Amongst the many dimensions of NEPAD that have some bearing on trade, the most directly relevant for the purpose of this analysis are the following
1. Infrastructural inter-linkages within Africa
NEPAD correctly points out that the building of cross-border and transAfrican road networks, railways, and other means of transport and communication, and the consolidation of joint energy, water and other systems will all be far more effective by benefiting from "economies of scale" [para 93]. The creation of such "essential regional public goods" [para 95] and inter-linkages are, in fact, essential to "enhance regional cooperation and trade" [para 105] and crucial to integrated African development [para 196]. These have to be "addressed on a planned basis - that is, linked to regional integrated development - [without which] the renewal process of the continent will not take off" [para 197]. NEPAD sees a major aim of such infrastructures to be "improving productivity for international competition", and enabling "the international community to obtain African goods and services more cheaply" [para 101].
BUT
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The first problem is that such huge infrastructural projects spanning regions, and even the entire
continent, are not primarily conceived as developmental instruments tailored to the needs of specific sectors, regions or sub-regions in Africa. This would entail careful joint cross-country and cross-border planning and inter-governmental negotiations. NEPAD, however, is basically promoting these as the main attractions to be marketed to draw foreign investment into Africa. These are offered as "great opportunities for investment" [para 177] together with the guarantee of governmental supports, particularly through "public-private partnerships" (PPPs) [paras 106, 178], and with promises of "lowering the risks facing private investors" [para 105]. However, under PPPs it is the private sector that reaps the fullest benefits while the public side will carry the burdens and risks - as elsewhere in the world.
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In addition to having to provide essential support facilities and - on current international investment
terms - to guarantee favourable or 'flexible' labour conditions within such 'joint' endeavours, Africa
would also have to carry the related financial costs arising from the profit 'repatriations' or capital exports by such investors. The bigger the project and the foreign investment involved, the greater will be the adverse pressures on Africa's external balance of payments, and on its external indebtedness. Foreign 'credit' or loans will add to these costs, even if ODA grants are also applied. And, as history has shown, net financial outflows will prevail for long periods before the creation of such infrastructures begin to have their full developmental impact and generate positive financial returns.
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Furthermore, the building of such essential 'sinews' for development in Africa will undoubtedly be evaluated, taken up and located by gigantic transnational technological, construction and service corporations within the framework of their own global investment strategies in these and related sectors. With vastly greater financial and technological resources, management and other skills - than the whole of Africa combined - it is such international corporations and investors that will determine not only the technical features but also the very functioning, the commercial orientation and overall character of such projects as profit-making enterprises; whatever may be the other - declared - intentions of African governments.
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In addition to the above problematics, the most fundamental question to be posed concerns the sequential and functional relationship between such infrastructural provisions and the economic development and trade that it is presumed will therefore be created and stimulated. The question is whether the provision of sophisticated transport, communication, power and other infrastructures will provide the means to economic 'renewal' in Africa; or whether such infrastructures, themselves, have to be created out of real economic development, and have to be an organic part of, reflect and accompany the substantive economic needs, forms and levels of economic activities within countries, regions and the continent, as these unfold. Setting up sophisticated structures in advance of and to stimulate such economic processes, without the necessary systems and appropriate infra-structures to maintain and service them, and without the economic agents and activities to fully utilise or effectively employ them, could simply create more vast 'white elephant' projects in Africa. The inter-relationship or inter-actions between infrastructural provisions and general economic or specific trade development entail much more complex development dynamics than seem to be acknowledged in NEPAD's simple correlations.
2. The encouragement of capital flows within Africa
There is certainly much to be done within and between the respective African countries and regions to eliminate procedural and bureaucratic impediments to productive capital flows, particularly to geographical regions and sectors deficient in the necessary financial resources. NEPAD recommends "the promotion of intra-African trade and investments" through "the harmonisation of economic and investment policies and practices" [para 95].
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Although NEPAD devotes a fairly considerable section to Mobilising Resources [paras 147-155], it offers little in the direction of mobilising domestic resources within Africa. This reflects it's a priori conviction that "the bulk of the needed resources will have to be obtained from outside the continent" [para 147]; although elsewhere it points to "an urgent need to create conditions that promote private sector investment by both domestic and foreign investors" [para 148]. In the section specifically devoted to Private Capital Flows [paras 153-155], NEPAD defines the priorities as: offering the necessary incentives to international investors, especially with respect to their concerns over "security of property rights" and the need to provide them with governmental insurance schemes [para 188], and other guarantees that go with PPPs. But all of these are located in the context of "the deepening of financial markets within countries, as well as cross-border harmonisation and integration" [para 154]. Thus, such measures will not only draw foreign investors into Africa but will facilitate the movement of capital around Africa; with the entire continent turned into a vast integrated and secure field for international investors.
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However, it must also be noted that such financial 'harmonisation' or liberalisation will also be advantageous to South African companies and investors and, through the repatriation of their profits back to SA, will contribute to the further domination of the South African economy within Africa. South Africa alone already accounts for more than two thirds of the combined GDP of sub-Saharan Africa, and a third of the GDP of the whole continent. Financial liberalisation within and between African countries could, conversely, also encourage the flow or 'flight' of domestic capital from other African countries to the (relatively) greater security and profitability of South African financial markets., and thus reinforce further the imbalances.
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In the light of such polarising tendencies reinforcing existing imbalances within Africa, it is also significant to note that NEPAD attaches no importance to the active and proactive role of the kind of regional and continental development funds and other public financial instruments that both the 'African Alternative Framework to SAPs" (AAF-SAP) and the plan for the
African Economic Community propose2. These could provide the compensatory and redistributional mechanisms to re-direct or at least influence the nature of capital flows towards disadvantaged geographical areas or social groups, or into strategically important sectors; a vital requirement for more balanced development, equity and stability in Africa. In similar vein, NEPAD makes no recommendations on the role of public investment strategies and agencies, in and of themselves, as central players in driving and directing major projects and targeting key areas or sectors requiring development. NEPAD only sees such a role for the state in supporting and empowering private investors, whether in PPPs or not. Thus, although at various points apparently promoting the 'role of government', NEPAD's conception of this is in the kind of 'enabling role' to private capital or 'market forces' that the World Bank also now recommends as it has gradually moved to recognise (and promote its own version of) 'the role of the state' in development in
Africa.
3. Common and coordinated regulatory frameworks
NEPAD recommends that agreed public regulatory terms will be important to facilitate cross-border cooperation and "coordination of national sector policies and effective monitoring of regional decisions" [para 95]; and "the promotion of policy and regulatory harmonisation [is necessary] to facilitate cross-border interaction and market enlargement" [para 106]. Thus, regulations would deal with manufacturing processes and standards and trade regulations, such as agreed rules of origin, and "the harmonisation of economic and investment policies and practices" [para 95]. Such regulatory oversight by designated national and regional public regulatory bodies are necessary in all technical spheres, from maritime, rail and road traffic, and telecommunications regulations, to environmental controls; and in all social service spheres, such as labour rights and conditions and safety regulations, education and health standards, especially the monitoring of human disease and animal pest controls and so on. NEPAD clearly recognises the importance of harmonised and coordinated regulatory frameworks for intra-regional and inter-regional cooperation and integration.
BUT
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What would be most significant is the actual content of such regulations, not only in technical but in comprehensive developmental terms. Will such regulations also be designed to encompass the monitoring of the business operations and general economic, social, labour and environmental impacts of corporations and other private agencies, in order to make them more financially transparent, socially and environmentally responsible and democratically accountable? This is what trade unionists and other civil society campaigners demand when they call for obligatory corporate codes of conduct through the democratic public (re)regulation of all corporations and other economic agencies, nationally, regionally, and globally.
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There could also be potential tensions between concerns about designing and promoting a wide range of joint national, regional, and continental regulations, appropriate to the situations within Africa and the needs for planned African developmental integration, on the one hand; and, on the other hand, the observance of existing international regulations basically in order to achieve 'more effective external trade'. In terms of the latter, NEPAD seems to be concerned to "improve the standards of exports" [para 158], by "conforming to international standards" [para 161] and by generally measuring up to the - often biased - rules and regulations set in the WTO. These include, for example, terms in the Agreement on Trade Related Investment Measures (TRIMs) specifically constraining governments from setting what are defined in TRIMs as internationally 'distorting' developmental regulations on FDI; meaning obligatory labour rights and conditions, labour training, technology transfer, local content inputs and so on.
4. Complementary and/or combined cross-border production
NEPAD observes correctly the long-recognised dilemma of most African economies that they are "vulnerable because of their dependence on primary production and resource-based sectors, and their narrow export bases [and that] there is an urgent need to diversify production" [para 156]. In this regard, it notes the importance of African countries "pooling" or combining their resources within regional production strategies [para 94], "cross-border interactions among African firms" [para 168 -vii] and cross-border "inter-sectoral linkages" [para 156]. NEPAD proposes "the alignment of domestic and regional trade and industrial policy objectives, thereby increasing the potential for intra-regional trade, critical to the sustainability of regional economic arrangements" [paras 171-172].
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NEPAD's proposals for industrial development stand in clear contrast to the plan of African Economic Community to explicitly prioritise "collective self-reliance" and employment generation - rather than 'export competitiveness' as NEPAD does (see sections 6 and 7 below). And, in the AEC plan, such industrial development is to receive public financial and technical support, drawing on local components and other inputs, and to be characterised by "industrial specialisation in order to enhance the complementarities of African economies, and expand the intra-community trade base [with] due account being taken of national and regional resource endowments". NEPAD avoids any suggestions about state subsidies and other supports to industrialisation, other than through PPPs and these basically to support of the private sector (see also 5 below).
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It is also significant that, where NEPAD does elaborate on modalities for economic diversification,
these are based on "harnessing Africa's natural resource base" and increasing "value-added in agro-processing and mineral beneficiation [and] a broader capital goods sector" [para 156]. These certainly all have a role to play in internal production dynamics within all economies, but these sectors tend to be based on larger-scale, capital-intensive and even very high-tech enterprises. NEPAD's vision seems to emulate the economic and technological patterns of the most industrialised economies, aimed as it is at "bridging the gap between Africa and the developed countries" [para 98]. It's proposals in the sphere of industrial development within Africa do not explicitly prioritise labour-intensive projects and will not, in practice, necessarily encourage employment creation. NEPAD does not stress economic development and diversification, deliberately based on human resource mobilisation and capacitation - which both the AAF-SAP and the AEC plans prioritise.
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In so far as NEPAD does deal with the human factor in development, it is to focus on "Promoting the Private Sector" [para 166]. Although there are some useful pointers to "both micro enterprises in the informal sector, and small and medium enterprises in the manufacturing sector [as] the principal engines of growth and development" [para 156], it is not so much these but larger internationally connected enterprises that will be the main beneficiaries of the partnerships proposed between African and non-African firms [para 162]. In dealing with broader human resource development, this is mainly based on the "poverty-reduction" (not eradication!) policies of the IMF and World Bank for the masses [paras 118-119], and mainly concerned with "reversing the brain drain" of skilled professionals from Africa [paras 124-125]. This latter is indeed yet another serious resource outflow from Africa to the rich countries. But, although NEPAD deals also with expanding education and skills training, its approach, seems to be based not on the inherent human rights of the people of Africa in these spheres, but rather on the view of the WB that people are 'factors of production' and that more skilled people will attract and service more productive foreign direct investment.
5. Agricultural development, and food security within Africa
NEPAD correctly states that "(i)mprovement in agricultural performance is a prerequisite of economic development on the continent. The resulting increase in rural people's purchasing power will also lead to higher effective demand for African industrial goods. The induced dynamics would constitute a significant source of economic growth" [para 134]. It notes the "structural constraints" affecting the sector, such as uncertainties in climactic conditions, and refers to the necessity of infrastructural and institutional supports, and even direct governmental support, such as in the provision of irrigation but this only "when private agents are unwilling to do so" [para 135]. It also provides some pointers to the crucial issues of access to land, water and rural credit, although it does not spell them out in detail.
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5.1 Although making some important references to small scale and women farmers [para 157], the
weight and significance of these references have to be evaluated also in the context of an emphasis on larger scale "intensive agriculture based on a significant flow of private investment" [para 135], with a call for donor aid to go to "individual high profile agricultural projects" [para 158].
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In the section on Market Access, NEPAD makes it clear that its aim is to "integrate the rural poor
into the market economy and provide them with better access to export markets", in terms of the broader aim "to develop Africa into a net exporter of agricultural products" [para 157]. Not only is there totally inadequate detail on how this is to be achieved, but NEPAD's writers seem impervious to the well-known fact that there are clear tensions between such cash crop export orientation, on the one hand, and on the other hand, the production of food crops for family, community, national and regional food security; which NEPAD seems to be concerned with [para 158].
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Similarly, while actively promoting increased commodity exports from Africa, NEPAD's brief
reference to "the instability in world commodity prices" [para 132] does not even try to provide counter-proposals to this, which the plan for the African Economic
Community does at least try3. Nor
does NEPAD seem to recognise the increased vulnerability of African economies to external price shocks that will accompany the increased dependence on agricultural exports; or the downward pressures that have been exerted upon commodity prices by ever-increasing agricultural exports from the poor South into the rich North. Once again, NEPAD seems in tune with World Bank instructions to African countries to increase and diversify their agricultural production …. but oriented towards the needs and tastes of the consumer markets in the rich countries.
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More broadly, NEPAD is not only weaker than many existing governmental and non-governmental plans and programmes for agricultural and general rural development in Africa, but it does not even acknowledge, endorse and try to benefit from the important proposals and demands being jointly posed by the Africa Group in their endeavours in Geneva within the WTO negotiations on the Agreement on Agriculture. This also reflects the more general inconsistencies and weaknesses of NEPAD's recommendations on how Africa should engage with/in the multilateral trade system and more specifically the WTO (see 8. below).
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NEPAD even lags well behind the widely accepted arguments by European NGOs, and major institutions such as the World Bank, which deplore and call for an end to the dumping of EU, US and other industrialised economies' subsidised agricultural exports into Africa and elsewhere in the Third World. The impacts of such export-dumping are as damaging as other internal 'structural constraints' within Africa. Furthermore, the forced removal of agricultural tariff and quota protections in Africa against such unsustainable competition will actually pre-empt the internal problems being effectively dealt with. NEPAD's silence on such Northern government agricultural policies is a clear indication of the diplomatic constraints required in dealing with the policies of governments that NEPAD's promoters would like to become aid 'partners' with Africa (see also 7.3 below).
Footnotes:
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See footnote 1
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The AEC plan suggests "protecting the prices of export commodities on the international market by means of establishing an African Commodity Exchange", and proposes "the protection of regional and continental markets primarily for the benefit of African agricultural producers".
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