Africa cannot afford to be all talk and no action on integration
Power supply and cannabis are two examples where policymakers fail to face practical realities
According to Nasdaq, the US financial services group that operates the Nasdaq stock market, Africa is home to the world’s six fastest-growing economies of 2020 (South Sudan, Egypt, Benin, Rwanda, Ethiopia and Tanzania). However, the World Bank expects the continent’s economy to shrink 3.3% in 2020, a function of lowered domestic consumption and investment.
The drop in investment is a particular concern as it could push up to 40-million people into extreme poverty and nullify gains made over the last five years. Admittedly, trade and inward investment were limited due to Covid-19-related restriction and containment issues.
But relatively speaking Africa was one of the continents least affected by the Covid-19 scourge (second only to Oceania). As a result, the continent should be on its way to a significant post-Covid-19 recovery. And the pandemic has left the continent with an opportunity to revisit how its economy is structured, especially with regard to inclusivity.
Africans are tired of hearing the same thing said year after year with nothing actually being done. In 2019 it was announced that Africa aims to create the world’s largest trading bloc with a market of 1.3-billion consumers and combined GDP of $3.3-trillion. The developed policy (African Continental Free Trade Area Agreement) makes perfect sense, and according to the African Development Bank could add at least 4.5% (as a start) to the continent’s GDP through enhanced trade.
However, as things stand what many African countries produce is not necessarily what other African countries want. Efforts will have to be made to start new industries or reconfigure value chains to include what other African countries are supplying as key inputs, and so foster trade for a more inclusive and progressive continental economy. Africa cannot afford to be all talk and no action — alignment between policy and practice needs to be prioritised.
Building an inclusive economy requires of policymakers and citizens to face reality. For instance, power supply needs to be tackled as a matter of urgency through policies and strategies that lead to real and scalable solutions. Why is Africa not generating most of its energy from solar, for instance? Why would African countries be talking about implementing a nuclear energy programme when there is no need? Who is endorsing such initiatives when reality points us in another direction? If an inclusive continental solar policy were to be implemented it more of the populace could benefit from greater energy access and affordability.
It would also be easier to implement through technology localisation and backwards and forwards integration. Lastly, such a policy would decentralise the energy value chain, which would contribute to job creation and sustainability across the continent through the use of cleaner energy.
In Southern Africa, legalisation of cannabis has taken centre stage lately, with countries such as Lesotho, Swaziland, Zambia, SA and Zimbabwe and Lesotho legalising the cultivation and export of cannabis for medical purposes. Some have done so on the premise that cannabis is the new “green gold” that will enable their countries to increase export earnings and regain some of the revenue lost through declining export sales of agricultural commodities such as tobacco.
But reality tells another story. Most of the cannabis grown on the continent is consumed recreationally, with close to 90% traded on the illicit market, the main beneficiaries being the middlemen (based on risk). Cultivators and processors of the product derive the least value from the industry.
In addition, it remains extremely difficult to obtain a licence to operate, with copious amounts of red tape and policy misunderstanding across the departments that have the authority to issue them, and exorbitant fees of up to $35,000 in some countries. This has the effect of excluding most of the population of African countries who might otherwise have benefited from growing cannabis for export — existing farmers.
Surely a better approach should be considered that understands growers’ challenges by converting them to legal growers of cannabis? In addition, lessons can be learnt from countries such as the Netherlands on how to legalise recreational cannabis in a manner that benefits both state and citizen, cordoning off the illegal cannabis industry and its associated risks.
Africa is a continent with significant potential based on its resources and populace. Countries such as Nigeria are transforming themselves based on internal wants and needs. For example, expansion of the country’s agricultural output has resulted in its investment in producing its own fertiliser to reduce imports (and foreign exchange demand).
In addition, localising production of fertiliser is aimed at supplying it locally at a more affordable price, an aspect that stands to benefit small farmers, whose yields are often reduced by the unaffordability of imported fertiliser (even after the government has subsidised prices in an effort to increase access).
Nigeria is being capacitated with exports in mind, and as neighbouring Ghana also expands its agricultural sector, trade between the two is growing, with Nigeria supplying increasing volumes of fertiliser. Lessons learnt through such initiatives should be spread across the entire continent to enable Africa to build a more productive, progressive and inclusive continental economy.
• Maposa is founder of market research, strategy, monitoring & evaluation consultancy Birguid.
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