Zimbabwe: African Industrialisation Needs African Free Trade

The strong moves by the African Union towards the industrialisation of Africa, and it has just concluded an extraordinary summit on the topic, shows the vital importance of African to convert its huge deposits of raw materials into manufactured products.

That summit last week was extraordinary in several respects, and now just in its title as a summit outside the normal run of summits.

It is unusual for an AU summit to deal purely with practical economic issues, with political decision-making not just on the back burner, but not even on the agenda. The need for an entire continent to start moving forward rapidly was obvious, and the agenda was how to do this most swiftly.

It needs, as most of the economic experts made very clear, a set of common national positions. The first, in the modern world, is to ensure that the market is large enough.

A lot of African countries are quite small, with populations that are relatively modest, in the teens and twenties of millions and some even smaller.

There are a handful of giants in population, but not many.

This is why the African Continental Free Trade Area (AfCFTA), is so critical. When established it will mean that things made in Africa, by Africans from African raw materials can be moved around the continent without attracting customs duties. The investors need not be African, but the rest has to come from the continent.

We have a group of regional common markets still in various processes of formation, and these have been on the books for more than three decades now. AfCFTA needs to progress a lot faster.

When setting up a free-trade area there is a lot of work to be done, in drawing up things like rules of origin and ways of setting common standards.

But a lot of that leg-work should already have been done with the regional organisations, and considering that there was a strong preference from the start for these to use many of the same standards, they should fit together a lot better than would otherwise be possible.

But we need to move forward on converting the fairly strong political will into reality.

So the AU at its highest levels, like the summits, needs to become the major driver.

The need for industrialisation is obvious. Africa is still, by and large, a continent with the highest percentage of people involved in agriculture.

This cannot continue for ever, as we can see in Zimbabwe’s case where census after census shows the steady fall in the percentage of the rural population, despite the fact that in actual numbers that population is rising or at least staying steady.

Land is limited, and while land reform opened a lot of opportunities now being exploited, it is a fact that not everyone who wants to farm can find a farm, and that will grow more obvious in time.

We can maintain roughly what we have, and use more intensive farming to raise the existing farming families into the upper-middle income groups, but we are unlikely to expand their number, just their wealth.

While our birth rates are now fairly close to replacement levels, the result when you look around the world of giving girls and women equal access to education and ensuring decent primary and public health systems, our populations are still rising, and will continue to rise until everyone born in the last 20 years, the Zimbabweans still to complete their education let alone start earning a living, are all old men and women.

Those livings will largely have to be earned outside agriculture, or more precisely outside direct farming. This does not mean that the new opportunities have to be in large towns and cities.

When we talk about rural industrialisation we are talking about a range of activity.

The two most important are local processing of farm produce and the sort of light industry that farming communities, especially those growing more mechanised and complex, need.

Local processing can cover a lot of area, but need not be basic.

To take an example from France, we have those ranges of local speciality foods known around the world, in small processing plants.

We have a modest group in the Champagne region converting the carefully selected grapes the farmers are paid to grow into the luxury end of the wine trade, with s string of processes required before someone packs bottles into a carton for the overseas customer.

So industry can cover the whole continuous range, from the new giant steelworks being built by Dinson Iron and Steel in Manhize, plus its smelters for alloy metals elsewhere plus its coking plant and power station in Hwange, to the village carpenter making a set of tables and chairs, or the small processing plant converting a nearby special fruit into something that can be a luxury brand.

But what all these have in common is turning a raw material there on the ground or under the ground into the intermediate raw material, like steel, or the final product, like a car.

And this is where the future jobs come from and why free trade is so essential. For a start, making African cars from African steel, as was given as an example at the summit, is fine but we need to remember a fairly typical country like Zimbabwe could possibly support one car factory if we all agreed to drive the same make.

Car manufacturing will be spread and we will export some and import some, and probably add in some of the steel others without steel will buy.

In an integrated market this is not a problem; we all get richer together, just like the countries of the European Union, the States of the United States and the provinces of China. Economic research shows that large free markets accelerate growth.

In fact, Zimbabwe will probably pick up a bit more change from the African car market, since we have lithium and it is generally agreed that no one will be making internal combustion engines from the mid-2030s.

Lithium ores are not processed into the metal, a dangerous and highly reactive element that no one wants to store or transport, let alone handle.

It needs to be processed into the salts that are needed by battery manufacturers, and once you have achieved the desired purity you have done most of the heavy lifting and advancing to battery manufacture is just an extra step, so we can make and export batteries for a good chunk of the African market, thanks to the free trade making us competitive as a supplier.

It is this sort of potential manufacturing and trade that makes AfCFTA so vital for our future, and why we need to be taking the lead in turning the political decisions made at summits and in treaties into the detailed, very detailed regrettably, rules of origin and the like that sees trucks carrying our products.

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