Table of Contents
THE WORLD AS A GLOBAL VILLAGE
AFRICA AND THEIR TRADITIONAL TRADE PARTNERS
ADVANTAGES OF AFRICA’S TRADE WITH ITS TRADITIONAL PARTNER
DISADVANTAGE OF AFRICA’S TRADE WITH HER TRADITONAL PARTNERS
ADVANTAGES OF SINO-AFRICA TRADE PARTNERSHIP
DISADVANTAGE OF SINO-AFRICAN RELATION
PERSONAL TAKE ON THE ARGUMENT
This essay seeks to discuss the assertion as to whether or not the African continent should be looking more towards increased partnerships with China, or strive to maintain its traditional trading relations, taking into consideration the globalized nature of the world economy and the dominance of powerful trading blocs. The paper argues that Africa should remain neutral as it would be ‘unwise’ for it to swing towards a more trading partnership with any power bloc. The essay is organized into three sections. The first section discusses globalization and the various phases it has taken over the years. Section two will examines Africa’s contact and history with its traditional trade partners. It also discusses the benefits Africa has derived and still derives from her trade with her traditional partner and hence should keep her ties with them. The section further looks at the disadvantages of Africa’s trade with her traditional partners and so Africa should look at increasing trade partnership with China. The third section of this paper focuses on Africa’s trade history and contact with China. The section further looks at some of the benefits Africa has enjoyed in their short term modern global trade with China, which has necessitated the need for the continent of Africa to increase her trade with China. This section again discusses the shortcomings Africa has faced as a result of her trade with China.
THE WORLD AS A GLOBAL VILLAGE
The notion of “world-system” can be defined as a maximum set of human societies that has systemic characteristics, and a maximum set of societies that are significantly connected among themselves in direct and indirect ways ( Grinin, Ilyin, & Korotayev, 2012). Within this framework, World System can be characterized as a super system that unites many systems of lower orders, such as states, stateless societies, various social, spatial-cultural, political entities, civilizations, alliances and confederation (Grinin, Ilyin, & Korotayev, 2012). Globalization is what brings about this interconnectedness of the world system. The term Globalization refers to the emergence of an international network, belonging to an economic and social system (Cuterela, 2012).
One of the earliest uses of the term "globalization" was in 1930, in a publication entitled Towards New Education. It designated an overview of the human experience in education (Cuterela, 2012). Globalization may be regarded as a process connecting the past, present, and the future or a sort of bridge between the past and the future and it is this bridge that has connects Africa to her major trade partners. Globalization can also explain the process by which different economies and societies have become more closely integrated (Nilson, 2010). With the world considered as a global village, the political and economic development of most countries is on the right track. Trade partners has become necessary for the survival of states not only in Africa, but also the world in general. Africa has been drawn in the globalized nature of the world’s economy as it has arguably become the focal point of powerful trading blocs (The West and China). The abundance of resources, good working environs and human labour has made the continent of Africa a hotspot for trade.
AFRICA AND THEIR TRADITIONAL TRADE PARTNERS
Africa’s global contact with its traditional trade partner (the West) began with the advent of the Europeans to Africa within the period of 1500 and 1800 CE. This contact resulted in a trade arrangement called the Trans-Atlantic Slave trade. This trade relation continued for centuries. European economies increasingly witnessed profound boosts in productivity and net output within this period (Jouannet, 2007). By the start of the 19th century when explorations and discoveries were the currency of the day, European powers increasingly saw the acquisition of Africa as crucial to satisfy its economic imperatives namely: reinforcing home industries and instituting a market for finished products (Azikiwe, 1931). Over the course of the next centuries, Europe grew astonishingly rich through enslaving, looting and exploiting the continent which arguably possesses the richest deposits of resources found anywhere. The incredible wealth of Africa ended up in Europe, contributing to the flourishing of cities (Forji, 2013). While professing liberal moralism, European encroachment into Africa became suddenly exemplified with a turn from informal to formal empire (which marks colonialism) (Azikiwe, 1931). In fact, historically, Europe owes much of its wealth and power to the exploitation of the African continent. Robert Beckford estimates Britain’s debt to Africans in the continent and diaspora to be in the trillions of pounds (Beckford, 2014). Without Africa and its Caribbean plantation extensions, the modern world as we know it would not exist. This was as a result of the earlier global trade relation (Bram, 2017). Britain for example financed its Industrial Revolution through profits from slavery and it found markets for its commodities in its African colonies (Beckford, 2014). This global relation continued even after Africa gained her independence from the European powers. This new relation between the now independent African continent and the west has taken different forms and shape. Africa has continued her trade with the West, receives aid and receives foreign investment (Beckford, 2014).
ADVANTAGES OF AFRICA’S TRADE WITH ITS TRADITIONAL PARTNER
Africa has adopted several strategies with its western partners in terms of trade in the post-colonial era. An example of such partner strategy was with the EU. The primary objective of Africa’s trade strategy was the achievement of the UN Millennium Development Goals (MDGs), through the doubling of aid to Africa by 2015 (EU, 2007). This reflects the spirit of the Cairo Plan of Action, endorsed at the first summit between Africa and the European Union, held in Cairo in April 2000. The new Africa strategy also called the Cotonou Agreement constituted a common vision for the three previously separate regional treaties: the ACP-EC Partnership Agreement (Cotonou Agreement of 1998) the Mediterranean cooperation program (MEDA); and the trade, development and cooperation agreement with South Africa (Grimm 2006). The Cotonou Agreement regulates the EU’s relations with its member states’ former colonies in Africa, the Caribbean and the Pacific during the decades following their independence. It is also built on three pillars: trade policy with the EU granting non-reciprocal trade preferences, development policy with the Agreement defining areas and procedures for the European Development Fund and political dialogue (Kohnert, 2008). The Non-reciprocal trade preferences allow the world’s poorest African countries to enjoy tariff and quota-free market access to the EU under everything-but-arms. This secures free access to the EU for goods exports from almost all African states especially processed agricultural products and textiles (Schmieg, 2019).
Against this background, Some African states such as South Africa recorded export increases from 2016 to 2017 for fish (16 percent) and sugar (28 percent) and Madagascar from 2012 to 2016 above all for textiles (65 percent), after the rules of origin were simplified under the EPA (Schmieg, 2019). Ghana and Côte d’Ivoire were able to increase their exports of chocolate, cocoa butter, cocoa paste and cocoa powder by a factor of 4.5 and 2.5 respectively between 2008 and 2015 (Schmieg, 2019). Alongside economic growth and regional integration, it emphasizes peace, security, and good governance as prerequisites for sustainable development in Africa (Kohnert, 2008). This strategy was reconfirmed by the second EU-Africa Summit in Lisbon on 8-9 December, 2007, which focused on energy; climate change; migration, mobility, and employment; democratic governance; and a joint EU-Africa political and institutional architecture (Kohnert, 2008).
In order to achieve sustainable development and create jobs for the African population as part of the Cotonou strategy set to double by 2050, private investment in particular increased. The negotiating mandates grant correspondingly broad space to this issue (Schmieg, 2019). The ACP states “resolve to create an enabling environment to improve productivity and facilitate value creation and addition to ACP products and services, to foster trade competitiveness and encourage investment expansion” (Schmieg, 2019). Under the G20 Compact with Africa (CwA), African states implement reforms to improve the environment for investment and in return the G20 governments use various instruments to encourage private investors to engage more strongly in Africa (Schmieg, 2019). The European External Investment Fund provides €4.1 billion, designed to mobilize €44 billion in private investment by 2020.
The Africa-Europe Alliance for Sustainable Investment and Jobs unveiled by the Commission in June 2018 bundles existing initiatives in the area of development and trade of the EU-AU Partnership to strengthen dialogue and cooperation with Africa on the subject of investment climate, including investor protection (Von Moltke & Suisse, 2004). A modern investment agreement between the EU and Africa has guaranteed investors security and stability for their investments, but also commit them to social and ecological goals in line with the international sustainability goals Along with the AU and its sub-organizations or institutions, the EU also has regional partners in Africa (Schmieg, 2019). The most important institutional partner is the New Partnership for Africa’s Development (NEPAD, adopted in July 2001), including its key element, the African Peer Review Mechanism (APRM). Both were created to guarantee the member countries ownership over their development programs. The new institutions have displayed a commitment to self-government and agency on the part of African states (Von Moltke & Suisse, 2004). The EU as well as the scholarly community consider their formation to be an important step in the right direction. Yet, NEPAD has continued to reflect connotations of Western conditionality for example, the “carrot and stick” policy of the EU, because of the strong influence of the international donor community on its conception (Schmieg, 2019).
To continue, the soaring oil and other raw commodity prices as well as growing competition among global players to secure access to vital African resources has brought about promising prospects for growth and prosperity in sub-Saharan Africa (IMF, 2007). On average, Africa’s economy grew by about 6.5 percent in 2007, well above the long-term trend for the fifth consecutive year and part of the longest growth phase for 35 years. All in all, Africa is now better positioned to withstand a deterioration of the global economic environment than in the 1990s and 1980s (IMF, 2008). Major African players such as Nigeria, Ghana, Kenya, Tanzania and Togo have used the newly gained leeway to improve economic governance and debt reduction (OECD, 2008). Real per capita income has remained about the same as in the mid-1970s. Therefore, only a minority of African least developed countries (LDCs) are likely to achieve the “Millennium Development Goals” (MDGs), that is, to halve poverty by 2015 (IMF 2008). European politicians and some of their scholarly advisers have promoted a “big push” comparable to the Marshall Plan; conditionality of aid to encourage “good governance”; external military guarantees as a decisive means to combat poverty (Collier 2006).
Moving on, in Africa’s fight to end poverty, the West have promoted better institutions. In 2005, the Group of Eight countries agreed to double foreign aid to Africa from $25 billion a year to $50 billion in an attempt to salvage Africa from poverty and lost decades of poor economic growth (Asongu, & Nwachukwu, 2016). The ‘Big Push’ Model also included a decision to scrap aid loans contracted by African countries during the previous attempts by donors to assist the region in the aftermath of the debt crisis of the 1980s (Asongu, & Nwachukwu, 2016). Prior to this effort, Africa was already the most aid-intensive continent in the world in per capita terms. In September of 1980, world leaders met at the United Nations to discuss further financial assistance with structural adjustment reforms for helping Africa to embark on the path of sustainable economic development by halving poverty by the end of 2015 (Easterly, 2005). Burnside and Dollar (2000) concludes that aid is effective when policies are good and under a relatively common set of conditions, a necessary condition for accelerated progress in very poor countries (Booth, 2012). Foreign aid has been effective in helping Africa achieve its goals. It has helped develop in the reduction of smallpox disease, increase the life age and reduce the fertility rate in the whole world especially the case of Ethiopia (Kohnert, 2009).
DISADVANTAGE OF AFRICA’S TRADE WITH HER TRADITONAL PARTNERS
Although trade with Africa and her traditional partners has been beneficial to Africa, from another point of view, this partnership has been detrimental to Africa’s development. First, the EU’s strategy of creating clusters of separate free trade areas linking Europe with four regional groupings has threatened to damage solidarity among African countries and to impede regional integration instead of promoting it. This is because African countries may be encouraged to reinforce regional trade barriers in response to unfavorable trade regimes enforced by the EU, not least because of a potentially severe loss of customs revenues which is the major source of government revenue in many African countries (Stevens 2006).
African regional cooperation and integration is still hampered by considerable interregional discrepancies in capacity, resources, and the degree of political organization. The degree of regional integration is rather low. Just eleven percent of international African trade occurs within its own sub-regions. Existing regional trade arrangements in sub-Saharan Africa suffer from high external trade barriers, small market size, poor transport facilities, and limited resource complementarity between member states (Yang & Gupta, 2007). These structural divergences have been intensified by the recent developments on the world oil markets. Because of the strong and growing structural discrepancies between RECs, the EU has insisted on separate negotiations with each sub-region on the future EPAs. However, its African partners have preferred joint consultations and suspect the EU of using “divide-and rule” tactics
This is even worse with the case of aid. For example, the negotiations on the programming of the 10th European Development Fund (EDF), which run parallel to EPA negotiations was used as a “stick-and-carrot” tactic to convince African partners to accept unfair trade regimes. Policy conditionality as being ineffective in promoting reform and its consequences like inhibiting the reform efforts of governments, insincerity about liberalization and sending wrong signals to the private sector is discussed by Morrissey (2004). These problems are compounded by the fact that recipients may have an incentive not to implement agreed reforms, and the donors increase their own utility by disbursing funds regardless of slippage. White and Morrissey discovered that conditionality designed under one scenario may not be effective under another. So, it not always that conditional aid works in certain situations, hence, makes the aid ineffective. White (2001 ), reveals that most of the aid recipient countries and particularly in Ethiopia, conditioned aid is becoming a burden to the government, to the individuals who are assigned to the project cite as an administrator or manger, and to the nation at large creating dependency and institutional instabilities. Technocrat aid (as a result of tied) from Africa’s traditional trade partners results in the situation where experts from the donor country do not always coordinate their programs with the recipient government’s national plans, which can cause duplication of efforts and inefficiencies. Technical assistance is coordinated with the country’s programs only 53 percent of the time, which is lower than average, although that figure has improved from 41 percent in 2005 (Essex, 2013). In either case, the recipient country is left with aid whose value for fighting poverty is diluted by its inefficient route. This tends to make Tied aid a well-intentioned foreign aid system appears self-serving, and it sends the message that foreign aid is designed to invest in donor country, not the recipient (Essex, 2013). The conditionality prevents donors (specifically the Bretton Wood Institutions) from putting in place a rewards and punishments sufficient to overcome the frequent perceived conflicts of interest between themselves and recipient governments. This shows the credibility of threats of punishment made by the donors in the event of non-implementation or withdrawal of access to agreed or prospective aid (Killick, 1998).
More than thirty years after the signing of the first Lomé Convention (1975), the Africa still exports primarily raw materials to Europe and provide a ready market for European finished goods. Conventional procedures have not promoted diversification, competitiveness, growth, or poverty reduction in any sustainable manner. Although regional integration has belonged for decades to the declared aims of both the EU’s and the ACP’s own development strategies, it has been applied with little success, particularly concerning the eight existing regional communities in Africa. Inter-African trade and investment has remained low, mostly because of a lack of both political consensus and the will to divest of national prerogatives and other nontariff barriers (ECA, 2006). Brussels has repeatedly threatened to increase trade barriers against African imports in accord with WTO rules if the non-reciprocal trade preferences of the Cotonou Agreement expire. Joint political dialogue on trade, peace building, conflict prevention and resolution have increasingly collided with different orientations provided by the more dynamic, newer Africa initiatives described (Grimm, 2006). In fact, the Cotonou Agreement has been facing the risk of being made increasingly redundant, most notably by the current negotiations on the new EPAs. The small gains which might result from the EBA initiative are expected to fade away as a consequence of the EU negotiations on EPAs and the compliance by all parties concerned with WTO obligations, thereby resulting in what will actually be a worse situation for Africa (Kohnert, 2008). Therefore, African states have insisted that RoO should be reviewed during the EPA negotiations in 2008 (Stevens, Meyn, Kennan, Bilal, Braun-Munzinger, Jerosch, & Rampa, 2008).
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- Esther Onomah (Author), 2019, Africa and its Relation to China, Munich, GRIN Verlag, https://www.grin.com/document/512218