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Wednesday 24 April 2019
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Maturing the African trade regime

One of the hindrances of trade liberalization is the deep cutting strongholds and privileges that former colonial masters enjoy in most African states, there are hidden interests in most trade agreements that are reserved to the first world countries.
We need to mature the current trade regime to invest effort and energy in improving Africa’s services sector and deepen inter-continental value chains.  Most minerals are foreign-owned and their cumulative revenues do not impact African states as much it impacts the first world countries with structured ownership.  African Governments are failing to strategically use mineral wealth to deepen its trade in goods and boom service exports, while subsequently global economies invest in more hybrid commercialized sectors.
A Nigerian proverb says that “A bird does not change its feathers because the weather is bad.” We have to learn from this proverb that if we catch a mineral “Dutch disease” Africa will be most vulnerable to fluctuations and slumps in commodity prices. Angola and Nigeria for example is an example of a monolithic trade partner because of its sole oil dependence. China remains a strong trading partner within its own Asian region. We will be surprised to learn that China’s key trading partner is not necessarily the world statistically but its own region. This is a positive and monumental vortex to stimulate growth in its continent. Actual statistics shows that 44% of China’s exports are to Asia, 21% to Europe and 30% to America, while only 3% exports heads to Africa. The exports from China to the world declined by 3% in 2015. If we copy this trend in Africa we will realize a continental superpower in trade with less influence and dependence on others.
Angola faced a 49% drop in Exports with China which is a huge setback for Angolan oil. This has also contributed to reduction of Africa’s exports to China which is 39% less in 2015.The big obsession with informal trade is a serious discourse for our continent because it slows industrialization and structure of Africa’s intra-continental trade climate because there is a total lack of research, monitoring, follow ups, and empowerment initiative, etc. The widespread informal trade hinders proper resource allocation and measuring resource needs such as the current energy deficit. Lebo Gunguluza from Dragons Den South Africa narrated a story that his father owned a “Spaza Shop or cuca shop” for many years and it remained small his entire life, compared to how billionaire Christo Wiese’s transformed ShopRite retail chain as a continental retail giant.  We need to pro-create state-funded and private-sector driven cooperation strategies to make our economies grow.
Africa must also import and make its own machinery. High-tech countries are clearly gearing towards machinery imports to champion and secure industrial dominance globally. That is why Europe’s key import in recent years is machinery to manufacture items. Industrialization require high tech resources and not just mineral dependence. When countries import machinery their goods imports become lower. We must buy or produce more machinery and we will import lesser goods. In 2015 less goods where imported from China, Europe reduced Chinese imports by USD 13.3 billion followed by other Asian countries at USD 12.4 billion, and America USD 9.3 billion in 2015 alone. Africa also reduced trade with Europe, America, Asia and the Middle East in 2015, can we use this diversion to strengthen our states?
The key former-colonial-power linked exports are as follows: France and Spain imports oil from Algeria, Italy imports oil from Libya, UK imports Gold and Platinum from South Africa, Portugal imports Algerian and Angolan Oil. Germany imports cars from South Africa but Namibia which is a former German colony does not benefit much from this car trade. Although Namibia imports cars from Germany. Others are Switzerland that imports South African Gold and Belgium importing diamonds from Botswana. Therefore, in order to shift from underdeveloped and infant status we must revolutionize our trade regime and restore a healthy trade environment with machinery injections and better empowerment initiatives, unlike the addiction of money-for-minerals which only widens the foreign reserve gap and trade gaps. Africa must grow, Africa is under pressure to Grow and be Independent, lets embrace this challenge now.
Rodney Dan-Ao !Hoaeb is a Trade and Investment Researcher Committed to seeing a radical economic shake-up in Namibia.




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