Kweku Eshun’s thoughts ….The AfCFTA, Eco and Year of return nexus: (2)

Dr. Kweku Eshun, columnist with B&FT

Will Africa finally receive its fair share of rewards from globalisation?

 I would like to strongly caution that the usual practice of assembling the same old groups of local politicians, semi-politicians, opportunistic local industry leaders and their well-connected friends and appendages who have failed our countries and Africa in general to solve this puzzle will fail disastrously. This unique opportunity to re-position and reconfigure Africa requires the injection of exceptionally high intellectual and practice awareness – based on insights from empirical evidence and unique strategy development and execution experience – to evaluate and unravel the complex puzzle that Africa presents.

We must adopt an open approach to problem-solving even as we work to find the right balance between theory and practice that optimises the output of our human and material assets. In order to achieve cognitive diversity, we must make use of all local and diaspora human resources/expertise at our disposal. Our planners must cleverly isolate the individual factors which will drive the rapid growth of AfCFTA, and with a clear understanding of their dimensions and logic of their interrelationships fashion-out and efficiently execute a strategic plan to rapidly grow the continent’s economy. We must not forget to identify and engage the services of our kinsfolk employed by the international and global governance organisations like the United Nations, World Bank, Security Council, IFC, ECA, WHO, Commonwealth Organisation etc. and their appendages.

They are an immense trove of intellectual, technical and practice knowledge which will be useful at both the strategic and operational levels. Finally, just as there were genuine people of non-African descent who believed in and contributed to the crushing of segregation and racism in the USA as well as apartheid in South Africa, we need to recognize this potent force which shares and believes in Africa’s aspirations, dignity and right to self-determination and integrate them into our plans.

Leadership of the African Union (AU) must quickly establish and empower committees with the express mandate and resources to identify, engage and organise our team (or teams) of elite planners, selected from the four sources, for the development and implementation of a strategic plan for Africa’s economic development. Although the three events are likely to progress at different speeds, we need to find factors, structures, logic and mechanisms which allow us to integrate them progressively. It is crucial that Africa avoids and prevents the intervention and control of our agenda by our detractors and competitors via their numerous agents and agencies. These include some of our very own greedy, selfish and brainwashed people.

We must eschew reliance on their funding, so-called experts, institutions and munificence of any sort. They are dastardly Trojan horses and traps. Metaphorically speaking, the AfCFTA is the flour in which all other ingredients necessary for baking our bread – i.e. a resilient continental economy – will be mixed.

Our well-balanced teams of knowledgeable and skilful African scholars, planners and effective implementers – with the active support of our new incorruptible leaders – will develop, coordinate and implement a strategic short-, medium- and long-term framework aimed at progressively increasing Africa’s trade volumes to an agreed stretch level within the first 20 years.

Generally, Africa’s trade volume has two major components: i.e. intra-Africa trade and the AfCFTA block’s trade with the rest of the world. Presently official intra-Africa trade which is extremely low – i.e. less than 20% of Africa’s total exports is composed of mainly transit business for land-locked economies and unprocessed food items.

Signing of the unprecedented AfCFTA agreement confirms Africa’s belief and understanding that by unleashing the aggregate consumption and productive power of its 1.2 billion people and a current GDP of US$3trillion through well-structured and coordinated intra-Africa trade, we can establish a large and vibrant middle-class and quickly lift all our peoples out of poverty, disease and illiteracy.

Well-known factors which have militated against a higher level of intra Africa trade include individual state laws, tariff, immigration, Customs, investment and currency regimes which make trade between even neighbouring African nations cumbersome and expensive.

With creation of the AfCFTA, our team of planners and mangers will aggressively work to harmonise or even eliminate these uneconomic encumbrances to trade and consolidation of the Africa market. I leave the operational details of these very important components of intra-African trade to our experts, as they are outside the scope of this article. Of particular interest, however, is the role of the proposed common currency, the Eco, in facilitating the projected free movement of goods and services, people (labour) and investment necessary for massive and transformative value creation across a well-structured and effective AfCFTA.

It is instructive to note that France, the ever-cunning colonial master, has already calculated that it can ride on the back of a regional or continental currency to reap superior benefits from the AfCFTA. Hence the surprise announcement of the Eco’s adoption as a replacement for the CFA in West Africa at a time when Africa is yet to harmonise trade and remains in a very poorly integrated state.

This sudden swap of Eco for the CFA is their experiment in securing the best deal for their economy while Africa is still weak. However, should the form and structure they propose for the Eco – i.e. linked to the euro via reserves held in European banks with fixed exchange rates etc. – be rejected by ECOWAS (and I know we will reject this), then expect real sabotage regarding integration of the Central Africa CFA region with the AfCFTA – and indeed even subversion of the Africa trading block in general. The threat from China is even more ominous and treacherous. I explain this later in this article. I am still nevertheless excited by this move by France because we can now, and should, quickly capitalise on this platform to adopt the Eco across West Africa and progressively expand its adoption to the rest of Africa.

A common currency by itself is significant fuel for increased trade and growth, but its effect as a catalyst in a free trade area characterised by low trade barriers is significantly heightened by the increased ease and velocity of exchange of goods and services, as well as the free movement of persons (u) and investment. Clearly, trade between fifty-four (54) African states using at least forty-five (45) different currencies in a continental free trade area is a non-starter and will mean that the AfCFTA is dead on arrival. The traditional use of bridging third party convertible currencies like the US$ or euro and the British pound only makes their economies stronger and opens Africa up to their control and manipulation. Commonsense dictates that we adopt our very own single currency or regional currencies to facilitate trade within the free trade area.

We should make the necessary sacrifices to support weak states to achieve convergence criteria (indeed, we should consider reviewing convergence criteria to reflect the positive effect of the AfCFTA) because adoption of the Eco will increase earnings for each state under a well rationalised and organised AfCFTA. For example, adoption of the Eco will eliminate currency exchange speculation which fuels inflation and conversion costs, make price comparison easy and transparent – leading to greater market efficiency through competition, as well as allow for easy interbank transactions and funds transfer across the free trade area.

The expanded market and single currency means African entrepreneurs, manufacturers, farmers and providers of services can operate at an economically viable scale, which makes them competitive locally and on the world stage. This has positive implications for value addition and wealth creation on the continent. These and many other positive or negative effects of adopting the Eco, which are technical issues beyond the scope of this article, will be expertly explored and managed by our well-coordinated, smart and knowledgeable teams of planners, practitioners and scholars.

They will work to develop and implement strategies for optimising benefits of the ECO while minimising or eliminating obstacles to its adoption. We already have successful experiments like ECOBANK and ABSA Bank, the use of VISA payment systems (we should create our own), and Internet/telecommunication infrastructure. Even if they are integrated at a low level, they clearly demonstrate that we have the capacity and experience to fashion-out and operate complicated synergistic systems under minimum levels of collaboration.

Other successful experiments like the West Africa Examinations Council (WAEC), security and intelligence networks in West Africa, Southern Africa Development Area (SADA) and Common Market for Eastern and Southern Africa etc. provide valuable insights regarding structures, logic, policy, processes and collaboration mechanisms necessary for a successful adoption of the Eco in the AfCFTA environment.

Regarding AfCFTA trade with the rest of the world, adoption of the Eco will provide a single window for exchange rate determination of all convertible currencies. This simplifies trade with Africa and facilitates the flow of foreign direct (FDI) investment to and within the large continental market, as investors have to deal with only a single currency. The advantage of increased investment mobility across countries, sectors and business opportunities within the AfCFTA – because of using a single currency, means creditors and investors have significantly reduced business risk and can therefore charge lower interest and return rates. Our database of diaspora kinsfolk-controlled businesses, investment banks, fund managers, technology developers etc. should be used to identify and actively encourage our well-placed kinsfolk to mobilise, promote and spearhead trade with Africa from their various local continents.

In a well-organised, coordinated and sustained drive, our diaspora kinsfolk – working closely with local counterparts – will become investment and trade champions for Africa who actively lobby for the mother continent to grow its wealth through fairer engagement with trading partners. Our smart planners will fashion-out special concessions which target our diaspora kinsfolk and provides them with superior earnings. In an even more aggressive move, our governments and business people can invest directly in businesses owned by our diaspora kinsfolk; or establish new joint ventures with them in their local markets by leveraging raw materials available on the mother continent; as well as utilise their connections, advanced business skills, superior technology and in-depth understanding of their home markets.

Additionally, the 400 million strong African diaspora constituency is a major market that has to be directly targetted by business ventures located in Africa. Working with diaspora social, commercial and professional platforms as well as economic and educational structures or institutions to achieve increased integration and a firm bond with the mother continent provides greater scope for tourism-based business opportunities, export of local foodstuffs, textiles and garments, education and cultural artifacts, for example. The key for success will be the adoption of a win-win attitude to trade and other socio-economic engagements with our diaspora kinsfolk instead of the current opportunistic and dollar-calculating approach being pursued by individual countries and organisations.

Based on lessons and insights from the study of drivers for successful major pilgrimages to holy sites around the world and other major tourism events, Africa can make it easy for our diaspora kinsfolk to experience life on the continent and interact with locals regularly in order to enable them fully understand and appreciate the needs and aspirations of Africa. Special and cheap accommodation, affordable foreign and local transportation arrangements and increased personal safety during their stay, for example, will encourage the African diaspora to visit the continent.  They will better understand our challenges and development gaps – which have embedded in them enormous business opportunities we can exploit together for our mutual growth.

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