Opinion
Africa needs Trade not Aid
Dr. Moyo therefore suggests a low-aid market-based development financing model that encourages trade and investment from both foreign and domestic sources.
This is her formula: 5 percent from aid, 30 percent from trade, 30 percent from foreign direct investment (FDI), 10 percent from capital markets and the remaining 25 percent from remittances and harnessed domestic savings.
While provocatively drawing a sharp contrast between African countries that have rejected the aid model and prospered with African countries that have become aid-dependent and seen poverty increase, Moyo illuminates the way in which over-reliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the ‘need’ for more aid.
Therefore for Africa to take its rightful position in the world’s global economy, then it must dream of becoming borderless in terms of doing business and not being dependent on aid. If we can create a single economic space, eliminate the regulatory and administrative physical barriers, then we will be on the path to taking our rightful position in the global economy and facilitate our efforts to reduce poverty.
The boosting of intra-African trade requires the adoption and implementation of trade policies at the national, regional and by extension continental level, which should be geared specifically towards the ease of business, flow of capital and human resources across geographical borders on the continent.
For regional markets to operate efficiently there is the need for strong regional and domestic framework regulations on trade related issues of intellectual property rights; competition policies; investment, government’s role; procurement; trade and the environment.
Non-tariff barriers which work to increase transaction costs, complex immigration procedures, limited capacities of border officials, costly import and export licensing procedures and lack of investments in trade association should at best be eliminated or reduced.
