Thursday, July 26, 2007

Experts Trade Views on US of Africa with Benin Mwangi


My good friend, Branded-thank you so much for helping to expand and share the knowledge on this whole United States of Africa idea that just swept by. Also, there are many wonderful online pieces on this United States of Africa. I have spoken to a number of people on the subject also, many have been from various African nations. While, others that have shared their thoughts on the subject have been from other parts of the worlds. What the conversations seemed to mirror in each other was a certain level of caution. Primarily, I felt this to be more of cultural or a social concern- the question of "whose voice takes precedence under a United States of Africa?" Whether social or not though, I have to say that it is a very valid concern. So, I think that the decision to apply the brake pressure and slow down was a very wise one. There are just too many issues that would have to be addressed before the discussion could become practical.

But underneath this, it should also be said that a more united continent could have the potential to bring about almost unfathomable macro economic benefit to certain areas and sectors on the continent. Believe it or not, just prior to the 9th Assembly of African Union Heads of State, I spoke with several experts on the subject of business across African borders and I believe that they bring some unique and tremendous insights to this topic.

One of the many people whose ideas on this topic have helped to shape mine was East Africa America Business Council Chairman and official Liaison of the East Africa Community, Mr. Patrick Ayota. I asked him, what did he think about the idea of African countries removing their borders all together and could there be any benefit to doing this and here's what he had to say,


"A more connected Africa would reduce the existing barriers that prevent African nations from doing more business with one another. Also, it could reduce costs.
However, it is not necessary to have a single president for such a union to work.
Here's what could work:

  • Creating a highway infrastructure linking the the countries together.

  • Removing visa requirements for members of the union

  • Creating a common market

He goes on to add, "On a smaller scale this has largely already done by the East Africa Community (EAC). There is now a single entity in the EAC that licenses companies moving products between Uganda, Kenya, and Tanzania. This means that a Ugandan company can hire a Tanzanian employee and offer the same benefits to that employee that a Ugandan employee would receive. Also, Mr. Ayota illustrates countries working out there differences, "because Kenya has a stronger economy than Uganda and Tanzania, it has agreed to allow its neighbors to temporarily impose small tariffs on Kenyan goods. While Kenya has removed tariffs on goods from Tanzania and Uganda."

What Mr. Ayota mentioned, as far as that cooperation between the East African nations is something that you don't often hear about coming from neighboring states on the continent, however this shows that it does and can happen. Of course, it has not always been this way between the three countries that he mentioned and it is in fact the result of an amazing amount of time, hard work, and diplomacy between the three nations. But, I believe that this is exactly what we need to see happen in order to make this discussion more practical. And I would think that it must happen, for a number of reasons. But primarily because today's voters on the continent are a lot more savvy than they were just one generation ago. Before they agree to go along with just any suggestion, my observation is that it would be better to demonstrate some of the benefits first. And isn't that the case around the globe? So, I agree with Mr. Ayota, before any serious thoughts of unifying all or a large part of the continent under one rule, there must be more connectedness on the basic items-like standardized educational systems with continental accreditation, looser tariffs, free movement of nationals across borders, better intra-roadways, communication systems, and a stronger system to support and document investment from one border to another. However, with the rise of the continent's regional economic blocks these things are slowly becoming materialize within smaller regions on the continent

I also had the pleasure of speaking with an investment researcher from the world acclaimed Barron's , Mr. Ryan Shen- Hoover. I asked him roughly the same question that I asked Mr. Ayota and Ryan's response was focused more along the lines of stock markets across the African continent and what these stock markets might look like if they were merged into one market.

Here's what he says,

"In brief, I believe a continent-wide stock market would be a welcome development for all involved. It would greatly lessen the difficulty of opening trading accounts in a dozen or so different countries and therefore would be great for any investor seeking exposure to more than one country. It would likely also have the effect of unlocking value in some companies that are listed in markets that trade infrequently (e.g. Swaziland, Ghana, Malawi) and could have the opposite effect in some of Africa's more overheated markets ( e.g. Nigeria and Kenya).So, how would a common stock exchange be brought about? There are a couple ways it might happen.

One way would be for all countries to sit down and hammer out the structure of a totally new market. They would agree on listing and reporting requirements, trading rules, location, etc. One obstacle I see to this is that most countries take a degree of pride in running their own national stock market. It would take a lot of political will to dissolve them in favor of one continent-wide market.

The other way to achieve a common market is more organic. Already in East Africa we are seeing Kenyan companies trade on not only the Nairobi Stock Exchange, but the Ugandan and Tanzanian exchanges, too. This is called cross-listing. Some other companies cross-list on the Johannesburg and Namibian stock exchanges. If one of the big exchanges (perhaps Nigeria, Kenya, or South Africa's) would actively encourage cross-listings, we could see a common market develop quite q
uickly. And each country could continue to run its own national market if it wished to do so."

I like Mr. Shen-Hoover's notion of voluntary participation on the part of African stock markets, whereby exchanges in different across different African borders can decide whether to cross list based upon the perceived risk or reward, rather than having the idea imposed on them. This to me would seem like more of a natural course to the continent finding that ever elusive unity that the founding fathers of the AU through the Organization of African Unity dreamt about only one generation ago.

So we said all of this to say what? Well, what we are getting at is that like Mr. Ayota says it is possible to harness the economic power of a unified continent without necessarily having all the continent's nearly 1 billion human inhabitants under a single national banner. Furthermore, the steps mentioned here need not be mandated. In fact, mandates seem to stir apprehension within voters. Instead, a more gradual and laizzez faire approach might be the way to go about this. One more thing that I failed to mention earlier is that the African Union decided to support the further development of the continent's 14 regional integration groupings-I say that if nothing else ever comes out of that 9th Assembly of the African Union Heads of State this development in itself is major. Although, I wouldn't have minded hearing the AU discuss how to fully harness the power of the informal economies existing in different regions of the continent.


Of course, I love your comments. But, if you can't comment at this particular time- but would like to let us know that you were here; please sign and View my guestbook

Nkrumah-King (Mr. Ogo Sow this photo is for you, I appreciate what you do, you're the only person that I am in close contact with who attended the event and I hope that we can do a follow up story to this one together ) photo courtesy of Wikipedia
African Union Flag Courtesy of African Union


2 comments:

Black River Eagle said...

This post presents two interesting angles on the global debates about a United States of Africa. Thanks for sharing with us the opinions of Patrick Ayota and Ryan Shen-Hoover.

One should note that the East African Community (EAC) idea is not necessarily winning over the hearts and minds of the majority of voters and citizens in EAC member countries: Kenya, Tanzania, Uganda, Rwanda, and Burundi. Although the EAC is and/or would be a mini-version of the proposed continent-wide United States of Africa with a single governing body and president, it remains to be seen if this concept will float with the citzens of these 5 member nations.

What would happen to existing intergovernmental bodies in Africa such as COMESA (Common Market for East and Southern Africa) under the EAC? Would COMESA be broken up and Southern African countries be forced to setup a new regional economic body?

The AEC (African Economic Community) is the mothership to COMESA, a continent-wide intergovernmental body divided into regional trading blocs (REC's) whose mandate includes fostering increased cross-border trade by reducing tariffs and buearacracy and other barriers. Today the African Economic Community is made up of 49 of the 53 African nations (excluding Mauratania, Morocco, Algeria, and Tunisia).

Some economic infrastructure (political and economic governing bodies) to foster a united approach to increasing commerce and trade for the continent is already in place. Strengthen these existing institutions by earnestly carrying out the mandates and agreeements that are already on the table, the rest (unity) will follow automatically if the citizens of African nations see a benefit in their everyday lives.

Benin "Mwangi" said...

BRE:

Hmm, I am not sure what would happen to COMESA and SADC, I was under the assumption that members with dual citizenship like Tanzania, would continue to be dual members.

On the voters not being happy about it, I must look into that point, at one time I heard that the voters in Uganda and Tanzania were not happy due to the perceived economic mismatch between them and Kenya, but I thought that the tariff structure appeased all that were of that mindset.

But also, the way that you ended your comment is in total agreement with my line of thinking.

Thanks for the thoughtful insight!

Google
 

africa search