The current global trade system overseen by the World Trade Organisation (WTO) is unfair to Africa, a report that surveyed chief executive officers from across the continent, has shown.
A survey commissioned by the Pan-African Private Sector Trade and Investment Committee (PAFTRAC) highlighted the private sector’s desire for considerable reforms to make the global trade rules system fairer and more transparent.
The analysis, done ahead of the selection of the new WTO director general, surveyed a total of 200 CEOs around issues concerning the WTO and trade in general.
It covered a number of areas which revealed a general consensus that the current rules penalise the African continent and its private sector.
At least 86.6 per cent of the respondents understand the role of the WTO in global trade. However, the majority believe the Geneva-based body is not effective in fulfilling its role.
As much as infrastructure, logistics and human capital were cited as two major constraints to growth in Africa, the CEOs also stressed the skewed international trade regime as another key constraint.
Some 37 per cent of the chief executives surveyed feel the WTO as it stands is ineffective, while 65 per cent of them explicitly feel the global trading system is unfair to Africa.
They call for a fairer system governing global trade that will support developing countries.
"Africa must be the rules maker not the rules taker. That is, we, the private sector in Africa, really demand,” Amany Asfour, an Egyptian businesswoman, noted on Thursday.
As the continent with the largest natural resources, Africa has continued to provide resources for the rest of the world. Yet, its overall contribution to global trade has remained very low.
This is because the continent has been marginalized by the rules-based system of trade.
"To give a sense of magnitude of the unfairness, Africa which is home to 17 per cent of the world’s population accounts for less than 3 per cent of the world’s trade,” Hippolyte Fofack, an economist at the Afreximbank, said as he presented the report.
To give another grim picture, Fofack said the Holland, which is the size of Zambia, accounts for 3 per cent of the global trade, way more than the entire African continent.
That is because stringent standards on final goods in developing countries has kept potential of many of the African countries to move across value chains.
The selection of the head for the top position of the WTO has just entered the next phase with three African candidates in the race; Nigeria’s Ngozi Okonjo-Iweala, Kenya’s Amina Mohamed and Egypt’s Abdel-Hamid Mamdouh.
There is a sense of understanding that an African leader would make the continent’s voice heard, and give a chance to the continent to be part of the rules makers.
Confidence
Interestingly, if the majority of CEOs believed that the global trading system was unfair, most also see the multilateral system strengthening in the coming years.
They outlined a set of reforms that should be undertaken for a fairer and more transparent trading system, including in the areas of voice and participation, tariffs and non-tariff barriers, agriculture and subsidies.
The CEOs were also optimistic about the future outlook.
More than 50 per cent believe global trade will increase over the next 12 months, while over 70 per cent of them believe intra-Africa trade will increase over the same period.
Pat Utomi, the Chair of PAFTRAC, stressed that unless reform was forthcoming the current global crisis may penalise the African private sector even further.
"We have seen during this pandemic companies in the industrialised world have received massive bailouts, tax incentives, not to mention government contracts and fiscal stimuli,” he said.
Companies in Africa were not so fortunate and will also have to deal with a world where trade will be depressed because of the post-Covid-19 environment.
"As such, a fairer global trade environment and trading system is more urgent today than ever,” he said.