The problem with EU trade

RECENT media reports purport to show that Southern Africa is reaping immense benefits from trading with the European Union. This is so reportedly because of reduced tariffs either way.

There are examples: last year Botswana, Namibia, Lesotho, Swaziland and Mozambique all posted positive balances in trade with the European Union.

That may well be the case in the short-term. But it is completely unsustainable and is against not only the Southern African Development Community agenda, but the entire continent.

For a start, African countries are exporting to the European Union raw materials which have a very low net value on the market. These are commodities which are very susceptible to price swings on the international markets that leave most economies badly exposed. We have witnessed this with oil dependent economies such as Nigeria and Angola and what the fall in the price of crude has done to their budgets.

The same can be said of Zambia and its vulnerability to the fall in the price of copper.

On the other hand, the same countries in the region import from Europe and America finished products. These are more expensive per unit because of value addition. We are talking here of engineering, vehicular and chemicals products and mineral products such as jewellery.

Europeans and Americans convert the raw material products we export into finished products which have a wider market and greater value.

That is not the end. Africans are exporting not only raw materials but jobs as well.

The continent has one of the youngest populations in the world. Most of its graduates do not  have entrepreneurial skills to launch themselves into the world. They roam the streets without jobs or skills. These are the people we deprive of jobs when countries export raw materials.

The point of this is that despite the appearance of positive balances in trade between the European Union and countries in Southern Africa as reported in The Southern Times two weeks ago, Africa cannot escape the painful road to industrialise its economies. That is the only way to catch up in terms of value addition. The continent cannot continue to be a source of raw materials that it was during colonial rule.

It is time people began to interrogate more critically the illusion of an “Africa rising” on the basis of gluttonous consumption of goods we do not produce but are imported from the developed world. Africa is viewed in the West and East as a huge market for their goods. This has fuelled the current second scramble for spheres of influence or client states in Africa by the West and China to ring-fence markets and raw materials.

That cannot be good news for the continent.

But there is an even bigger risk in the perceived benefits of Southern African trading with the European Union. This all goes against the spirit of integration of the continent and the promotion of trade among African nations. Yet that is at the heart of the African Union. African nations should increase trade among themselves before they can look to the outside world.

Anything short of that keeps Africa open to manipulation and a dumping ground for cheap and dangerous imports.

Then of course there are the divisive tactics of developed nations trying to win trade deals with individual African states.

The risk here is in creating friction among Africans themselves as they try to outdo each other to win the favour of Europeans.

The countries are not only further divided; they are pushed further away from the idea of integration.

In trying to clinch deals ahead of fellow competitors, they are forced to mark down the value of their products, raw materials, natural resources and other commodities.

That is why the whole notion of foreign investment has failed to lift Africa out of poverty. We tend to surrender too much in trying to impress European and American suitors.

Africa becomes the ultimate loser.

That is why Economic Partnership Agreements with Europe or America are never going to benefit Africa.

November 2016
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