Friday, July 19, 2024

African leaders’ dislike of trade openness undermines growth  

The World Bank recently convened a summit of heads of state in Nairobi under the auspices of the International Development Assimilation (IDA).  Initially, when I came across the news of the gathering, I wondered why Botswana was not represented but quickly learned that the IDA is a gathering of low-income countries.  While I did not watch the whole shebang,   I got a chance nonetheless to watch a speech by the president of Uganda, Yoweri Museveni. In his book, it might well have been a treatise on international trade

 I know that one swallow does not make a summer but the Ugandan leader’s exposition was yet another case study of why Africa is generally making little headway economically.  He took pride in extolling the virtues of his inward-looking trade policies such as banning the export of iron ore. He added that he was also mulling a ban on raw coffee from his country and implicitly exhorted other African coffee-producing nations to do the same.

In his remarks, he seemed to hold economic and other development experts in contempt and for all intents and purposes, mocked the notion of sustainability. The man did not his words and warned those who cared to listen that he is done with those who approach him to peddle such concepts. I must add though that I too, also find the notion of sustainability of putting because it is used to foist unviable solar and wind energy on poor countries and deny us access to cheap energy in the process. 

The trouble with Museveni and his fellow travellers on our continent is that they seek to treat economic orthodoxy especially as it relates to trade openness, as nothing more than a sinister ploy by clever people to keep Africa from rising into an advanced economy. With that posture, they are then happy to want to reduce international trade to a zero sum game. In that zero-sum game, the coffee producer is worse off if he exports his coffee raw and to put him out of his misery, our benevolent leaders blissfully slap him with an export tax which they euphemistically call a levy. 

In that bliss, they sweep aside concerns by the clever people – as they mockingly call those who prefer policies that are based on empirical evidence –  that taxing producers for the sin of selling their produce to those who pay a premium price, is to throttle economic freedom. Without economic freedom, the free market is constrained from operating optimally. And the vicious cycle continues because the free market is the only economic system that has -and is – able to lift millions out of poverty.  This therefore means that our economic freedom as individual businesses and consumers must not end at where the border with our neighbouring countries starts.

The freer the people and businesses are to trade with other nations, the greater the prospects for economic prosperity. We see that with the advanced economies of the West including nations such as Japan, South Korea, Malaysia, and Singapore. Closer to home, Mauritius is a good example of an economy that has benefitted greatly from trade openness because its unwritten dictum is that you either have to trade or die. They have no minerals to support a welfare state. As a result of this, they chose openness which has thankfully moved them away from the league of low-income economies. It is instructive therefore that they did not have to be part of the recent IDA meeting.   

Our leaders must face up to the reality that international trade has been with us since biblical times. This is the reason why the people of that era had important trading routes to facilitate commerce and thereby prosper. They did not just sit around in Egypt and trade only with their brethren and kinsmen.  They crossed  the desert to trade in Hebron , Jerusalem , Bethel , Jordan , Damascus , Gaza ,  Beersheba ,  Ashdod as well as in other areas in the empires of their time. We must follow suit lest we stagnate. 


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