by Francis Ssekamatte & Geoffrey Bakunda*
Africa's marginalisation in global trade has never been more of a reality than today. Africa's share of global trade has fallen from 6 per cent in 1980 to just 1.2 per cent by 2005 and is expected to fall further below 1 per cent by 2010. All this is happening despite the fact that Africa has 12 per cent share of the world's population. According the DATA (Debt, Aids, Trade and Africa) statistics, if Africa could regain just 1 per cent share of global trade, it would earn $70 billion more in exports each year, several times more than what it currently receives in foreign aid.
The question therefore is : How can Africa regain its share of global trade?
Much as Africa finds itself in a generally unfair trading environment where it is the weakest trading partner and a latecomer, African governments and the private sector leaders should institute measures, strategies and policies to re-energise Africa's trade potential. Such efforts and processes to create effective export sectors will have to be informed by a new mentality. For any progress to be realized, we have to shed the "commodity mindset" - (undifferentiated, unbranded export offerings) which has engulfed us for generations.
This commodity mindset is an entrenched belief and general acceptance that Africa should export commodities.This commodity mentality is now synonymous with all export thinking at all levels of society.
While the rich Western nations are in some way responsible for the poverty of the Third World through continuing extortion and savvy manipulation of the terms of trade, it's actually the poor nature of exports with which our countries are engaging the international market that best explain why we remain among the poorest on earth.
Poor countries' exports consist of the most easily imitated products - undifferentiated offerings placed on the international market with little or no added value. These are largely raw material commodity products - green coffee beans, raw cotton, fruits and vegetables, fish, cut flowers, etc; for which competition is based on price only. Exporting firms are operating at the lowest ends of the value chains, thus commanding little or no control over their products on the overseas markets.
This price-based competition leads to enormous pressure on wages and keeps the ordinary citizens poor. By implication, and perhaps cynically speaking, the more the nation exports its primary commodities, the poorer it gets.
We are pleading for an entire paradigm shift and in this way suggesting that unless the public and private sector industry leaders abandon the old outdated thinking based in the theories of comparative advantage, we will never come out of poverty and the poor international performance currently experienced.
*Dr. Geoffrey Bakunda, PhD (International Trade Development) & Mr. Francis Ssekamatte Musoke - BCP, MSc. are based at Makerere University Business School