Atul Singh | Samuel Ollunga
In many parts of the world and Africa, church bells toll the knell of the passing of the first half of the year. This month has been eventful. Colombia achieved a long-negotiated peace deal and the United Kingdom decided to end its troubled marriage with the European Union(EU). Africa avoided major drama, but many developments might have significant ramifications over time.
DREAMS OF UNITY
Many pan-Africanists trace their roots to the late 18th century when Ignatius Sancho, Quobna Ottobah Cugoano and Olaudah Equiano became the first African writers to register themselves on the British consciousness. They worked as members of Sons of Africa, a society of freed African slaves in London, which played a key role in the abolition of the international slave trade in 1807.
Pan-Africanists aim to bring together all African peoples so that they become more self-reliant and empowered. The African Union (AU) is heir to the pan-Africanist tradition and represents 54 states. Even as the UK decided to quit the EU, the AU is planning to create an EU-style “continent without borders” that allows a free movement of people across Africa.
In July, the AU is launching an electronic passport that will allow Africans to move seamlessly across borders. AU President Nkosazana Dlamini Zuma sees the passport as both symbolic and significant because it is a “steady step toward the objective of creating a strong, prosperous and integrated Africa, driven by its own citizens and capable of taking its rightful place on the world stage.” Emulating the EU, the AU is working toward unrestricted movement of persons, goods and services across the continent.
As one of the authors pointed out last year, barely 10% of the total commerce of the continent is intra-African trade. In contrast, intra-Asian trade is 25% and intra-European Union trade is over 75%. This is a legacy of colonization, poor infrastructure and trade barriers. The AU is taking some of these barriers down to promote trade and drive prosperity.
It is not just the AU that is working to boost trading ties. The East African Community (EAC) that once collapsed in 1977 despite almost achieving full integration has now been revived and is making significant progress. Its member states, charting the same path as the predecessor alliance, agreed on a customs union in 2005, a common market in 2010 and aims to create a common currency by 2024. According to Thierry Mayer and Mathias Thoenig, two professors of economics who write for the International Growth Centre, the EAC customs union increased bilateral trade among members by 213% on average, which improved welfare and security in the region.
Risks remain. Nigeria demonstrates that even large and wealthy states are fragile and vulnerable. The AU and EAC could overreach like the EU. Mayer and Thoenig estimate that potential risks and costs outweigh the small trade and welfare effects of a common EAC currency. Memories of the first EAC collapse remain fresh in the region’s psyche.
In an eerie similarity to countries like Greece and Italy, East Africa has been loading up on debt. Interest payments are mounting and eating into the development kitty. In 2013, Kenya spent 70% more on repaying its public debt than on development. Simultaneously, falling commodity prices are pushing down export earnings and making debt levels unsustainable. A single EAC currency might lead to similar tensions as in the EU. EAC leaders must tread carefully.
BREXIT’S EFFECTS ON AFRICA
Not too long ago, much of Africa was part of the British Empire. Even today, the UK continues to play a significant role in the continent from trade and finance to education and development. Therefore, Brexit has brought waves of uncertainty crashing on African shores.
Once markets settle down after their post-Brexit volatility, there are seven areas of concern for Africa.
First, African exports to the UK might suffer in case the British economy goes into recession. With fewer pounds to the good, English lads might buy fewer roses to woo their lissome lovelies, hurting Kenyan growers. Cocoa farmers in Ghana are likely to be hurt by the lower demand for chocolate, a luxury that people consume less when they feel poorer.
Second, the falling pound might push up British exports to Africa. This would be beneficial for exporters in the UK but might hurt African producers competing with exports. British exports might rise precisely when African exports are falling, increasing African current account deficits.
Third, the UK remains a major source of investment into African economies, particularly for countries like South Africa and Kenya. If Brexit leads to recession, there will be less capital making its way to Africa.
Fourth, the UK has pledged 0.7% of its gross national income to development aid, most of which flows to Africa. The country is unlikely to renege on its promise, but if the British economy shrinks, less money will make it to Africa. More importantly, the UK has been the biggest supporter of EU aid programs in Africa. With its biggest champion out, Africa might find EU aid money dwindling in the years to come.
Fifth, the EU’s Common Agricultural Policy (CAP) that subsidizes European farms has long hurt African farmers. The UK has consistently fought a lonely battle within the EU to reform CAP. Now, the dirigiste French could merrily persist with CAP and African farmers can kiss goodbye to hopes of a level playing field in agricultural trade.
Sixth, Brexit has fueled anti-immigration sentiments in the UK. Racism is on the rise and immigration controls might become tighter now. Africans living in the UK might have to move back. When this happens, remittances would inevitably fall. Of course, some hope that the UK might boost immigration from African countries even as it places limits on immigrants from the EU. If this were to happen, Africa would lose more of its highly-skilled professionals because these are precisely the sort of people that British policymakers want in the UK.
Finally, both market volatility and market recession make people flock to safer repositories of value such as gold, silver and diamonds. Their prices inevitably rise during such periods. Therefore, Brexit is likely to help the mining sector, particularly in South Africa where the rand has been falling against the dollar since 2015.
NIGERIA IS SINGING THE BLUES
Internal developments continue to be significant even as external shocks hit African economies. The Economist reports that oil production in the Niger Delta has fallen to about 1.5 million barrels a day from 2.2 million last year. This 22-year low production level is a result of relentless attacks aimed at sabotage. Earlier this year, Niger Delta Avengers (NDA) blew up a major pipeline. Armed militant groups in the Niger Delta have been attacking companies, destroying infrastructure and conducting extortion with great gusto. Hence, oil production has suffered despite oil prices bouncing back to nearly $50 a barrel.
This fall in production is catastrophic for the Nigerian government, which relies almost entirely for its revenues on the oil industry. President Muhammadu Buhari has adopted what Al Jazeera calls a “sledge hammer approach” that is clearly not working. He is a northerner who took over the Nigerian presidency from Goodluck Jonathan, a local boy from the Niger Delta who, by a foreordination synonymous with his first name, made it right to the top. The traditional regional, religious and tribal rivalries in Nigeria have since come into play.
As Brexit demonstrated, history matters. Nigeria is yet another former British colony with incredibly diverse people yoked together into a European-style Westphalian state where de facto power is centralized in the national capital. The big man who controls Abuja, the capital, presides over a web of patronage that allows those in power and their lackeys to steal oil revenues and actual barrels of oil.
Naturally, local people have not been too pleased with this arrangement. A bloody insurgency raged in the Niger Delta from 2006 to 2009. It only ended when the then-president “offered amnesty, vocational training, and monthly cash payments to nearly 30,000 militants, at a yearly cost of about $500 million.” The powers in Abuja and oil companies placated former militant leaders by rewarding them with lucrative contracts to guard pipelines. Jonathan showered further goodies on his home region during his reign.
This peculiar system of pelf and patronage was messy but worked fairly well. When Buhari took charge he did three things that have led to blowback. First, he curtailed the expensive amnesty program. Second, he ended many of those juicy pipeline security contracts. Finally, he prosecuted one former militant leader for fraud. Buhari is a former general who is trying to assert his authority again. Yet his tough talk about crushing militancy cannot be backed by strong action. His military lacks material, men and the morale to win.
More importantly, it is the militants not the military who have the hearts and minds of the local populace in the Niger Delta region. They may just be gangs who are out to extort money for themselves, but they are sons of the soil, not strangers from elsewhere. Like Robin Hood, NDA and other militants are shrewd enough to share some of their booty to create their own support networks. This is not terribly hard in a region “characterized by widespread poverty, youth unemployment, political underrepresentation, and environmental degradation.”
Buhari faces a full-scale economic crisis as government revenues plummet and expenditures mount because of the costs of fighting wide-ranging insurgencies. Even as militants cause mayhem in the south, Boko Haram wreaks havoc in the north. On June 20, Nigeria’s currency went into free fall when its central bank stopped pegging it to the dollar. The naira lost 40% of its value in a single day. As a result, the cold specter of both inflation and recession is staring Nigeria in the face.
TROUBLE IN SOUTH SUDAN
Nigeria is not the only place in trouble. This month, the United Nations (UN) warned that 4.8 million people in South Sudan, a third of the country’s population, “will be facing severe food shortages over the coming months and the risk of a hunger catastrophe” is very real. Renewed fighting between the government and rebel groups is largely to blame. The recent pompously celebrated ceasefire is being breached.
The weather has not helped either. An unusually long and harsh annual lean season has been followed by heavy rains. Families are running low on food stocks even as refugee camps suffer flooding and shelters collapse. In 2016, more than 100,000 children have been treated for severe malnutrition, an increase of 150% since 2014. These malnourished children with low immunity levels are highly vulnerable to waterborne diseases in this rainy season. The specter of blood and rain in South Sudan is only too real as UN peacekeepers struggle to provide relief.
In the past week alone, 70,000 people have fled the town of Wau in northwestern Sudan as government troops and rebel forces continue to clash. Clearly, thepeace deal signed in August 2015 is coming apart at the seams. In recent months, more than 100,000 refugees have fled South Sudan to the neighboring countries of Kenya, Sudan, the Democratic Republic of Congo and Uganda. There are thousands of others who have been internally displaced.
Food insecurity is rapidly spreading beyond areas of conflict, “as rising prices, impassable roads and dysfunctional markets prevent families from accessing food.” Inflation is running at 300%, the oil industry has collapsed, corruption is a way of life and the economy is in disarray. For the first time, the government of South Sudan has cancelled independence day celebrations. It did not do so in past years even at the height of the civil war.
Al Jazeera reports that both President Salva Kiir and rebel chief Riek Machar have lost control. Numerous militia forces led by ambitious warlords are belting it out in a ferocious battle for control and dominance as famine and disease threaten to stalk the land.
As the Chinese proverb goes, we live in uncertain times. Brexit threatens to tear apart the EU even as AU seeks to unite Africa. At the same time, post-colonial states like Nigeria face discord whilst even more recent creations like South Sudan face disaster. To paraphrase the late great Chinua Achebe, will the center hold or will things fall apart?
(The article was first published on FairObserver. You can read the original article here.)