For too long, the West’s policy toward Africa could be summed up in two words: foreign aid. Somehow, temporary funds transfers – many of which never reach their recipient country and end up in the pockets of well-connected Western professionals – would solve structural development issues. MIT economist Daron Acemoglu once derided some foreign aid plans as “get-rich-quick schemes.”
Those developmental policies, like Ponzi schemes, hurt the would-be beneficiary.
“Even as the level of foreign aid into Africa soared through the 1980s and 1990s, African economies were doing worse than ever, as … a paper by economist Bill Easterly of New York University, shows,” the World Economic Forum summarized. “The countries that receive less aid … tend to have higher growth — while those that receive more aid … have lower growth.”
If such policies harm Africans, albeit unintentionally, what would be a better alternative?
Nobel Prize winning economist Angus Deaton “argues that we should focus on doing less harm in the developing world, like … ensuring that developing countries get a fair deal in trade agreements.”
Anoba – who hails from Lagos, Nigeria – argues that his continent will benefit from free trade and Brexit. The fortuitous confluence of the Continental Free Trade Area (CFTA) and Brexit could fundamentally transform the African economy and improve the region’s well-being. When it is signed this March, the CFTA would create a free trade zone (and customs union) encompassing 1.2 billion people in 54 nations, with a GDP of $2.2 trillion. It would include a greater number of countries than any free trade agreement in history. It is estimated to increase intra-African trade by as much as half-again.
The UK is already one of Africa’s largest European partners, and leading Brexiteers have raised the possibility of importing more goods from Africa once the UK no longer has to abide by the EU’s Common Agriculture Policy, which imposes 18 percent tariffs on African agricultural goods. Of course, the post-Brexit EU would equally want to replace trade lost by Brexit. What this means is a new scramble for trade in Africa between Britain and post-Brexit EU that perfectly plays in the continent’s favor.
However, the beauty of this historic agreement is the simple-yet-vital change it promises to inaugurate in the continent. If this deal survives for at least a decade, it will have allowed African entrepreneurs to share their talents in a fast-evolving global market. Technological innovations that have helped some countries improve will be transferred to others through trade. The higher volume of trade will increase Africans’ personal, material well-being, especially those of the millions ravaged by poverty on the continent. And the possibility of increased trade – within Africa, with the EU, the UK, China, and other regional economic powers – is the most important path to open Africa’s doors to boundless prosperity.
Free trade and an improved geopolitical playing field must be joined with a respect for the rule-of-law, impartial administration of justice, and respect for human rights. Then Africa will take its place as a global economic power that enables its growing population to flourish – without Ponzi schemes or stilted trade agreements dictated by Brussels.
(Photo credit: Embassy of Equitorial Guinea. CC BY-ND 2.0.)