Africa will have to learn to deal with major changes in the global economy, but it will not be straightforward, says the former executive secretary of UNECA.
Carlos Lopes, professor at the University of Cape Town, former executive secretary of the UN Economic Commission for Africa and expert on African economies, policy and geopolitics, sees a future for the continent with new fault lines and new allegiances that are threatening the current consensus.
In a wide-ranging interview shortly after the June meeting of the G7, he tells us what he thinks is at stake and what Africa’s position should be.
Carlos Lopes addresses a meeting of African finance and economy ministers during his time as executive secretary of the UN Economic Commission for Africa. (Photo by ISSOUF SANOGO / AFP)
Carlos Lopes: I would say that the complexity of the world is there for us to see. With the war in Ukraine, we see the acceleration of several phenomena. In particular, decoupling, i.e. a divergence between the Western economies and the economies of countries that are increasingly associated with the Chinese economy.
I found that this type of tension was already present before the pandemic, for example with the trade war that President Trump had declared. I am convinced that the war in Ukraine is a consequence of this much greater and structural tension. Russia, whose economy is very dependent on fossil fuels, is undergoing one of the most dramatic demographic transitions in the world, with a considerable ageing of its population, which will also fall in size. Hence its attachment as a huge country to its history and to the Russian-speaking world.
These are major trends and shifts that are happening. Africa will have to learn to deal with them and transition, but it will not be straightforward.
You say we are entering a fractured and bipolarised world. How should Africa respond? How will it be able to react to all this antagonism?
The continent is facing a food crisis, caused as much by logistical and supply difficulties as by speculation. According to analysts, the quantities of grain currently available on global markets are at historically low levels. Africa was not expected to suffer so much, but with the difficulties caused by the absence of the major producers Russia, Ukraine and Belarus from the global market, speculation is further driving up prices. Food has become a strategic tool.
For me logistics and supply chains are fascinating. They are less talked about but events from the last two years have highlighted the importance of getting logistics right. Thirty percent of agricultural production in Africa is lost because of poor logistics. The African continent is the only one without a coast-to-coast trade route. The hinterland isn’t on the important trade routes. This has to be changed. Thankfully we are seeing significant investments in ports, airports and roads. But more needs to be done, especially in rail infrastructure.
We need to learn from the current food crisis. Lesson one is to consume much more of what we produce and less of what we do not produce. There are many crops that are adapted to Africa and are probably much more productive, nutritious and climate resilient. There is little reason for Egypt and Benin to import more than 50% of their grain from Ukraine or Russia.
Then we have the energy crisis, which affects Africa in several ways. Of course, inflation affects most African countries that are net importers of fossil fuels. Even producers who export crude oil are importing refined products so they are not immune to the increase in the price of energy. But more importantly on this front is the issue of financing.
There is currently a major issue financing anything that is related to fossil fuels so we have not been able to fill the gap left by Russia in a meaningful way because of the last few years of underinvestment.
The third crisis is macroeconomic. It is caused by the lack of access to capital markets. Sanctions have been disruptive and we are seeing an appreciating dollar. This is having repercussions in the rates of interest at which countries can borrow, higher yields, and thus much less room for manoeuvre.
The combination of all these factors is creating a particularly troublesome short-term horizon.
Lastly, severe droughts are affecting the Horn of Africa, parts of the Sahel and Southern Africa. This is not new and they are not showing signs of abating, so we can expect a very difficult 2022 and 2023.
I had predicted that the pandemic would hit Africa hard, largely because of the collateral damage it would cause, but the other global crises and repercussions from the policies the West took against Covid have aggravated the situation.
At their June meeting the G7 discussed priority issues and the actions they would take. How do you see this gathering of the powerful – does it serve a purpose?
The G7 certainly serves its members. But we’ve seen a high level of hypocrisy recently, first because of the pandemic on the issue of vaccines and now around the issue of the energy transition, where everyone changes their point of view and position to ultimately serve their interests. Only last year, countries were saying they were against gas and now they are travelling the world clamouring for it. One day, they tell us we must put an end to coal in Africa, and the next they are striking deals to purchase coal from Botswana and elsewhere!
The level of hypocrisy is so great that no one believes the announcements being made any more. A few days before the Europe-Africa summit, the Global Gateway initiative was announced. Africa was to receive €150bn [$154bn – over 5 years], but when you look more closely at the numbers, the EU budget has only €33bn for the same period and we do not know where the rest will come from.
Now the G7 has made a new announcement and promised huge sums for Africa. But again it doesn’t add up.
The US has just announced $4.5bn to support food security in Africa. But people need to know that spending on the war in Ukraine is about $5bn a month in budgetary spending. Ukraine alone, in one month, receives more than all of Africa during the crisis caused by the same war. So in the grand scheme of things, even that announcement is actually only a drop in the ocean.
In fact, we should be talking about “the Africas” and not about a common direction or vision for the continent, which is still moving at a different pace.
The African space is a political construction like the European Union. The West of colonial times is not the West of today, which has shrunk considerably [in global terms].
The justifications for Western thinking are also changing – before, it was centred on the renaissance, now it’s the defence of the international rules-based system. Each time, these definitions are political constructs to serve the interests of the West.
Africans must develop their own political constructs and define what they want. The African Continental Trade Area [AfCFTA] is a positive example of this.
We have to do this in a meaningful way. To be able to better negotiate at a global level and from a position of strength in a world that is becoming increasingly turbulent, the only solution for Africa is to be able to come to the table with clout and dimension that carries weight.
We have a fundamental role to play in the solutions of tomorrow. If the West is interested in green hydrogen and strategic minerals they will not be able to do this without engaging with Africa and we need to be able to negotiate from a position of strength and be part of that value chain.
Will Africa once again become dependent on unrefined raw materials? Or will it take advantage of this crisis to better position itself and add value to these new forms of natural resource use? These questions will weigh heavily on the negotiating capacity of the AfCFTA. I have a saying: you don’t get what you deserve; you get what you negotiate.
You once said “We want to get out of an asymmetrical relationship between a party that has the means, and therefore decides on priorities, and another that has to adapt.” Are we still in the same situation?
Yes, and that is why it is important to know how to negotiate. Very often our leaders give in very easily to the pressures they are under in exchange for a seat at the top table. They appear more interested in the photo op than the outcome of those talks and in defending our interests.
I have seen this, for example, in the climate negotiations. African countries are the closest to net zero, the objective currently being discussed. In order to be able to talk about a “just transition“, another fashionable expression, it must benefit the countries that are closest to the objectives. We therefore have a kind of carbon credit because the other countries – which are industrialised – pollute and exploit nature, particularly our raw materials. For a long time, raw materials were the major driving force behind the growth of Western economies. These countries therefore have a carbon debt, and we have a carbon credit.
This type of negotiation is reflected in the details. For example, during a discussion on the new tax that will be introduced in the European Union, to penalise the carbon intensity of certain imports into the European area, African countries will pay the costs if they do not negotiate in such a way as to avoid this tax penalising them.
What is on the table and has already been passed in the European Parliament is of no interest to Africa. The EU tells us that it will tax the products we export to its markets but intends to give us aid to compensate for the difficulties we have with the energy transition. This is putting us once again in a situation of dependence when it was possible to negotiate differently.
How can Africa reorganise priorities and shape its strategy when the continent is once again in a crisis and being pressured by all sides?
We have evidence of this difficulty in relation to the pressure being exerted to take a position on the Ukrainian issue. Most African countries are not interested in taking a position for obvious reasons. They are familiar with the logic of the Cold War and do not want to enter a game where you have to take a position.
Each time this has happened, we have lost a set of partners and become even more dependent on the partner we choose to support. I don’t see the case for it. And I can’t imagine an African country wanting to depend on Russia or China. Similarly, I can’t see African countries wanting to depend only on the goodwill of Western countries either.
That’s why it makes sense to stay somewhat outside this obvious polarisation. This period in which African countries have to navigate in troubled waters will be extremely difficult. Depending on what is done with the AfCFTA, they may or may not be able to count on a much more active and energetic Africa.
If we fail to implement the AfCFTA, we will lose a considerable amount in terms of our negotiating hand and we will remain under enormous pressure [given our dependence on external partners].
I am very encouraged by the statement in one of the G7 declarations that we must invest in infrastructure. I hope that this is not just a form of politeness. Indeed, infrastructure makes all the difference. African countries have relied heavily on China in this area, but I am convinced that they do not want this dependence either. They want to have the freedom to negotiate with several partners.
Many countries are capable of understanding the future of Africa. It is a demographic future and a future of strategic resources for the transitions I mentioned.
But it is also a future important partner in terms of trade and a large consumer market of 2bn people. The same pessimism existed about China when its people were on bicycles. At the time, it was already a nation of billion people but with a small economy in terms of GDP.
Today, China is no longer talked about in the same way, and I am convinced that this will also be the case in relation to Africa. Simply because half of the world’s youth at the end of the century will be in Africa. They are, for obvious reasons, the biggest consumers of technology, unlike older populations.
Africans can count on these assets but they are not cheap. It is not something that will automatically put Africa in a good position. When I talk about the future of the African world, I’m talking about potential and the major trends that favour such a possibility.
Is Africa still a continent where change is taking place frustratingly slowly?
I see several factors affecting this. Focusing on the internal factors, which are those that Africans can change themselves, the first is more inclusive growth. This means much more investment in human capital, especially in education and health.
Above all, taking advantage of all the innovations that have been introduced during the pandemic and which have shown the role of social protection.
We had something really extraordinary where Africa was more resilient than the rest of the world. We need to take advantage of this and not let it be a passing thing.
The second aspect is that African taxation must be much better organised. We have a lot of savings that go up in smoke. For example, pension funds, which hold huge sums of money that are not used productively, could make a difference to the capital markets and create much more consistent African markets.
Thirdly, countries must stop trying to be carbon copies of Western democracy just for the sake of it. That is, to have constitutions, elections, to look like Western countries do, without really dealing with what is the essence of democracy.
The ability to respect diversity is the main problem in Africa. Whoever comes to power takes over everything. He appropriates the economic means, the political space, he eviscerates the space of cultural and ethnic diversity.
This is a major cause of our problems. A country like Ethiopia, which was industrialising at great speed with substantial transformations and reforms, is completely bogged down today by problems of ethnicity. This is what is undermining our growth and in Ethiopia’s case caught up with a country that was reforming and showing great economic growth.
Does Africa have the means to choose a different development trajectory?
I see civil society and citizens’ interest in politics increasing in Africa. People don’t easily accept the state of affairs they are given. So they are demonstrating a lot and, in my opinion, this is the beginning of something more serious.
That is, a readjustment of the political space. First of all, the monopoly of authority and force is crumbling everywhere. Even countries with regimes that are fairly well equipped with security and military apparatuses are not really able to control their populations.
Even producers who export crude oil are importing refined products, and are therefore affected by inflation. This also affects us from an investment point of view, because although many fossil deposits have been discovered recently in Africa, financing their exploitation is becoming problematic.
These demonstrations, which can be seen even in countries with complex governance structures such as South Africa, are really the beginning of a kind of questioning of the models [that have been adopted to date].
These things take time and you don’t change the model overnight. Even in Western countries, it took wars and long processes of institutional construction.
I also see that the monopoly of truth has disappeared. It is no longer possible to say that this or that country is a reference point. Notably, in the countries that used to serve as reference points for the West, we have seen sinister people come to power or to the verge of power.
Finally, what needs to be closely monitored in this period of serious crisis so that African countries do not worsen their predicament?
In the short term, we need to focus on three things. First, the negotiations on the debt issue in Africa have gone somewhat round in circles. The three mechanisms that were put in place during the pandemic have not produced much in the way of results.
We also need to look at the way the current international institutions are structured. We saw that international bodies were not up to the task of dealing with the latest crises. They don’t have quick and consistent instruments to respond to this kind of crisis.
Africans must not accept a new wave of pandemic-like measures. The crisis is getting worse, so we need to question the instruments. I think this discussion has already started.
This interview originally appeared on the website of our French sister publication New African, Le Magazine de l’Afrique.
Source: Hichem Ben Yaiche | African.business