Africa 'should look inwards to trade'

Some factories in Accra are reaping the benefits of a special deal with the US

A major economic think-tank in Africa has recommended that the continent deals within itself rather than within the World Trade Organisation as the best way to trade out of poverty.

Africa should come up with a "plan B" to strengthen regional groupings like the East African Community and the African Union, Dennis Kabaara, Chief Executive Officer of the Nairobi-based Institute of Economic Affairs, told the BBC.

He also said the recent WTO talks in Cancun had been doomed from the start as he felt it was clear Africa was better off without a deal that favoured rich nations.

"It's about setting up a rules-based regime that enables poorer countries to participate in world trade. What's happening is it's not working," Mr Kabaara told BBC World Service's Africa Live! programme.

"In principle we have this organisation, but in practice we don't have what we set up.

"What Africa and countries within Africa need to do is start thinking about our own domestic and regional agendas."

Market access

Mr Kabaara also said that African countries needed to move away from "cash crop"-based economies and find other ways of entering markets.

"A major part of the discussion that was going on at Cancun was about access to the developed markets," he said.

"Essentially the way it works now is that if we process our agricultural products locally, then the tariffs that are going to be imposed by foreign markets are going to increase very rapidly.

"Already the markets that we have in place do not help us."

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Currently much African agricultural production suffers from the high tariffs and generous subsidies - such as the EU's Common Agricultural Policy - that exist in the export markets.

Mr Kabaara insisted that this meant African producers were being denied access.

"When this whole kind of multi-lateral trading system was set up, the underlying assumption was that we were all starting from the same place. The reality is that we are not," he said.

"The people who are already processing agricultural products were allowed to retain their production. Many countries in Africa were not."

Way forward

Africa does, however, benefit from some types of special treatment.

The Africa Growth and Opportunities Act allows quotas of textile imports into US markets, for example.

George Monbiot says Africa needs protectionism

And leading Ghanaian industrialist Prosper Atabla - whose sock factory has been one of the beneficiaries of the Act - told Africa Live! that processing or "adding value" was the way forward for Africa's economies.

"If you add value to any product in Africa you definitely make a profit," he said.

"Whether tariffs go up or not, it doesn't matter."

Mr Atabla added that he believed agricultural processing - developing products from the raw crops - was the way to make the continent's cash crops profitable.

"Last year a company in Ghana that processes pineapple into concentrate made more money than all the farmers exporting pineapple to Europe combined," he stated.

Meanwhile leading British environmental and social justice campaigner George Monbiot said protectionist policies were required to allow Africa to develop the industries needed to compete.

"The countries that are poor today should be allowed to follow the routes to development taken by the countries which are rich today," he stated.

"Nearly all those countries protected their small infant industries very fiercely during their key development phases against international competition.

"They only engaged in free trade once they'd already got into a dominant position."

Mr Monbiot pointed out that such protectionism of "infant industries" was now against WTO rules, but that the US had followed such policies from 1789 until 1913.

"There's this myth that the rich countries became rich through free trade," he argued.

"It's just not true."