Why Africa continues to retrogress economically — Obi

The Vice Presidential Candidate of the Peoples Democratic Party (PDP) in the 2019 elections, Mr Peter Obi, has given, among others, low volume of export trade in African region, general lack of policies implementation, excessive urge to consume rather than produce, corruption and leadership failure, as the reasons for continued retrogression and under-development of the African continent, noting that if  the African Trade Agreement were properly implemented, the continent would reap great fruits of development.

Obi made this known during the 2nd International Conference of Banking and Finance, held at the Faculty of Business Administration, University of Nigeria, Enugu Campus, on Tuesday, May 25, 2021. Speaking on “Trade, AfCFTA and African Development”, Obi explained that trade has been a critical driver of economic development since the beginning of time.

“Trade is the driving force behind China’s Silk Road and Belt & Road Initiative (BRI). Trade is the reason that Singapore, a country with no natural resources and a population of less than 6 million people has the best Human Capital Index (HCI) ranking (88%) in the World. Trade is the reason that a war ravaged country like Vietnam is now an export powerhouse in South East Asia. These strides were not accidental but were shaped by visionary leadership and deliberate policies.

“Sustainable Economic Development can directly be linked to trade especially where there are significant integrations in the forward value chain e.g. China (Manufactures Goods), South Korea and Japan (Consumer Electronics and Automobiles), Brazil & Chile (Commodities), The Gulf States (Petroleum Products), The Netherlands (Agriculture), the United States (Semi-Conductors and Space Technology), etc. Trade in Invisible goods and services is also a driver of sustainable economic development e.g. Dubai (Tourism & Hospitality), India (Business Process Outsourcing and Bollywood), Singapore (Financial Services & Transhipment Services) and the United States (Hollywood & Music).

Obi regretted that one of the reasons Africa is grossly underdeveloped is because the volume of export trade is very low in Africa, owning to the high level of unproductivity that pervades the continent. He noted that other developed continents have high volume of regional trade which boosts their economy and fosters national development.

“That is why the African Continental Free Trade Agreement (AfCFTA) was set up, to open up Africa and encourage African countries to trade among themselves. Boosting regional trade in Africa will bring about a lot of creativity, innovation and economic growth.

“Out of the entire universe of trade that happens within Africa, only about 15% is intra continental. In Europe that number is 59% and in Asia it’s 51%. AfCFTA would significantly boost African trade, particularly intraregional trade in manufacturing. In the very near term, the target of AFCFTA is to move intra-African trade from 15% to 22%. Again, this increment in intra African trade will have a multiplier effect across the continent and will lead to aggregate improvements in African continental HDI and HCI. We need to set our sights higher in the area of tradable goods m to move Africa out of the doldrums that it is currently in.

“The African Continental Free Trade Area (AfCFTA) will create the largest free trade market in the world measured by the number of participating countries. The agreement will connect 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at US$3.4 Trillion. The AfCTA also has the potential of lifting 30 million Africans out of poverty,” Obi explained.

Obi stated that AfCFTA has not yielded visible fruits for the continent because of the general leadership failure in Africa and the apparent lack of commitment to the implementation of the trade agreement. He expressed hopes that there will be great economic transformation in Africa if the trade agreement is duly implemented.