A Short-Term Avenue to Sustainable Economic Growth in Africa

By Dennis Matanda,
Editor-in-Chief | The Habari Network

While its almost faux pas to suggest that African countries must look abroad for short-term solutions to their respective economic growth, today’s presupposition is less about neo-colonialism, and more to do with global value chains. Specifically, because nationalistic campaigns like Uganda’s ‘Buy Uganda Build Uganda‘ campaign are more about import-substitution – impacting that country’s performance under the East African Community (EAC) – rags such as ours have no choice but to call shots for what they really are: import substitution has not necessarily worked in developing countries, and if Africa is going to grow, the region must seek to emulate the light-manufacturing attributes Japan, South Korea, Singapore, and Taiwan adopted before infamously being known as the Asian Tigers.

However, this article is not breaking new ground. In fact, attributes of light-manufacturing – especially in regard to textiles and apparels – have proven statistically significant to the economic development of countries like Bangladesh, Cambodia, Honduras, and Vietnam. Although its a major textile producer, Bangladesh is, for the most part, a poor country prone to the ravages of natural disasters. Another textile champion, Cambodia is still not over its violent political past. Honduras is still home to some of the world’s most violent murders. And Vietnam is still Vietnam – picking up the pieces from a long War and the consequences of experimenting with Communism.

For its part, much of Africa contended with post-colonial existence with political, economic and social instability; often times adopting import substitution and ill-advised policies such as mistempered liberalization and immature privatization. But some of these things African went through were experienced by the afore-mentioned countries. Simply: while Africa has its own quandaries, its less about looking East for solutions, and when one factors Honduras’ unique circumstances into the equation, economic growth can come from exporting ‘slightly manufactured’ products to the United States.

Export Manufactured Goods

Say what you will about the United States – thoughts and words influenced by the recent election and Trump presidency – the country continues to be home to the world’s most sought-after, most affluent, and most discerning consumer. Nonetheless, the American consumer, for the most part, does not know much about Africa. Americans, for the most part own two cars, spend money on insurance, and contribute financially to a plethora of causes. Relatively, even though African Americans are, somewhat, feeling a little more secure about their financial future than ever before, general consumption patterns have mutated towards cost-effectiveness. Global trends have been turned on their heads. The global marketplace – whether it is, for the most part, still run by multinational corporations – has a large-enough space for textile and apparel fabrics from Zambia, Uganda, Rwanda, Malawi, Ethiopia, and Comoros. People will pick up their usual Johnson & Johnson brands. However, they might also be attracted to an appropriately packaged organic product from Africa. The traditional American procurement outfit may not do this, but a significant-enough number is probably going to look for organic products and services. If an African manufacturer employs sustainable and environmentally-sensitive production methods, they might find a sympathetic place in an American’s consumer’s heart – ending up on a shelf, wardrobe, or in American refrigerator.

The argument, therefore, is this: if African countries want to witness significant economic growth their respective economies over the next 3 to 8 years, they must invest resources in exporting manufactured goods like textiles and apparel to the United States – before the African Growth and Opportunity Act (AGOA) expires in 2025.AGOA is, perhaps, one of the most misunderstood things in Africa. It is neither a grant, not a specific avenue for textiles. Although AGOA has highlighted textiles in countries like Uganda, this is neither the fault of the program that was signed into law by President Clinton in 2000; enforced by President George W. Bush; propelled by President Obama, nor a program whose survival might be threatened by Donald Trump. No. AGOA is a simply a way for Africa to garner short-term economic growth by exporting its competitive products and services to the United States. So far, most AGOA beneficiaries can competitively export textiles and apparel to the United States. More competitively than Bangladesh; than Honduras – Cambodia, and Vietnam.

But thus far, only countries like Kenya, Lesotho, and Mauritius are achieving a modicum of success in exporting their way to economic growth.
South Africa may export Mercedes Benzes and BMWs to the United States; but until Botswana, Ethiopia and Tanzanian hides and skin can appropriately be used to make luxury leather interiors, it may be a pipe dream for anyone to think that AGOA can achieve tangible results for Africa’s manufacturing sector, or for economic economic growth on a continent.
Ultimately, therefore, the task is going to have to fall on the shoulders of those that manage regional integration. The Tripartite Arrangement of COMESA, EAC and SADC mean nothing if they cannot, collectively, make a cotton-to-cloth value chain happen.
Ugandan textile processesors are still smuggling textiles from Kenya. Rwanda is still exporting most of its products to the Democratic Republic of Congo, and its still much too expensive to export from Ethiopia to Kenya – even though these two countries are connected by a world-class one-stop border post at Moyele. Where is the quandary, I hear you ask?

Look out for our treatise next week.