According to various World Bank Reports, Africa’s growth may exceed five per cent in 2015-16 despite recent setbacks. Such reports paint African economies as being on a growth trajectory expanding at a moderately rapid pace despite the weaker-than-expected global growth and declining commodity prices. With the Federal Reserve managing the dollar well lately, most foreign currencies – more so currencies from African countries – have depreciated significantly against the dollar. For instance, Kenya and Tanzania, the largest countries in East Africa by economy and geography, respectively, have recorded significant losses against the dollar. According to Bloomberg, the Kenyan shilling depreciated by 11.29 per cent while the Tanzania shilling lost its ground against the dollar by 23.56 per cent. Other currencies like the South African rand, Ghanaian cedi, Ugandan shilling and Zambian kwacha depreciated by 13.78, 15.7, 20.5 and 47.36 percent respectively.
Despite these challenges, Africa and particularly East Africa economies continue to thrive on strong economic fundamentals and are thus being regarded as the next growth frontiers for the global economy. Global leaders continue to affirm this through their foreign policies cemented by their visits to Africa. Kenya and Tanzania continue to receive business delegations from the Americas, Asia and Europe who are keen to invest in key sectors of the economy such as agriculture, tourism, ICT, building and construction, oil and gas, and mining, among others. In light of the upcoming 10th World Trade Organization (WTO) Ministerial Conference (MC10) to be held in Nairobi from December15th to 18th, Africa must be alive to the fact that it plays a pivotal role in the success of the global economy.
The first of its kind to be held in Africa, the choice of Nairobi is a vote of confidence not only to Kenya but also to the whole of Africa, and must be a great source of pride for Africa. Of all the events that have taken place in Africa this year, the MC10 will probably be the one with the greatest impact on the Lesser Developed Countries (LDCs), majority of whom are domiciled in Africa.
Highly publicized but least understood, the Ministerial Conference is where the business of WTO is conducted. The Ministerial Conference is the highest decision making body of WTO. The last Ministerial Conference was held in Bali, Indonesia, in 2013 where the ministers in attendance adopted the “Bali package”- a series of decisions aimed at not only streamlining trade but also allowing developed countries more options for providing food security, boosting least-developed countries’ trade and fostering general development of member states.
How has the road to Nairobi for the MC10 been? Africa’s hope lies in the successful conclusion of the Doha Round, the so called Doha Development Agenda (DDA), if only the round will deliver credible development outcomes. Today, the United Nations Global Goals acknowledge the importance of trade in contributing towards sustainable growth and development. This is why, through the highway or not, Nairobi must deliver on Africa’s growth prospects through trade by moving the WTO agenda forward. The Nairobi MC10 will remain etched in the memories of the African countries because of the likely ramifications on issues such as export competition in agriculture, development issues on duty-free, quota-free market access and transparency in view of domestic regulations in services and rules. These are issues at the nucleus of the economies of LDCs.
For instance, we are all aware that agriculture is the mainstay of the LDCs economies contributing significantly to their food security, export earnings, GDP growth, employment opportunities and rural development. Most agricultural products are the main source of raw materials for industries. Any process that scuttles growth of the agricultural sector has a negative impact on Africa’s dreams of industrialization. Slow growth in agricultural production and persistent sharp annual fluctuations in output continue to be a chronic problem for LDCs. This poor performance of the agricultural sector in most African countries is as a result of internal and external challenges which are part of the WTO’s core function to deal with.
The Doha Round held in 2001 and currently under perceived euthanasia was aimed at lowering trade barriers largely faced by the LDCs. The Doha Round negotiations’ intention was to reduce trade barriers and thus facilitate increased global trade. For developing countries, the DDA was to systematically correct the multilateral trading system, to make it more relevant to these economies and their people placing their needs and interests at the heart of the Doha Work Programme.
However, there are fears that the current state of play reflects a major departure from the original promises of the DDA and the expectations of African countries. Just days to the upcoming Ministerial Conference, agricultural exporting countries like Argentina, New Zealand, Paraguay, Peru and Uruguay have joined hands with the EU to propose tighter WTO rules on export subsidies and similar measures raising pressure on the US to make concessions on export credits and food aid – two areas which Washington has indicated it might have problems with in accepting stronger WTO disciplines.
As the clock ticks, all indications point to horse-trading to have the Doha Round “closed” but not “concluded” at the MC10 without reaching an exhaustive agreement. This could give rise to another agenda dubbed “Nairobi Round” which could have far-reaching ramifications. This premature conclusion of the Doha Round will then give rise to an alternative agenda, the so called 21st Century issues namely: investment, transparency in government procurement, trade facilitation and competition policy. Hitherto, trade facilitation has been a ‘Singapore’ issue which is deemed to be one of the concluded agreements to be “harvested” in Nairobi as a “low lying fruit”.
It is imperative that African countries speak in unison on the issues of progress that have already been identified by the members – such as simplifying rules of origin requirements to make it easier for LDCs to process imported raw materials for duty free export to other markets, reform agricultural export support and reducing tariffs and subsidies to cotton – to open opportunities for African exporters. Above all, members must lobby for greater transparency on trade policies with a spotlight on micro, small and medium-sized enterprises known to be the drivers of economic growth and development in African economies. Kenya’s cabinet secretary for foreign affairs has been lobbying trade ministers from the African, Caribbean and Pacific (ACP) countries to unite and speak in one voice on key trade issues at the upcoming MC10. By approaching trade issues with one voice, these countries will deepen regional integration since they will be able to adopt basic trading principles and easier interpretation of existing norms and adjudications that are key to fostering intra-Africa trade.
For the white smoke “fumata bianca” to signify a decisive and meaningful outcome for African countries, the MC10 must conclusively address issues of market access by LDCs, eliminate trade-distorting domestic support, eliminate export subsidies and apply export competition disciplines to cotton, duty-free quota-free access for cotton exports and affirmation of the development objectives of the DDA. Above all, let us make the outcome of these discussions to have greater impact on the masses, a majority of whom hail from Africa. The job is well cut out for the 161 trade ministers who will be in Kenya’s capital. Let us make trade happen so that Africa can reap the full benefits of the 10th WTO Ministerial Conference. This is the only way LDCs will celebrate Kenya’s position as the first African country to host a Ministerial Conference. By so doing, Africa will be handed an early Christmas gift.
By Benard Ayieko
