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Trade Wins

Those loud creaking sounds are the economic drawbridges being drawn up on both sides of the Atlantic, as nations that preached raging competition when it suited them, now have other ideas about its virtues.

In the UK, polls indicate that a clear majority of voters prefer controlling immigration and protecting “British jobs”, over open access to the EU market – often without recognising the inherent contradictions.

Upcoming election campaigns in France, Germany and the Netherlands will be replete with similar attitudes. Similar worries also underpin the opposition, albeit to different degrees, of both US presidential candidates to friction-free business between countries.

Although by no means the primary targets, this is bad news for African nations, especially those whose economies have been battered by low commodity prices. These are the same countries trying desperately to take their economies to the next level, by diversifying towards exporting manufactured products to Europe and North America.

African policy-makers have long recognised this vulnerability to shifts in external sentiment, and talked about reducing the barriers to trade within the continent for decades. Such flows account for around 15% of all African shipments, compared to 60%, 40% and 30% within Europe, North America and South East Asia respectively.

Red tape and other barriers mean that it is often easier to send cement from Lagos to Rome and then onto Nairobi, rather than directly. Similarly, airline flows and visa complications, mean that the businesses involved may find it simpler to hammer out the details in Dubai, rather than at home. Recent research from the African Development Bank showed that non-Africans often find it easier to move around the continent than the native-born.

The good news is that progress is being made on both fronts. Last year saw the start of formal negotiations on the establishment of an African Free Trade Area. But in the near-term, it is the introduction of an African passport which allows visa-free movement that is particularly exciting.

So far it is only available to heads of states, diplomats and staff of African institutions to enable short-notice movement across the continent. But the aim is that our business leaders and traders will be able to negotiate and celebrate their deals at home within a few years.

Global Connect Jonathan Thomas

Photo Credit: Firmbee

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