Trading in Africa

Intra-Africa trade and investment unlike the African Cup of Nations (AFCON) where only one winner will emerge, is not zero-game. Zero-sum game, from game theory in economics, is a situation where one person’s gain is equivalent to the loss of another. Trade between several individuals, businesses or countries is an example of non-zero-sum game; no one winner takes it all, all who take part stand to benefit.

Africa has been trading tackles (playing matches in the jargon of football commentators) for over 60 years. But trade between African countries has been minimal; until the past decade. Between 2003 and 2011 intra-Africa investment, the best measure of trade across borders, has seen a decent uptick as Dangote Cement and banks from Nigeria, telecommunications companies from Egypt and South Africa expand across the continent. With AfCFTA more goods and services will flow across African borders from Cape Town to Cairo.

Football matches are notable for their pre- and post-match drama – the introduction of video assistant referees (VARs) has now raised the level of debates by a few decibels. The voice of Nigerians was perhaps the highest on Thursday after we squeezed past South Africa into the semi-finals with a late goal.

Last week, Nigeria decided to sign the African Continental Free Trade Agreement (AfCFTA) after one year of unnecessary shakara typical of Nigerians for whom hard-headedness is one form of many modes for survival, a show; all swagger and bombast.

Across Africa Nollywood, Afrobeats, pastors, traders, fashion and boisterousness are associated with Nigeria; and fraud too, unfortunately. I remember a saying of my grandfather which my mother quoted often: Wherever in the world you go, first ask if there is a Nigerian there, if there is none, don’t stay there, it probably won’t be worth your while.

Signing AfCFTA late is better than never. It will benefit Africa. It complements the Single African Air Transport Market 23 African countries, including Nigeria, agreed to create a single air market on the continent. More flights within the continent will facilitate trade. There are more flights connecting Europe than African cities. To get to Tunisia from Lagos is expensive and often involves flying out of the continent to Europe to catch a connecting flight to Tunis. That itself is a barrier for any serious African business looking to invest or trade in the continent.

 

Prior to each match Nigeria has played during the group stage at AFCON 2019, interest in the Burundi, Guinea and Madagascar, in terms of searches online, went up of the day of the match. And fizzled out immediately afterwards, probably until a friendly, if ever, or the next AFCON.

The match against South Africa generated the second-highest number of searches.

But we don’t share any border with South Africa. It’s a 6-hour flight away from here. Yet there are more MTN subscribers in Nigeria than the population of South Africa; freshly baked bread and chicken pie sold in Shoprite, a South African retail outlet, are favourites of Nigerians. I can’t tell my merlot from cabernet when it comes to wine. Our palates prefer (some say cheap) Spanish red wine to that from South Africa. With the trade agreement will come more options and competition. Experts assert that intra-African trade will improve productive capacity, industrial development as well as sustained economic growth and investment.

Football rivalry and proximity apart, lots of Nigerians can be found nearby in Ghana and far as the Democratic Republic of Congo. A Bolt driver from Kinshasa who once picked me said he thought all Nigerians were Igbos. No surprises. When it comes to spare parts business in Kinshasa and Douala, Igbos run the show.

We need to boost intra-Africa investment to promote economic growth (China and the US some of the biggest trade partners of African countries are in trade war and the UK is battling with Brexit).

With a level playing field across the continent there will be no favourites. African consumers will have access to the most competitive product; countries with competitive talent will be the most attractive destinations for investment. Signing AfCFTA makes sense. Nigeria can’t lift 100m people out of extreme poverty with government hand-outs. We need investments, from wherever, in our most competitive sectors which will generate jobs.

Labour-intensive sectors such as textiles and readymade garments that are part of a global value chain. So long as the foreign-owned factories find an enabling business environment with power, roads, bridges and rails provided and in good shape. The sizes of our labour and consumer market are already an attraction.

A Nigerian manufacturer may be less competitive than say than a South African maker of the same product but Nigeria may have more qualified workers than South Africa. In other words, each country plays to its own advantage.

The benefits from AfCFTA can be likened to football: it provides a level playing field, coherence, coordination and regulation of trade within the continent. At AFCON, the winner will walk away with silverware and $4.5 million (28% of the total available for all), whereas AfCFTA, a single market for goods and services in Africa, has a potential worth billions of dollars that will transform entire economies and generations.

 

Temitayo Fagbule