Opinionista David Monyae 15 July 2020

Covid-19 a huge hit to African economic growth: Free trade can soften the blow

Intra-African trade is likely to mitigate the continent’s susceptibility to the vagaries of global economic uncertainty. It is disappointing that intra-African trade is still less than 20% of Africa’s total trade volumes.

The coronavirus pandemic has dealt a severe blow to Africa in multiple ways. Just a year ago, the world was gushing about Africa’s economic growth, especially in small economies. The enthusiasm was not misplaced because Africa was one of the fastest-growing regions in the world. The 2.4% economic growth that Africa registered could easily have been higher if big economies such as Nigeria and South Africa had registered more growth than they did.

The coronavirus pandemic has punctured the enthusiasm of 2019. The African Development Bank (AfDB) has issued a supplement to its African Economic Outlook that it published in January 2020. The AfDB now predicts that Africa’s economic growth for 2020 might decline to minus 3.4% and that about 49 million Africans, mostly from West and Central Africa could join the extremely poor Africans.

These numbers are devastatingly scary. Already, the World Bank has noted that there is a chance that by 2030, extreme poverty will only be in Africa if the continent does not improve the calibre of its leadership and does not reduce economic risks. The African Continental Free Trade Agreement (AfCFTA) was established in order to marshal a continental approach to Africa’s development. Our leaders have long known that the continent has a fair chance of success only if individual members have a vision beyond their borders. However, it took more than 55 years after the establishment of the Organisation of African Unity (the OAU, later transformed into the African Union – the AU) for them to come up with an economic framework that could ease the passage of goods and services. This notwithstanding, the AfCFTA gives Africa an opportunity to be more integrated.

Intra-African trade is likely to mitigate the continent’s susceptibility to the vagaries of global economic uncertainty. It is disappointing that intra-African trade is still less than 20% of Africa’s total trade volumes. What this means is that when Africa’s major trade partners such as China and the United States are embroiled in trade fights, as has been the case in the last three years, Africa suffers. 

Apart from Tanzania and Burundi that have gone against the grain of scientific opinion, another country to watch out for is Malawi. The recent rerun of the presidential election subjected many citizens to exposure to the virus.

The US has been increasingly inward-looking and this might be so for the next four years if the current administration retains power in the November elections. The volatile nature of the current international system summons Africa to be more self-reliant; for this to happen, however, the African Union has to be candid about certain things that hold the continent back. For example, the AU has to take a leading role in advising member states on how to deal effectively with Covid-19. It has to stamp its authority on countries that are using populist methods of dealing with the virus. Methods that are at variance with scientific counsel should not be tolerated.

South Africa is the 2020 chair of the AU and its legacy for this year will be to some extent tied to how Africa copes with the coronavirus pandemic. It does not help that the government’s approach to Covid-19 has been vilified by its citizens. Some argue that the decision to open schools while the virus is still on the rise is precipitate, irrational and illogical; it comes close to Tanzania’s refusal to secure its borders and restrict certain activities within the country as it tries to cope with the virus.

The small number of cases reported in Tanzania and Burundi is arguably because those countries are reluctant to carry out massive tests. Their logic is akin to Donald Trump’s ludicrous allusion that a small number of testing translates into a small number of cases. The internal denialism of some countries will have long-term effects on the rest of the continent.

Apart from Tanzania and Burundi that have gone against the grain of scientific opinion, another country to watch out for is Malawi. The recent rerun of the presidential election subjected many citizens to exposure to the virus.

All this will have implications on how the nascent days of the AfCFTA will be facilitated. Countries with fewer cases of Covid-19 are likely to impose strict restrictions on their borders. Those that have been vigilant in trying to curb the virus are also likely to limit travel from the errant ones. Such limitations on travel and the attendant limitation of goods and services passage will make the work of the AfCFTA a more daunting undertaking than it already is.

The African Union should shed the laager mentality that is a relic of a bygone era of the OAU. The AU should be sterner in conducting continent-wide affairs; under current circumstances, this entails firmly advising all member states to adhere to scientific wisdom as the guide for dealing with Covid-19. Evidence hitherto has shown that the US and other global players are either clumsily dealing with the pandemic or are overwhelmed by it. This means that the AU should be the first port of call for the continent’s challenges. 

It is sad that more people will join the group of the extreme poor. This can be softened by a more assertive approach to Covid-19 that could facilitate a smooth take-off for the Free Trade Area, which in turn is likely to improve Africa’s lot. DM

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