Protectionism or Trade: Alternatives for Africa’s Economic Growth

Valentine O. Ogunaka Ahmadu Bello University, Zaria African Liberty Essay Competition 19 July, 2012 What is good for Africa? What does she need to become prosperous? What is the level of her economic growth? These questions provide insights into the dichotomy between Protectionism and Trade. Which of the alternatives is best for sustaining the economy of the African region? It is essential to note that Africa’s economy have in recent times survived recessionary shocks and gained some strength; political instability and maladies gassed by corruption, profligacy, estranged and baseless policies with foreign aid have robbed the economy of maximizing its full potential. These facts justify why macroeconomic reforms have been dysfunctional in the continent and shall serve as a pointer in picking an alternative. Debates on Protectionism versus Trade (trade herein implies “Free Trade”) have ensued radically among several economic pundits, governments and fiscal architects. The basis of the arguments does not exclude Africa. By international economics, supporters for both policies have emerged; thus taking sides. Some argues that boundless growth and prosperity for Africa is only attainable if economies are allowed to operate freely without governments’ intervention and discrimination of goods across borders. They claim that Free Trade would explicitly eliminate barriers, enhance market flexibility and by ‘comparative advantage’ reward all trade partners. Protectionists reject that assertion. They propose that governments’ legislations will rather save jobs and give African countries some sense of economic freedom and autarky where emerging domestic industries will be protected from overseas competition and therefore contribute immensely to the growth of national economies. Such regulations entail imposing bans, high duties, implementing quotas and any attempt to restrict trade between countries. I shall nullify this argumentation and proceed to treat each alternative policy as a case of its own in Africa. This will check into their validity and decide the most beneficial to Africa’s undefined economy. Choosing Protectionism for Africa Protectionism is not alien to Africa; but ubiquitous as governments in the Sub-Saharan region have always resorted to the so-called ‘revival’ policy at the slightest mishap to ‘protect’ and develop the resident economy. Compared to other regions in the world, Africa has a dysfunctional trade bloc which is inured to low-level internal trade, thus favouring richer western countries in the stereotyped ‘trade for aid’ system. Protectionism in Africa takes different forms. Recently, a trade war must have resulted between West African neighbours following the ban on Ghanaian movies from entering Nigeria as retaliation that the Ghanaians have longed banned the distribution of Nigerian films in their country. This sketch of protectionism is wherefore: ‘Ghollywood’ slams tariffs on actors to make them costly-to-hire; ‘Nollywood’ imposes taxes on Ghanaian actors before their participation in Nigerian productions; or both movie industries grant licenses (embargo) to their actors with intent to protect ‘careers’, promote production and increase sales. Similar form of protectionism extended when Ghanaian authorities seized shops of Nigerian businessmen operating in Ghana as government policy demands they must have $300,000 capital and employ at least 10 Ghanaians before being considered legal. The aforesaid facts bring to mind the quote attributed to early French economist, Frederic Bastiat, “When goods don’t cross borders, soldiers will.” With inference to Ghana-Nigeria ‘trade war’ and ‘fair trade’ respectively, Protectionism truncates diplomatic ties and breeds isolation between African countries. Can one dispute that the mutual cooperation between Nollywood and Ghollywood has churn out great actors and wealth. Won’t protectionism encourage smuggling of movies across borders and hackings over the internet? Nigeria has ‘inextricable’ ties with protectionism, using tariff and non-tariff barriers. A presidential adviser in Nigeria was quoted (in Al-Ahram Weekly): “I can assure you that my pen is always ready to ban more items as long as they are available in Nigeria.” In the 1980’s, agricultural products like grains and oil were mainly subject to high custom duties. This now includes beverages, cassava, tobacco, and poultry. Rationale for the policy is not new: ‘shield’ fragile industries from foreign competition; develop the economy; checkmate food, security, employment, sanitary and health issues; and even generate revenues. Lamido Sanusi, Nigeria’s Central Bank governor backed this argument. Citing United States’ protectionism against Britain in the steel sector, he emphasized related needs to ‘protect’ infant industries until they are due to compete internationally. Considering that protectionism expanded the economy of a less developed America upon independence from Britain and established it as a major power, one is tempted to deduce that a developing Africa should imitate. But the ghastly effect of this policy on economies during the Great Depression is cautionary. East Africa bears the Tanzanian case that served to ‘protect’ its weak manufacturing sector from the stronger Kenyan’s. Adopting a lopsided taxing system against Kenya; exports percentage augmented to $112m in four years. This sounds impressive but Tanzania ruminated against itself when it barricaded Kenya Airways from purchasing Air Tanzania Cooperation. Protectionism had also spread from Uganda, Guinea, and South-Africa among others. Pan-African protectionism increases inexorably, but some questions linger: What has this policy contributed to Africa’s economic growth? Is it a dependable trade policy? Should we adopt this alternative? This will be answered shortly. Let I delve into the particulars of Free Trade. Permitting Trade for Africa Free trade is not peculiar to Africa. The campaign for trade liberalization in Africa as the key alternative to prosper Africa’s economy has trumpeted greatly, but sadly not in actual effect. This can be analyzed from two perspectives: primordial African trade and modern African trade. From the historical standpoint, trade was actually freer in old-traditional Africa than nowadays. Early Africans exchanged whatever they had for what they didn't. Camel ships transported goods across the Sahara. Kush for example, the Iron center of ancient Africa took trade seriously. They negotiated terms with Egypt and exchanged gold, iron and exotic products for manufactured cottons. Also, caravans from the North bartered with the Ghanaian Empire (center for West-African trade) through a silent exchange system. Muslim traders offered condiments and Ghana reciprocated with gold; fair enough to disregard deficits. In East Africa, Kilwas Kisiwani, a community in Tanzania enjoyed wealth as it was a great merchandise of gold, iron, ivory, coconuts and animal products. It was the trade center to Southern Africa. Primordial African communities also believed in globalization. They exported commodities to Europe, Arabia, India and China. Integrally, these gave rise to ancient civilizations that flourished, thus birthing the illustrious Trans-Saharan trade routes, great empires, cultures, occupations and alternative sea routes. It was an era of prosperity for Africa. Modern Africa is yet to tread that path. The bitter observation is: trade within the region is infamously low (an average of 11%) wherefore there are about fifty trade barriers across borders. From perceptual experience, exporting goods to China from Tanzania is cheaper than exporting the same amount of goods to Libya. This is pathetic. But stakeholders are not ignorant to the supposition. The economic agenda of the African continent has been overwhelmed recently by calls for pan-African trade which would forge holistic coalition to a single market, a central bank, common currency and customs union. This eventually creates Free Trade Area; but a cloud of doubt lingers amid whether such ambition is achievable, particularly in a region where governments are characterized with rhetorics and would rather continue to trade (60%) with the West (for aid). Pan-continental Trade with industrialized countries tend to validate protectionists’ claims that it strips the infant African market to unfair competition, undermines food production and further depletes her resources. This distorts reliability on Free Trade as a good alternative to foster Africa’s economic growth. But analysts believe that free trade if implemented rightly and especially within is profit-oriented and sustainable in the long run. Determinants Beyond economic arguments, I cannot protect what I cannot handle. Therefore, I will not recommend protectionism for Africa. As an enemy of itself, it has achieved the opposite of its aims. African countries that rank high in protectionism are yet to combat poverty and massive unemployment. Commodities’ prices soar and businesses aren’t competitive. A government that adopts this policy does so basically to ‘protect’ special-interest groups to the detriments of common citizens. This will condemn Africa to eternal depression. The values of trade cannot be overridden. As elucidated by Adams Smith, for all nations, trade breeds specialization and prosperity. Should Ugandans produce for themselves and costly what can be obtained cheaply from Ethiopia? It is so foolhardy because trade flows as seen from old-traditional Africa fosters development. Pointless interventions and restrictions ground innovation plus African ‘regionalization’. What a weak link to prosperity! African economies urgently need practical economic integration to prosper. Incumbent Mozambican President, Armando Emilio Guebuza has stressed it: The choices are clear: either we integrate and survive united, or we fragment and we perish in isolation. In conclusion, it is pertinent and beneficial if Africa review and espouse its old, proven pattern of trade. Free trade policy is the fundamental alternative to substantial Africa’s economic growth.

OPINION: COULD NEW MERGER PARTY APC BE THE MAGIC WAND

By Valentine O. Ogunaka @naijamatta

There is a word describing opposition: challenge. And the essence of having one is to keep sleeping giants and eyeservice men on their toes, writes Valentine Ogunaka.

Some of us who think the emergence of another major political party would right all the wrongs in our country should reexamine the purpose that justifies its nativity. Agreed, we have many problems rooted in corruption and ne'er-do-well leadership; Nigerians must still be cautious and never let desperation for change shrink the fact that we are at crossroads.

New face All Progressives Congress (APC) may be singing a new tune. They can capitalize on the weaknesses and malignity of the dominant Peoples Democratic Party (PDP). They could overwhelm folks with trendy speeches and provide the roadmap to an all green and serene Canaan land. One thing remains certain—it will be foolhardy to get coaxed by crowd mentality.

Enough of rhetorics and generalizations: PDP is our problem. Corruption is our problem. Attitude is a problem. Religion is the problem. And lately, APC is the ultimate solution. Of course it has been a terrible syndrome; folks relishing new initiatives without actually weighing up and looking beyond.

Considering that Nigerians have been let down for the umpteenth time by loudmouthed politicians, activists and even clergymen who had paraded themselves as oases of hope, some questions run through mind and I have been quite suspended.

Is a new political party the answer to a new Nigeria? Will APC restore hope or swerve to unleash any ulterior motives once elected into power in 2015? If PDP is evil, what is APC? And why is PDP so popular and equally unpopular?

Those are the questions we ought to solve before we entrust and endorse again, to avoid a repeat of the jamboree that beclouded reasoning through 2011 general elections. In order words, to thrive under the wings of phenomenal democracy—to the very effect; we must not surrender cheaply, our vote of confidence due to the enveloping frustrations, economic misery, and unyielding insecurity problems.

There should be more to prove to win over our hearts this time. And in my view if All Progressives Congress (APC) must thrive, it will have to do more than a smear campaign on the purring engine of the PDP long-derailed train. Its sole intent must never be to dwarf the ‘giant’ party or shove it into the closet but to inspire a new political spectrum that will empower, engage and improve the mindset of the people. In fact, it should exercise its true characters, values and ethics in the spirit of democracy, and ensure that they reflect consistently.

On the other hand, the so-called Peoples ‘Undemocratic’ Party should note that at this time, things have changed. The Nigerian youths have embraced a better political philosophy. Therefore, the grandiose belief that it is the ruling party has rapidly waned. If it has achieved nothing but problems in over a decade in power, the plot thickens; Nigerians will no longer hesitate to decide, seize the country back and make direct inputs into what affects their lives.

In a nutshell, it’s logical to believe that the successful merger of four major opposition parties—CPC, APGA, ACN and ANPP—is a sign for good things. I cannot vouch or argue in favour of the upshot. But if truth be told, APC could wave the magic wand. That is, they can be the catalyst for change and not necessarily the change itself.

So the theory goes: “One beastly creature might molest the crowd. Two fighting giants will have impressed them.” In essence, new merger All Progressive Congress (APC) has purportedly got the credentials to be a force to reckon with. Thus, its emergence is undeniably a shake-up in Nigeria’s political sphere. And as a major challenge, it is either way sending a clear message to People’s Democratic Party (PDP) that as they continue to batter the hope of the people, APC is prepared to turn the tide.

Compatriots, this might be a genuine competition. Besides, it is good for our democracy.

Follow me on twitter @naijamatta

Fault Lines: Our Generation Should Look Beyond – By Valentine O. Ogunaka @naijamatta

Fault Lines: Our Generation Should Look Beyond – By Valentine O. Ogunaka @naijamatta This write-up was originally published on www.omojuwa.com. SHARE YOUR VIEWS IN THE COMMENTS BOX #Nigeriaunite “Oya were ni”, a Yoruba man had rasped at his daughter, realizing she was dating an ‘Omo Igbo’. Also I have witnessed an Igbo mother mercilessly beat her teenage son because he had invited his ‘ofe manu’ friend to their home. Unconscionable, aren’t they? Yet these scenarios of ethnic fringes play into our daily lives such that it is perceived as ‘haram’ for Chukwudi to marry Fatima. This piece was actually inspired by the heedless controversies trailing Chinua Achebe’s “There was a Country”. Enough have been written though; this is my first foray into the matter. I muted all the while because I didn’t deem it fit to fault the personal account of someone who was, indeed, part and parcel of the Biafran war. Besides, I believe memories are very subjective owing to how Chimamanda Adichie had put it: “We remember differently…” Reacting to Achebe’s new book, commentaries have been starkly tendered with bigotry; the ethnic disease of biasness, invectives and intellectual barbarism. You read through them and discover that tribalism has become not only a scourge but an acute embarrassment to our collective struggle for change. I wonder why the authors whom I expect to be dispassionate in their writings—considering their prolific standing and measureless experiences in national business—have further deepened the fault lines. Of course, the war of words between the Awoists and Acheberians will lead us nowhere. It only replicates the aftermath of the first electoral dispute in Nigeria in February 1941, which is the tribalization of media. I had learnt that Zik’s West African Pilot and the Egbe Omo Oduduwa’s Daily Services fiercely attacked each other. According to Coleman, “at local height of the tension…” the Igbos warned that “all personal attacks on Azikwe would be considered attacks upon the Igbo nation.” This was amidst ongoing press wars. Just as in the case stated, most commentators, perceivably Yoruba, have lambasted Achebe not essentially on the ground that he inopportunely stirred up the hornets’ nest, but because the octogenarian has in his diatribe memoir, called Awolowo a ‘villain.’ It becomes very unfortunate that our generation is being brainwashed into the unfounded realm of ethnic intolerance. Someone had said the Igbo are greedy and undeserving. Another had bickered that Yoruba is an existential threat to Igbo political interest, referencing the famous 1952 ‘carpet crossing’ incident in the Western House of Assembly. And I couldn’t help but laugh it off when a friend beckoned and whispered to me: “Why are Hausas and Igbos like cats and dogs?” I did my high school in the north and I think I was the only ‘Igbo boy’ in the class. Did I ever complain of being ostracized? No. My classmates who were mostly Hausas and Fulanis deemed me as they should—just another Nigerian! And till this moment; amid all the crises, bombings and perceived religious provocations, we get in touch. Isn’t that fair? That is because we understand, because we look beyond the fault lines. Beyond the 1964 hullabaloo, the coup and countercoup of 1966, the pogroms that followed and the Biafran civil war lies a greater future. It is true that we cannot disregard history especially as vital lessons can be drawn from it. In this vein, history for all its quintessence is a direct challenge to futuristic affairs. But it becomes a problem when we deride its lessons and transfer penalties. Of all the legacies handed by our foremost nationalists, I wonder why we choose ethnocracy ahead of patriotism. It makes me think we are sick. In context, tribal hatred which has snowballed from the past and entrenched in our generation will disinherit us from the good things of life, like peace. I strongly hold that it will continue to be a ferocious challenge to the idea of unity in diversity. Now do not expect me to ride through the rigmarole of reviewing “There was a Country”. I might vacillate and end up taking sides, involuntarily. But we must understand that the book is a memoir and memoirs do not essentially match up with history books. I can prove they are sometimes oscillated between the line of facts and fiction. However, to look beyond the fault lines, let our generation embrace logic and destroy the rabid intolerance in tribal character. Chinua Achebe has lived his own life and has told his story. That was his generation. Without doubt he has ruptured old wounds; we have every right not to lick or stitch them. Let the healthy atmosphere we create with our sense of oneness dry them up. I look forward to how we can reintegrate, find a selfless leader and lift this very nation, Nigeria, beyond the fault lines! Valentine Ogunaka writes from Abuja. He is the author of The Undergraduate, The Perfect Pawnbroker and National Heroes. Follow him on twitter: @naijamattta

A man who does not read

A man who does not read
Is not just an empty head
When he is called upon to lead
He is just as good as dead

A man who cannot read
Is just that car without wheels!
Hardly ever, will he succeed
Cos’ he can’t move an inch

To the mind, Reading is
What watering is to the plant…
If a man must grow to ‘bliss’
It is with what he has learnt

follow @naijamatta