Africa's economic game changer
African leaders made history, recently when they launched a continental Free Trade Area (FTA) that will unite 1.3 billion people and create a Sh349 trillion economic bloc. Reflecting the optimism that African leaders need to share with their citizens, the International Monetary Fund described the FTA as a potential “economic game changer” that boosted growth in Europe and North America.”
There are significant challenges, however, that stand on the road to economic prosperity. They include poor road and rail networks, corrupt and self-serving bureaucracies that have perfected the art of stifling business growth with excessive regulations and political instability that lies just below the surface even in the most stable countries.
Although only spoken of in whispers, the greatest threat to Africa may come from countries that are lining up, ostensibly, to help it overcome these challenges. The continent’s leadership must be wary of China and India, which have huge populations.
Both Asian nations have expressed ambitions to become economic super-powers after what they claim to be waning US grip on the global economy.
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Whether the two countries are right in their prognosis or not, the inescapable reality is that they both expect to ride on the Africans’ back much as Europe and America did before them - through slave trade, colonialism and, later, unfair trade practices.
The targeting of Africa as part of China’s Belt and Road initiative should raise more eyebrows.
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This is borne out of the realisation that the initiative can tie African countries in an impoverishing relationship with China for decades. China’s largesse is directed at countries that either have proven oil and valuable mineral resources or have a high probability they will be found.
It should be noted that the Asian nation often offers to finance and carry out oil and minerals exploration and surveys. Of concern are the terms under which it is financing the construction of road and rail networks.
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The lender is said to demand the right to take over the running of valuable State assets in the event of default. Yet the road and rail networks are aimed at making Chinese firms penetrate Africa’s hinterland and ferry out raw materials to fuel its economy. Leaders need to scrutinise contracts they enter with the Asian countries.
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EconomyFree Trade AreaFTAIMF