programme. It was a good way of seeing and assessing things, and the way we should regard the AfCFTA too — what would happen if no action were taken?

Now, in the United Kingdom, we have an even more valuable case study — the case of a major economy that chooses, of its own volition, to leave an existing and well-established regional bloc. When the Brexit referendum took place in 2016, many people in Europe were fearful other EU countries would follow the UK’s example.

Certainly, opinion polls in a few EU member states were becoming increasingly unfavourable to the EU. What people didn’t count on — particularly the supporters of Brexit — was, first, the tremendously difficult job of extricating oneself from a longstanding agreement like the EU and, second, what a muddle British politicians were going to make of the process.

No one asking for the door

Now, if you ask anyone in the rest of Europe about leaving the EU (including self-professed Europhobes like Marine Le Pen), no one is asking for the door. So, paradoxically, Brexit has given new life to the EU project. Not that Europe doesn’t have its own very serious challenges – particularly now with the conflict in Ukraine and a looming energy crisis.

Yet the UK’s recent predicament highlights the enormous costs — even for large economies — of either abandoning or not implementing a regional agreement. If you stay on the sidelines, your economy will get trampled.

UK trade has declined significantly, with exports declining by 25 percent in 2021, compared with 2019, and both investment and growth are well below its trend rate prior to Brexit. Underlying the recent political problems is an especially difficult economic situation, and Brexit has reduced the options regarding the way to turn things around.

Beyond rolling over existing trade deals from which the UK benefited as part of the EU, new trade deals with other countries have not materialised — most pointedly with the United States.

The other main lesson regards sovereignty and regional integration. In a recent Twitter space discussion on the AfCFTA, somebody asked whether African authorities were not concerned about a “loss of sovereignty”. That fear is what underpinned Brexit too. Because of media disinformation, people became obsessed that Europe meant a loss of power for the UK government to decide what was best for its citizens.

‘Curved bananas’

But most of that loss of sovereignty is trivial. Early in his career in the 1990s, when he was a journalist, former UK Prime Minister Boris Johnson peddled a story about how Brussels wouldn’t allow “curved bananas” to be sold. It was largely a made-up story, but it did have a notable impact on public opinion in the UK that the EU was intruding on people’s daily lives which were unnecessary and unwarranted.

Yet this story contains a very important truth. There is a dimension to regional integration that is very boring: just agreeing with a common set of standards, rules, and regulations which facilitate business and trade between signatories.

It almost doesn’t matter what those standards are. The important thing is all member states of the regional bloc agree to abide by them. So the loss of sovereignty is normally really banal, compared to the large benefits from belonging to and negotiating as a regional bloc.

Set its own standards

In this sense, a little national sovereignty is sacrificed in exchange for much larger gains in collective sovereignty. Basically, Africa either sets its own standards, rules, and regulations for its own benefit, or they get set by larger, more powerful trading partners like the EU and the US.

This is the crux of the dilemma now for the UK. The extreme Brexiteers have forced a hard Brexit on the UK, and the result is that the UK’s “regulatory freedom” has come at the cost of freezing the UK out of the third-largest market in the world.

It is no small irony that the only part of the UK economy that remains in the European Single Market – Northern Ireland – is currently posting the highest rates of economic growth. This is essentially due to the fact that businesses in Northern Ireland can still do business both with the Republic of Ireland and the rest of the European Union unhindered by the paperwork and border controls that are impacting the UK.

All this should drive home to African policymakers the importance of not staying on the sidelines and implementing the AfCFTA agreement as expeditiously as possible. The costs of not doing so could be much higher than they expect.

Andrew Mold is Chief, of Regional Integration and AfCFTA Cluster, Regional Office for Eastern Africa, United Nations Economic Commission for Africa, Kigali, Rwanda

Strictly Personal

African Union must ensure Sudan civilians are protected, By Joyce Banda

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The war in Sudan presents the world – and Africa – with a test. This far, we have scored miserably. The international community has failed the people of Sudan. Collectively, we have chosen to systematically ignore and sacrifice the Sudanese people’s suffering in preference of our interests.

For 18 months, the Rapid Support Forces (RSF) and the Sudanese Armed Forces (SAF) have fought a pitiless conflict that has killed thousands, displaced millions, and triggered the world’s largest hunger crisis.

Crimes against humanity and war crimes have been committed by both parties to the conflict. Sexual and gender-based violence are at epidemic levels. The RSF has perpetrated a wave of ethnically motivated violence in Darfur. Starvation has been used as a weapon of war: The SAF has carried out airstrikes that deliberately target civilians and civilian infrastructure.

The plight of children is of deep concern to me. They have been killed, maimed, and forced to serve as soldiers. More than 14 million have been displaced, the world’s largest displacement of children. Millions more haven’t gone to school since the fighting broke out. Girls are at the highest risk of child marriage and gender-based violence. We are looking at a child protection crisis of frightful proportions.

In many of my international engagements, the women of Sudan have raised their concerns about the world’s non-commitment to bring about peace in Sudan.

I write with a simple message. We cannot delay any longer. The suffering cannot be allowed to continue or to become a secondary concern to the frustrating search for a political solution between the belligerents. The international community must come together and adopt urgent measures to protect Sudanese civilians.

Last month, the UN’s Independent International Fact-Finding Mission for Sudan released a report that described a horrific range of crimes committed by the RSF and SAF. The report makes for chilling reading. The UN investigators concluded that the gravity of its findings required a concerted plan to safeguard the lives of Sudanese people in the line of fire.

“Given the failure of the warring parties to spare civilians, an independent and impartial force with a mandate to safeguard civilians must be deployed without delay,” said Mohamed Chande Othman, chair of the Fact-Finding Mission and former Chief Justice of Tanzania.

We must respond to this call with urgency.

A special responsibility resides with the African Union, in particular the AU Commission, which received a request on June 21 from the AU Peace and Security Council (PSC) “to investigate and make recommendations to the PSC on practical measures to be undertaken for the protection of civilians.”

So far, we have heard nothing.

The time is now for the AU to act boldly and swiftly, even in the absence of a ceasefire, to advance robust civilian protection measures.

A physical protective presence, even one with a limited mandate, must be proposed, in line with the recommendation of the UN Fact-Finding Mission. The AU should press the parties to the conflict, particularly the Sudanese government, to invite the protective mission to enter Sudan to do its work free from interference.

The AU can recommend that the protection mission adopt targeted strategies operations, demarcated safe zones, and humanitarian corridors – to protect civilians and ensure safe, unhindered, and adequate access to humanitarian aid.

The protection mission mandate can include data gathering, monitoring, and early warning systems. It can play a role in ending the telecom blackout that has been a troubling feature of the war. The mission can support community-led efforts for self-protection, working closely with Sudan’s inspiring mutual-aid network of Emergency Response Rooms. It can engage and support localised peace efforts, contributing to community-level ceasefire and peacebuilding work.

I do not pretend that establishing a protection mission in Sudan will be easy. But the scale of Sudan’s crisis, the intransigence of the warring parties, and the clear and consistent demands from Sudanese civilians and civil society demand that we take action.

Many will be dismissive. It is true that numerous bureaucratic, institutional, and political obstacles stand in our way. But we must not be deterred.

Will we stand by as Sudan suffers mass atrocities, disease, famine, rape, mass displacement, and societal disintegration? Will we watch as the crisis in Africa’s third largest country spills outside of its borders and sets back the entire region?

Africa and the world have been given a test. I pray that we pass it.

Dr Joyce Banda is a former president of the Republic of Malawi.

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Strictly Personal

Economic policies must be local, By Lekan Sote

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With 32.70 per cent headline inflation, 40.20 per cent food inflation, and bread inflation of 45 per cent, all caused by the removal of subsidies from petrol and electricity, and the government’s policy of allowing market forces to determine the value of the Naira, Nigerians are reeling under high cost of living.

 

The observation by Obi Alfred Achebe of Onitsha, that “The wellbeing of the people has declined more steeply in the last months,” leads to doubts about the “Renewed Hope” slogan of President Bola Tinubu’s government that is perceived as extravagant, whilst asking Nigerians to be patient and wait for its unfolding economic policies to mature.

 

It doesn’t look as if it will abate soon, Adebayo Adelabu, Minister of Power, who seems ready to hike electricity tariffs again, recently argued that the N225 per kilowatt hour of electricity that Discos charge Band A premium customers is lower than the N750 and N950 respective costs of running privately-owned petrol or diesel generators.

 

While noting that 129 million, or 56 per cent of Nigerians are trapped below poverty line, the World Bank revealed that real per capita Gross Domestic Product, which disregards the service industry component, is yet to recover from the pre-2016 economic depression under the government of Muhammadu Buhari.

 

This has led many to begin to doubt the government’s World Bank and International Monetary Fund-inspired neo-liberal economic policies that seem to have further impoverished poor Nigerians, practically eliminated the middle class, and is making the rich also cry.

 

Yet the World Bank, which is not letting up, recently pontificated that “previous domestic policy missteps (based mainly on its own advice) are compounding the shocks of rising inflation (that is) eroding the purchasing power of the people… and this policy is pushing many (citizens) into poverty.”

 

It zeroes in by asking Nigeria to stay the gruelling course, which Ibukun Omole thinks “is nothing more than a manifesto for exploitation… a blatant attempt to continue the cycle of exploitation… a tool of imperialism, promoting the same policies that have kept Nigeria under the thumb of… neocolonial agenda for decades.”

 

When Indermilt Gill, Senior Vice President of the World Bank, told the 30th Summit of Nigeria’s Economic Summit Group, in Abuja, Federal Capital Territory, that Nigerians may have to endure the harrowing economic conditions for another 10 to 15 years, attendees murmured but didn’t walk out on him because of Nigerian’s tradition of politeness to guests.

 

Governor Bala Muhammed of Bauchi State, who agrees with the World Bank that “purchasing power has dwindled,” also thinks that “these (World Bank-inspired) policies, usually handed down by arm-twisting compulsions, are not working.”

 

What seems to be trending now is the suggestion that because these neo-liberal policies do not seem to be helping the economy and the citizens of Nigeria, at least in the short term, it would be better to think up homegrown solutions to Nigeria’s economic problems.

 

Late Speaker of America’s House of Representatives, Tip O’Neill, is quoted to have quipped that, at the end of the day, “All politics is local.” He may have come to that conclusion after observing that it takes the locals in a community to know what is best for them.

 

This aphorism must apply to economics, a field of study that is derived from sociology, which is the study of the way of life of a people. Proof of this is in “The Wealth of Nations,” written by Adam Smith, who is regarded as the first scholar of economics.

 

In his Introduction to the Penguin Classics edition of “The Wealth of Nations,” Andrew Skinner observes: “Adam Smith was undoubtedly the remarkable product of a remarkable age and one whose writing clearly reflects the intellectual, social and economic conditions of the period.”

 

To drive the point home that Smith’s book was written for his people and his time, Skinner reiterated that “the general ‘philosophy,’ which it contained was so thoroughly in accord with the aspirations and circumstances of his age.”

 

In a Freudian slip of the Darwinist realities of the Industrial Revolution that birthed individualism, capitalism, and global trade, Smith averred that “How selfish soever man may be supposed, there are evidently some principle in his nature which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasures of seeing it.”

 

And, he let it slip that capitalism is for the advantage of Europe when he confessed that “Europe, by not leaving things at perfect liberty (the so-called Invisible Hand), occasions… inequities,” by “restraining the competition in some trades to a smaller number… increasing it in others beyond what it naturally would be… and… free circulation of labour (or expertise) and stocks (goods) both from employment to employment and from place to place!”

 

Policymakers, who think Bretton Woods institutions will advise policies to replicate the success of the Euro-American economy in Nigeria must be daydreaming. After advising elimination of subsidy, as global best practices that reflect market forces, they failed to suggest that Nigeria’s N70,000 monthly minimum wage, neither reflects the realities of the global marketplace, nor Section 16(2,d) of Nigeria’s Constitution, which suggests a “reasonable national minimum living wage… for all citizens.”

 

After Alex Sienart, World Bank’s lead economist in Nigeria, pointed out that the wage increase will directly affect the lives of only 4.1 per cent of Nigerians, he suggested that Nigeria needed more productive jobs to reduce poverty. But he neither explained “productive jobs,” nor suggested how to create them.

 

In admitting past wrong economic policies that the World Bank recommended for Nigeria, its former President, Jim Yong Kim, confessed, “I think the World Bank has to take responsibility for having emphasized hard infrastructure –roads, rails, energy– for a long time…

 

“There is still the bias that says we will invest in hard infrastructure, and then we grow rich, (and) we will have enough money to invest in health and education. (But) we are now saying that’s the wrong approach, that you’ve got to start investing in your people.”

 

Kim is a Korean-American physician, health expert, and anthropologist, whose Harvard University and Brown University Ivy League background shapes his decidedly “Pax American” worldview of America’s dominance of the world economy.

 

Despite his do-gooder posturing, his diagnoses and prescriptions still did not quite address the root cause of Nigeria’s economic woes, nor provide any solutions. They were mere diversions that stopped short of the way forward.

 

He should have advocated for the massive accumulation of capital and investments in the local production of manufacturing machinery, industrial spare parts, and raw materials—items that are currently imported, weakening Nigeria’s trade balance.

 

He should have pushed for the completion of Ajaokuta Steel Mill and helped to line up investors with managerial, technical, and financial competence to salvage Nigeria’s electricity sector, whose poor run has been described by Dr. Akinwumi Adesina, President of Africa Development Bank, as “killing Nigerian industries.”

 

He could have assembled consultants to accelerate the conversion of Nigeria’s commuter vehicles to Compressed Natural Gas and get banks of the metropolitan economies, that hold Nigeria’s foreign reserves in their vaults, to invest their low-interest funds into Nigeria’s agriculture— so that Nigeria will no longer import foodstuffs.

 

Nigerians need homegrown solutions to their economic woes.

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