The framework for successful intra Africa trade already exists. The seven action points highlighted are both my recommendations and my current views on the status quo. I conclude (unsurprisingly) that what is remaining is to continue to add value, improve the quality of goods and services, and then increase the scale, by getting stuck right in and refining the offer in good time.
- Recognise the role Diasporans play
I don’t know if I still classify today, but once upon a time, I was a diasporan. I came to Ghana from the UK on holiday about 18 years ago, and never went back, except for on holidays. On one of these trips back to London I received a Christmas hamper which tickled me and I’m not sure I’ll ever forget it. One of my sisters-in-law gave me a large delightful hamper with lots of goodies in it. One of those goodies was a pack of Chocomilo. For those who don’t know what that is, it is a confectionery product produced by Nestle in Ghana and Nigeria only. Now the irony for me was that I was the person responsible for the brand and product business in Central and West Africa. But I travelled to another continent and received it as a gift, unbeknownst to my sister in law. I was excited to know that ‘my product’ was so valued that she bought and carted boxes of it from Nigeria during her last holiday. And many others do the same. But it also highlighted for me the relevance and role that diasporans (and multinationals) play in the global trade of African or any country of origin products.
- We can learn a lot about intra-regional Trade from multinationals
That was just one product. That product is made in two countries using mainly locally sourced raw materials, and mainly local labour from the respective countries. That product is then sent across the ECOWAS region so that consumers in other countries can enjoy it too. They have found audience in multiple countries, they understand the customs, taxes and other legal frameworks of the countries they do business in. African companies can learn a lot from multinational companies like Nestle. Their founders may not be African but they play a positive and beneficial role in Intra-African trade!
So diasporans and multinationals help by:
- Contributing to increase in exports – imagine the total of all goods exported for which responsible multinationals pay large sums in taxes
- Contributing to introducing goods and to increasing demand in foreign markets – market expansion.
I can’t leave out the strong influence and impact that other aspects of culture have in expanding markets. Thanks to diasporan presence globally, modern African music and film has steadily been expanding its footprint. If intra Africa trade is supposed to benefit Africa, it sometimes has to reach beyond the shores of Africa. What is attractive globally, becomes attractive locally. Once African film, for example, is appreciated by global markets, it becomes less taken for granted in its home markets.
- Build Alliances, one person, one country, one step at a time
Alliances are key to any successful venture; even individuals who are establishing their own companies need a string of alliances to succeed. Those alliances may come in the form of investor, advisory, connections, advocacy… These are all useful and in some cases instrumental to business success.
A former team member organised an Innovation Forum bringing together start up business owners from across central and west Africa. At first the participants were a bit suspicious as to why a multinational would bring them together. Did the host organisation to steal their ideas? At the end, they were most grateful for the opportunity to exchange with people facing similar triumphs and, particularly, hurdles as they were and realised they could learn from each other as some were further ahead in the process. They even started to recommend to one another suppliers of raw and packaging material and what they had learnt working with trans-border companies. What these types of alliances do is they help create scaleleading to better pricing, they provide opportunities for market expansionand so many other softer opportunities. If you can be successful in Cameroun, why not expand into Burkina Faso, perhaps with a local partner? African companies can become global too if they see the benefits and capitalise on strategic partnerships.
African countries are far behind today. We need, that much more, to form strategic alliances with one another. So we don’t have to wait until all countries are on board, or until everything is ready to start before we make moves and before we start to benefit from synergies and partnerships. We can form strategic alliance with one or two countries in strategic areas. With reference to Ghana and Cote d’Ivoire’s recent stance on cocoa, it’s not only the act or the outcome, but it’s the collaborative nature of the bilateral ‘teams’, from the Heads of State, to the Ministers, to the technical teams, that we can learn from. What this type of alliance will do is foster a long running collaboration and start strengthening a country’s position to position it better for growth. As the old adage goes, “too many cooks spoil the broth.” We are potentially stronger if we develop smaller alliances and build on them. If you wait for everyone, too many different priorities will slow down the process and consequently, progress.
- To Function effectively, negotiate trade-offs at the onset
A big country like Nigeria being subject to influence by albeit a consortium of smaller countries, will arguably always be a barrier to the effective functioning of a regional trade bloc. It will slow down the take-off of any policy or real initiative. It must be agreed upon that to function in unity, there must remain a certain level of autonomy for individual countries, particularly when it comes to making macro-economic decisions. It is the same for business alliances. Determine the roles each will play before jumping in. What we can learn from the European Union…
- The Integration of Infrastructural development within the trade zones should form part and parcel of the Efforts
Even without a trade bloc, African nations would benefit more greatly from trade if transport networks (road and rail infrastructure for one) was better. The increase in the exportability of goods may generate more revenue than that to be derived from tax benefits. Informal trade is everywhere. Reducing structural barriers will propel trade further. So countries shouldn’t limit their infrastructure to within their borders. They should integrate the region as part of their infrastructure planning and development.
- Stop bemoaning the plight of Africa and become globally Competitive
Until it happens, we won’t stop hearing that what stops Africa from being competitive is the lack of value add that our products and even services offer. Any country that has thrived through trade, has thrived because of value addition. Nation states can start by investing in infrastructure, whilst scaling up industrialisation efforts as a first point of call. Although Africa indexes slightly higher in intraregional trade of manufactured goods vs raw commodities, the value is still low. And even where commodity trading is still needed, markets can be better structured through, for example, the intervention of a commodity exchange. Commodity exchanges, such as that recently established in Ghana, seek to provide efficient and risk free trading solutions, establish fair and transparent price discovery mechanisms, develop product standards and contracts to protect producers and traders, amongst other things. Lack of structure disturbs markets; exchange rates and nothing else dictate trading behaviour. This is limiting and myopic behaviour which curtails growth in business value for countries and for the continent. Africa should be the originators of many more recognisable quality brands which are the result of adding value to commodities which have African countries as their home. As the African Continental Free Trade Agreement comes into effect, a good starting point will be to look at the harmonisation of the regulatory frameworks which will be a pre-requisite for smooth implementation of intra-Africa trade and then ultimately, once scale increases, to international trade.
- Take Action now; refine later
As an entrepreneur, one should:
- Learn more about other African countries; study those markets
- Understand customs and legal frameworks of the countries you are interested in doing business with
- Produce goods and services that will have an audience within the continent
- Create partnerships
- Get going – you will refine your products and services as you go along.