Africa: A Market of One

“In the simplest sense, to think our forefathers were seen any different from mineral resources is a sentimental position on colonialism.” - Redacted, 2024

The crux of what you are about to read explores several subjects my somewhat nationalistic mind has been nibbling on for quite some time: our strengths, our economies, our present, our narrative, and our tomorrow. If you are here for the answers, this may not be your read, but if you are here for thoughts that should trigger the right questions, kindly hold my hands.

Africa, deep sigh

My people—all 1.49 billion of us—are about 18% of the world, by United Nations estimates. Our median age is 18.8 years, which is powerful considering Asia, North America, Latin America, and Europe have median ages of 31.9, 38.4, 31, and 44.5 years, respectively. Blame that in part on a greater life expectancy and largely on the new found latitude of the concept of family. Africa is the world's second-largest and second-most-populous continent after Asia. We cover 20% of Earth's land area, at about 30.3 million km2 including adjacent islands.

The data suggests we should be far more effective as a people than we are; we should be economically solid and have wealthy nations. If your immediate thoughts are bad governance, corruption, and the like, please shelf them for now; it's too soon.?

Let’s talk economics. Africa is home to some of the world’s largest deposits of natural resources; the GDP of the entire continent? $3.1 trillion. For context, the GDP of Japan is $4.2 trillion, and that of Germany is $4.4 trillion. As a continent, we have twice the population of Europe, but singular nations are apparently wealthier than we are. Nine of the top 10 poorest countries in the world by GDP per capita are African nations.

The oddity is that Africa houses some 30% of the world’s mineral reserves; we have 40% of the world’s gold, 12% of the world’s oil reserves, about 10% of the world’s natural gas, and up to 90% of its chromium and platinum. Two-thirds of the world's cobalt is in the Democratic Republic of the Congo alone. The world’s largest diamond, platinum, and uranium reserves are also here, and we hold 65% of the world’s arable land and 10% of the planet’s internal renewable fresh water source. All too puzzling: the countries with the largest gold reserves in the world are the United States of America, Germany, Italy, France, and Russia. One of the largest gold mines in the world, your guess? Kibali, Democratic Republic of the Congo.

When we consider the trade spread on all these resources, it looks like one huge bad deal, anywhere you look. The common, albeit weakest, argument is “value addition." So if we know it and are certain it is possible, why can’t we do it? Germany, the “coffee giant,” doesn’t even grow coffee beans. But with the abundant resources at our disposal, can Ethiopia and Uganda not process their coffee? Can C?te d'Ivoire and Ghana not process their cocoa? And Nigeria, Africa’s number one oil-producing country, can’t refine its oil??

If you work in services, you may not fully understand. To win in any sector or industry in the real African economy is life’s work; any step in enterprise you take that structurally affects the corresponding transaction in the West will directly be met with force and fences - ask Mr. Allen Onyema. In the words of a wise Kenyan, Julian Kyula, we have “wicked problems.” A genius businessman, whom I know, owns a lithium mine in northern Nigeria. He says to me, “Many have lost their acreage; there are foreigners in the bush and villages; places you cannot go, my brother.” Wicked Problems!

“Yet all stock exchanges in the world are preoccupied with Africa's gold, diamonds, uranium, platinum, copper, and iron ore. We have been too busy nursing our separate states to fully understand the basic need of our union, rooted in common purpose, common planning, and common endeavor." – Kwame Nkrumah, the first Prime Minister and President of Ghana.

As much as I love a football reference, it just won't cut it here, so let's play tennis. In 2018, Naomi Osaka became Japan’s first Grand Slam singles champion after she defeated Serena Williams at the U.S. Open. Many only remember this match for Serena’s upset exchange with the umpire, Carlos Ramos. If this were global trade, Carlos Ramos would also play in the same tournament, and that, my friends, is the conundrum. The referee can’t play, and if he must play, he shouldn't be officiating.?

In July 1944, the International Monetary Fund and the World Bank Group (WBG) were born, not in Pretoria, Kigali, Rabat, or Port Harcourt, but in Bretton Woods, New Hampshire, USA. The core interests of both financial institutions were set before the bulk of us even showed up. And as much as I admire the work of the current president of the World Bank, Ajay Banga when he served as CEO of Mastercard, I cannot say with certainty that he will “end extreme poverty within a generation and boost shared prosperity"—in Africa.

“These divisions, which the colonial powers have always exploited the better to dominate us, have played an important role—and are still playing that role—in the suicide of Africa.” - Patrice Lumumba, African Unity and National Independence Speech, March 1959.

Four years on, I still have quiet optimism for the African Continental Free Trade Area (AfCFTA), as it aims to create a single liberal market for goods and services to enhance the movement of capital and people. It is also structured to aid the movement of goods and services across the continent without restrictions, with a forecast that by 2035, Africa's gross domestic product will increase by $450 billion. The prime challenge is that trade moves faster than policy, and transactions simply do not wait for frameworks to catch up, but we have to be relentless in this cause. Also, a larger portion of the trading activity across the continent is not documented; there is still Bitterkola moving from Eastern Nigeria to Kaolack, Senegal, by road; soaps and cosmetics are still being flown from Lagos, Nigeria, to Luanda, Angola; and drinks and beverages from Lagos to Accra are easy money beyond what our “EXIM” banks and export commissions can capture.?

Efforts like PAPSS (Pan-African Payment and Settlement System) are geared towards facilitating our intra-African trade, which is around 15% of our total imports and exports on the continent. However, the limitation with our infrastructure, as a friend of mine constantly says, is that we assume a level of education and sophistication that just isn’t there. Our people need to evolve but efforts to sensitize key players must maintain consistency. If the AfCFTA succeeds internally, then we can look to the West with one trapezius.

Interestingly, according to the Director-General of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, Africa’s share of world trade stands at approximately 3%, and there is a lot of headroom to improve. A single market clearly can harness this latent potential; together, we are far stronger and much larger to easily trip up.?

An even more disruptive concept is a single currency, as we mostly have similar pitfalls from a national tender standpoint. Our difficult external debt situation further exacerbates the matter; this figure had already hit $824 billion as of 2021, with countries sacrificing up to 65% of their GDP to servicing these obligations. We’re bogged down by expensive and short-term commercial debt, with 44% of Africa's total debt being Eurobond debt, a big jump from 14–17% previously. It is clear that our risk profiling in this regard is wrong, but we engage handicapped despite data showing that Africa's default rates are lower than those of other regions. The greater risk here are these reckless natural resource-backed loans, as these can potentially take us back 70 years, and it is Sékou Touré vs. Charles de Gaulle all over again. Remember, Sékou Touré’s slogan was “We prefer freedom in poverty to opulence in slavery” in 1958-Guinea; it's 2024 now, and we simply cannot afford to go back.

“A conversation we must have and we need to convene the leaders of this continent to talk about this visa story. This is a disaster, and let me just say the following: I struggle to understand why I can land in Paris, get on a train, and end up in Brussels, but if I want to move from Johannesburg to Gaborone, I must produce a passport. Who's the genius that came up with this scheme?” - Vusi Thembekwayo on Visas in Africa.

Truly, we are the solution, and I opine that even beyond educated people, we need more productive people. In my country, our population is projected to be on the other side of 400 million by 2050, with 200 million people under the age of 25. The inherent possibilities are boundless. So, what can we do?

If you are really about it, pick a sector—the real economy—and prepare value-creating solutions. We don’t need more fintechs, and there are way too many who only run commentary. Gamble migration, as I call it, is clearly not the solution; there have been cycles. To quote Apostle Grace Lubega from Uganda, “When the Israelites were slaves in Egypt, their testimony was food.” From the scripture, Numbers 11 vs. 5 (NLT) is what I hear when I interact with some of my countrymen who visit from abroad. Therefore, if you only desire to live well and have enough for your family, never mind.?

From Aswan to Casablanca, Dodoma to Tema, Lagos to Porto-Novo, Luxor to Dar es Salaam, Marrakech to Enugu, Hurghada to Nairobi, Morogoro to Abuja, Accra to Ouidah, and Tanga to Cairo—all of which I've been privileged to set foot. My inference is that we need saviours, and it can only be us who will save ourselves.

A special thank you to my friend Ahmed Elsayed in Egypt, who insisted on buying his shoes from Nigeria and led me down this thought road.

So here’s the CTA... A borderless Africa is a sensible move; it is obvious; we are not blind; we are just occupied.

Till then, are our people hungry? Qu'ils mangent de la brioche.

BTE

#002 - Musings At The Township