Free trade, self-reliance vital for Africa’s economic recovery in the post-Covid19 era

Will Africa’s political parties and personalities promote peace and economic recovery in 2021, or will they predispose the continent’s fragile economies to increased dependency on debt capital from the West, and China.

While China, the second largest global economy, may have added coronavirus to its export list in 2020, its infrastructure lending to sub-Sahara Africa is likely to be moderated in 2021-2022, amid rising debt sustainability concerns. 18 or more African governments are currently renegotiating their Chinese loans. The United States of America, the world’s leading economy by GDP, will begin 2021 under a new management. Will the Biden-Harris administration usher in a new era of Africa-US relations? Possibly. Optimism for an improved policy disposition towards Africa exists on both sides of the Atlantic.

Africa’s policy, trade and investment optimism however needs to be measured. The continent needs to be less emotional, more introspective and more strategic about its expectations from a Biden-Harris presidency.

This year’s Thanksgiving, transition and inauguration season in the USA coincides with campaigning, parliamentary and presidential elections across Africa: following Cote d’Ivoire’s October elections, Egypt and Burkina Faso held polls in November 2020; Ghana, Liberia, Central African Republic and Niger will hold polls in December; Ugandans will vote in January 2021 while Somalia and Chad are expected to hold parliamentary elections much later in 2021. The peaceful outcomes of these contests will do more for Africa’s trade, economic and investment landscape than any offshore loan.

One of the paradoxes of this year must be the fact that 2020 was the year many African governments did a better job of managing the public health crisis than their social, economic and political struggles. The tacky handling of Nigeria’s #EndSars protests against police brutality, the fading financial health of South Africa’s state-owned enterprises and ethno-political clashes in Cameroon, Cote D’Ivoire, Equatorial Guinea, Tanzania and Uganda are some of the ripple effects of the caustic politics and opaque governance across the sub-Sahara. Ethiopia, once the poster child for Africa’s investment case, is now in conflict with itself.

Africa is likely to recover slowly from these political skirmishes which have occurred without even the cautionary, diplomatic notes or press statements from Washington. Biden and Harris already have an overflowing in-box awaiting them and can afford to be indifferent to Africa’s issues, at least for a little while. After Donald Trump’s chaotic, celebrity-style Make-America-Great-Again leadership – which effectively alienated the USA internationally, the world may get some ‘humble leadership’ from a Biden-Harris team.

But America has rarely been known for modest behavior. The historic duo will be expected to rebuild confidence in America’s economic policies and political institutions, commence aggressive measures to contain Covid-19, begin to restore American jobs and livelihoods affected by the public health crisis, accelerate the trek to racial harmony and social equity, and restore America’s hegemonic and ‘soft power’ position by effectively mitigating the trade, geopolitical and military antics of intransigent global actors like China, North Korea and Russia.

While President-elect Biden is unlikely to continue President Trump’s unconcealed disregard for Africa (Trump infamously referred to El Salvador, Haiti and Africa as “shithole countries” in 2018), signals from the Biden camp reveal a more expansive foreign policy net. These include breathing life into the trans-Atlantic alliance with Europe, rebuilding the military alliance with NATO, fostering multilateralism (which Trump abandoned), promoting human rights, and being tough on dictators and undemocratic regimes, amongst other priorities.

Where is Africa in this foreign policy mix?

Our premise is that in 2021, Africa can only justifiably be a third- or fourth-level foreign policy priority for the US and other more economically developed countries (MEDCs). This may not necessarily be a bad idea. As President Trump once quipped, “it is what it is.”

The pragmatic view Africa’s policymakers, technocrats, diplomats and development finance experts need to have is that North America, China, Europe, Japan, and other MEDCs will be preoccupied with Covid-19 recovery efforts – at least in the medium-to-long-term.

With northern and a few southern economies embarking on Lockdown 2.0 in the midst of the good news about plausible vaccines and treatments for the virus, the WHO and African Union will need to ensure that Africa is not excluded from the global vaccine distribution plan (if such a plan actually exists).

The IMF’s economic outlook for 2020-2021 is somber: while the global economy is expected to contract by -3% in 2020, economic activity in 2021 is likely to remain subdued until health risks abate. On the bright side, the pandemic has fast-tracked digitalization of services and catalyzed a new breed of entrepreneurs across a range of industries. Africa’s Healthcare workers, farmers and agriprenuers were busy throughout the lockdown, highlighting the case for innovative solutions and increased domestic investment in these critical sectors.

LifeBank, an unfashionable but vital business idea which gave birth to a female-led startup now looks forward to saving millions of lives across sub-Sahara Africa in the foreseeable future. Founded in 2015, LifeBank develops smarter ways to deliver medical supplies including blood and oxygen to hospitals. Operating at the intersection of healthcare, technology and logistics, the firm launched in Kenya last September and has Ghana, Rwanda in its sights.

Ivorian fashion startup Afrikrea could hardly keep up with online orders during the lockdown months. Its 2019-2020 turnover has already grown by 53%. In February 2020, Afrikrea secured a $1 million funding round to grow its team and expand its online mobile marketplace.

Gail Lingerie, an online venture founded in 2019 by Tuale and Abigail Mene, a Lagos-based couple, specializes in fashionable night wear and garments for plus size African ladies. Relying on word of mouth, WhatsApp and Instagram to promote sales and manage customer feedback, Gail Lingerie’s sales and revenues tripled during the first half of 2020, surpassing total revenues for 2019. The couple are currently automating workflow processes and scoping potential partners in Accra, Cape Town, Dakar, Lusaka and Nairobi.

Agile and technology-savvy companies like LifeBank, Afrikrea, Gail Lingerie, Co-creation Hub (where LifeBank was incubated), a Lagos and Nairobi based tech hub, and Cellulant, a multinational digital payments company founded in 2004, represent the face and future of ecommerce in Africa. They solve real problems and their self-reliant, home-grown, alliance-friendly operating models seem poised for the long haul.

,

As the cumulative loss to the global economy from the public health crisis across 2020 and 2021 is projected to be over $12 trillion, Africa can only confidently rely on the principle of self-reliance

to improve her condition in the shifting sands of the global post-pandemic socio-economic landscape. This should be the perspective for Africa’s policy makers as they craft their regional integration plans in the post-Covid19 era.

Given that most of the valuable global trade happens between MEDCs who also generally import low-value goods from less economically developed countries (LEDCs), Africa’s post-Covid-19 recovery efforts need to be concentrated on the following areas: revving up intra-Africa trade; re-aligning the activities of transnational companies in Africa towards pan-African value chains; and accelerating national and regional implementation of the African Development Bank’s “High 5” investment priorities: , power, agriculture, industrialization, regional integration and quality of life issues like education, healthcare, access to water, labour market opportunities and other ‘soft infrastructure’ areas.

Regional free trade arrangements represent a healthy and constructive way for LEDCS to hasten their recovery from the pandemic. Expected to take off in January 2021, the African Continental Free Trade Area (AfCFTA) will arguably be the world’s second largest trading bloc after the 15-nation Indo-Pacific Regional Comprehensive Economic Partnership which came on stream in mid-November 2020. According to the United Nations Economic Commission for Africa, AfCFTA will boost intra-Africa trade by over 50%, cover 1.2 billion people and create an integrated market with a total GDP of over $3 trillion.

Beyond the lofty projections, the Accra-based AfCFTA Secretariat urgently needs to present a wholesome policy and strategic blueprint that will give life to the spirit of the AfCFTA Agreements. In the long term, effective regionalism often produces regionalization and market integration. African startups, local and multinationals companies will need to operationalize the continental free trade area, leveraging their local knowledge and mega-resources to assist in the building of national and regional value chains that attract global manufacturing capacity to Africa. After over 200 years of resource extraction and sub-manufacturing in Africa, transnational firms now need to deepen their African integration and investment plans. 2050 is around the corner. The “African opportunity” space will have 2.4 billion people by then.

The energy, creativity and business savvy of Africa’s entrepreneurial population, and youth, must be a global force for good in the 4th and 5th industrial eras. Strategic alliances and self-reliance in policy, trade and investment frameworks must be Africa’s new normal. While expertise, intelligence and experience can be local or global, the post-Covid19 era may herald the end of international benevolence towards Africa.