Saturday, April 11, 2009

Diplomat questions Lusaka summit

Former British High Commissioner to Uganda Michael Cook is disappointed that today’s meeting in Lusaka of the three east and southern African trade blocs, EAC, SADC, and COMESA will prioritize seeking more aid.

The meeting will be attended by presidents of South Africa, Kenya, Uganda and Zambia and more than 300 delegates from the regional blocks.The Zambia president Rupiah Banda was set to officially open the meeting at the famous Mulungushi International conference center Monday morning.

Writing in today’s edition of the Ugandan Monitor (www.monitor.co.ug) Mr. Cook said such a transport corridor would give a great economic boost to the region.

“But it is disappointing that regional leaders should give priority to seeking yet more aid”, said Mr. Cook adding that “their track record in using it has been less than impressive. Witness the mythical Trans-African Highway, supposed to be built by donors in the ‘70s, today a highway to nowhere”

According to Mr. Cook, a primary objective will be to secure aid ”to remove infrastructure constraints which are hampering progress towards an expansion of regional trade, economic growth and faster poverty reduction along the North-South Corridor.

Mr. Cook argued that the Lusaka delegates should instead focus on measures that they can achieve themselves to accelerate trade freedom within Africa. It is quite right that the G20 be pressed to eliminate protectionism.

But African appeals would resonate more if African governments showed they were doing their best to help their own people.

Earlier n the article Mr. Cook argued that the G20 leaders will have heard pleas this week in London to reverse growing protectionism and to open their markets unconditionally to the poorest countries.

The simplistic assumption is that dismantling so-called North-South trade barriers, canceling subsidies by rich countries to their farmers and manufacturers, and an end to dumping their products on poor countries will provide a quick but enduring fix which will help the poor to trade out of poverty. But Africa could get bigger and faster gains by regional measures between neighbours.

On average, sub-Saharan African countries impose a 34% tariff on agricultural products from other African countries and 21% on manufactured goods-the most protectionist region on Earth.

International agencies estimate that eliminating such tariffs would generate immediate gains to sub-Saharan economies of $1.2billion. Indeed, 70% of all trade barriers are imposed by governments in poor countries on people in other poor countries.

The reason they remain poor-unlike, say, India after it improved some of its trade policies-is the deliberate obstruction that undermines people’s initiative and exchanges.

Exporters and importers usually face bewildering and inert bureaucracy, infected by corruption. A South African wanting to send goods 600km from Johannesburg to Maputo must allow 28 days for inspections and paperwork.

These barriers continue between countries that are formally partners in regional economic groupings such as Comesa, Sadc, EAC and Ecowas that are committed by treaty to promote common markets and economic integration. Protectionist instincts remain strong.

A recent meeting of senior Ugandan businessmen, held to discuss how the country could boost exports to its EAC partners, became a litany of complaints about competition from larger Kenyan and Tanzanian companies, with calls for protection, while ensuring their own unrestricted access to all other markets.

Tanzanians are no better: as fast as import tariffs in the EAC are removed, the government introduces new and costly barriers to trade, like compulsory pre-inspection of imports.

If the benefits of free trade are as evident as the World Bank and others maintain, why is Africa so resistant to what it demands so stridently of the developed world? First, there is a strong legacy, from the early days of independence, of state economic control which, for reasons of ideology or politics, governments are reluctant wholly to relinquish.

Secondly, a favourite argument for tariffs is as a major source of government revenue in impoverished states. However, initiatives by donors to compensate by improving the efficiency of revenue collection and eliminating corruption have met internal obstruction.

At one time British project officers had to leave their work in Mozambique because their lives were threatened by corrupt revenue officers seeking to protect their illegal income.

Thirdly, many governments want import restrictions and special exemptions as rewards for their supporters in business, or punishment for their opponents. From the businessman’s viewpoint, why not pay a premium to secure a monopoly for your products at home, with protection against imports?