Open the Gates for African Trade

By Versi, Anver | African Business, July 2003 | Go to article overview
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Open the Gates for African Trade

Versi, Anver, African Business

The good news, according to the African Development Bank's annual continental report, is that Africa's growth will increase from the low 2.6% in 2002 to a modest 3.6% this year; the bad news is the number of 'ifs' and 'buts' attached to this forecast.

African economies will grow only if there is sustained growth in the developed world, particularly the 30 members of the Organisation for Economic Go-operation and Development (OECD). Only if there is growth in this region will Africa's commodities fetch a reasonable price on the international market.

Africa's growth is also contingent on lower oil prices otherwise any gains made through commodity exports will be negated by higher fuel prices. The growth forecast is also based on the hope -- rather than the expectation -- that the drought now causing havoc in Southern Africa and The Horn will ease off.

These are a lot of contingencies on which to base an optimistic forecast. At any rate, a modest growth will not even begin to solve Africa's economic problems. The bare minimum growth requirement is around 7%, sustained over at least a decade. Then, and only then will we begin to see a real dent in Africa's poverty.

Let's not bury our heads in the sand and pretend that Africa's poverty will simply go away if we give it long enough to do so. Look at the figures. Africa's annual GDP has been variously estimated at between $520bn and $540bn. Of this, north Africa contributes $200bn; South Africa alone chips in with $120bn and the all the rest of Africa can only muster between $200 - 220bn.

Spain alone, with a population of 41m, has roughly the same GDP ($540bn). Africa's population is 784m. Divide $540bn by 41m and see what per capita income figure you get and do the same for Africa and examine the result. This is the difference between being a middle-income developed country (Spain can by no means be considered wealthy) and being poor.

Why is this so? What does Spain have that we don't? Or let's ask the question the other way around: what do we have that Spain doesn't? Plenty. We have the largest store of natural resources, including oil, in the world; Spain has no natural resources. We have huge populations; Spain has a middling population; we have massive fishing grounds; Spain has over-fished its own waters; we have game-parks the size of Spain; Spain has only a coastline with which to attract tourists. The list can go on and on.

In terms of tradeable resources, Africa is a giant compared to Spain.

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Open the Gates for African Trade


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