Opinionista Ivo Vegter 12 February 2020

Cyril Ramaphosa and the AU’s naïve idealism

In his acceptance speech as the new chairman of the African Union, President Cyril Ramaphosa conjures a grand future for a prosperous Africa, but is at once very confused about trade. State-led growth and African autarky will not get us there.

If African leaders were judged on the floweriness of their rhetoric and the purpleness of their prose, Africa would be the richest continent in the world. We’d have bullet trains and continent-wide broadband, thriving agriculture, world-leading manufacturers and vast quantities of inexpensive and reliable energy. We’d have rooftop poetry nights and people being nice to one another.

All of this idyllic peace and prosperity would be brought to you by the collective efforts of Africa’s great and good governments, caring paternally for what African nationalists condescendingly call “the African child”.

Consider Cyril Ramaphosa’s acceptance speech at the African Union (AU) of its rotating chairmanship, delivered on Sunday 9 February 2020 while most of us were gathered with friends and family, chewing the cud about what fresh economic disasters the next few weeks might hold.

He waxed lyrical about the grand aspirations of the AU, as expressed in Agenda 2063, which is “Africa’s blueprint and master plan for transforming Africa into the global powerhouse of the future”.

The document contains lots of pie-in-the-sky… I mean, goals and priorities. It can most charitably be described as a lengthy statement of naïve idealism. It could have been written by any 21-year-old dreamer, except that a young African would probably not trust their government to the same extent that the AU does.

Agenda 2063 is brought to you by the same grand planners that brought you Zimbabwe’s collapse. It is brought to you by the same leaders that managed to get 14 African countries on the International Rescue Committee’s list of the world’s top 20 humanitarian crises for 2020, ranking alongside Venezuela, Iraq, Yemen, Syria, Afghanistan and Myanmar. These are the august overlords governing 17 of the 22 countries on the World Food Programme’s Global Hotspots 2020 list of ongoing or impending food security crises.

And His Excellency President Cyril Ramaphosa, the orator evoking these grand images of Wakanda, has a lot to answer for himself. Since 2014, he occupied the high seats of deputy president, chair of the National Planning Commission and head of the Eskom War Room, yet sat by silently while the police shot workers at Marikana, the state was captured and the country pillaged, unemployment reached record highs and the national electricity utility plummeted into ever-further crisis, with no clear solutions in sight.

Agenda 2063’s flagship projects are all government projects. A few are great, like “silencing the guns by 2020”, although that has already been amended to “silencing the guns by 2023”. Other great projects include establishing an African passport to facilitate the free movement of people, and the further implementation of the African Continental Free Trade Area (AfCFTA).

Beyond that, they’re all about state-led growth and developmental economics. The governments of Africa will build this megaproject, establish that industry and improve this other industry, and eventually, somehow, that is supposed to lead to a better standard of living for all. But it never does.

Ramaphosa’s statements on the AfCFTA (an acronym which doesn’t really roll off the tongue, but which I’ve heard pronounced like “after”), expose his tenuous grasp of basic economics.

First, he says that “our forebears understood that true progress and development could be advanced through trade and working together,” which is awesome. But then he goes right ahead and limits that trade and co-operation to Africa:

We must all ensure that the AfCFTA does not become a conduit for products with minimal African value addition to enter and penetrate our local markets under the guise of continental integration.

There must be a reasonable standard set for what constitutes a product that is Proudly Made in Africa.

We have to level the playing field for African businesses, so they are able to operate in a large-scale market unfettered by regulatory fragmentation. This is an integral part of rebalancing global trade relations.

The era of economic colonialism and imperialism, under which Africa is a pit stop in the global assembly line, has passed.”

What’s wrong with being a conduit for trade? Perhaps the Netherlands, Hong Kong or Singapore could explain to Ramaphosa & Co that trade benefits the economy no matter who it’s with, and even if you’re just the middleman, you can make pretty decent profits from your transport and handling fees. In fact, you can become incredibly prosperous, and have all the nice things that the Agenda 2063 central planners can only dream about.

Ramaphosa clearly doesn’t understand comparative advantage. If they really do want Africa to be a manufacturing hub, they’ll have to compete in the same way China did against Japan. That means producing better goods, cheaper than others can produce them. That doesn’t require protectionism. That requires reliable electricity, low taxes, light regulation and breaking the power of the unions, which, of course, they’ll never do.

That’s why we need to levy 40% import duty on textiles, to take just one example. This directly raises the cost of living for everyone, and hurts the poor, who struggle to afford clothing as it is, the most. The poor consumers must suffer just because our industry cannot produce clothes as well or cheaply as Vietnam. That’s why Ramaphosa is so afraid of imports from beyond the borders of Africa.

For some reason, he thinks that free trade within Africa will benefit African countries, but free trade with others will not. Given that both parties who freely enter into a transaction benefit – otherwise they would not have traded – this belief is plainly wrong.

African autarky (a closed, self-sufficient economy) is bound to fail, just as the national autarky promoted by the apartheid government during the country’s international isolation failed. How does “Proudly Made in Africa” differ from “Koop Suid-Afrikaans”?

All of the outcomes that the African Union says it wants can be achieved, and have been achieved elsewhere in the world. But other than in China, where freedom is a dirty word and the people are terrified of their government, they have not been achieved by grand government plans. (The Chinese model is not one we want to, or can afford to, follow.)

Better standards of living, higher income per capita, better human and political rights, higher economic growth, lower poverty rates, better healthcare, higher life expectancy, lower infant mortality, lower gender inequality, higher-income earned by the poorest 10%… all of these desirable outcomes contained in some form or another in Agenda 2063 have been achieved by freeing the economy from government-imposed constraints. And those economic freedoms include the freedom to trade internationally.

The African Customs Union is a necessary step towards improving trade relations within Africa. The trade barriers between African countries are unconscionably high, and ironically, much higher than trade barriers between African countries and the rest of the world. That doesn’t mean that we have to erect barriers against global trade in order to improve intra-African trade or industry.

Besides free and open trade with the entire world, much more needs to be done to liberate African economies so they can begin to generate real growth and opportunities. The AU can play an important role in this, by encouraging better governance, creating a common market with far less red tape and ensuring peace, security and stability. It can’t do this by promoting grand vanity projects, top-down economic management or building the Great African Museum.

“Government never of itself furthered any enterprise, but by the alacrity with which it got out of its way,” as Henry David Thoreau wrote. Every African Union leader, starting with Ramaphosa, should have that printed on a sign on their desks. DM

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