Fifty years ago, per capita GDP in South Korea was twice that of some African countries. Last year, it was nearly forty times higher. But now things are changing in Africa. In the past decade sub-Saharan Africa was the third fastest growing region in the world, after China and India. The question is how does Africa build on this and close the gap for good?
I believe a big part of the answer is free trade within Africa. Freer trade in Asia gave Korea space to grow. African countries, by and large, have not exploited opportunities to trade with each other. It is time for that to change.
Trade and enterprise have the power to change people’s lives. As we are seeing now on every continent, what will lift tens of millions out of poverty in the long run is the dynamic engine of economic growth. And that means African countries buying from and selling to each other, doing business with one another and the world.
In the past, there were marches in the West to drop the debt. There were concerts to increase aid. And it was right that the world responded. But they have never once had a march or a concert to call for what will in the long term save far more lives and do far more good – an African free trade area. The key to Africa’s progress is not just aid. It is time for some fresh thinking.
Consider these facts. An African free trade area could increase GDP across the continent by an estimated $62 billion a year. That’s $20 billion more than the world gives sub-Saharan Africa in aid. Backed by investment in people and infrastructure, sound government and effective tax systems, imagine what this would mean: businesses growing, new jobs on offer, families on the up, living standards transformed.
So we need to take on the obstacles to trade and growth. Despite recent strong economic growth in Africa, today just twelve per cent of African trade is with other African nations. For much of the continent it is easier to trade with Europe or America than it is to trade with a neighbour. Infrastructure can be poor and overstretched, red tape endemic, and trade taxes stifling.
Africa has begun to respond to this challenge. Many non-tariff barriers in East and Southern Africa have been eliminated. On the North-South Corridor linking the southern half of the continent, over 1400 kilometres of new road is being laid and prepared. Delays at Africa’s first One Stop Border post at Chirundu on the Zambia – Zimbabwe border have been cut by almost two-thirds, saving truckers up to $600,000 per day.
We are determined to seize on this success. South Africa has taken on championship of the North-South Corridor on behalf of the African Union. Nigeria will work with its partners in western Africa to liberalise trade with the ultimate ambition of Africa-wide free trade. From London, Britain will invest more than £160 million between now and 2015 in freeing up trade, including halving delays at ten key border crossings. We need greater commitment throughout the continent to regional transport corridors.
But what will transform Africa’s potential in the end is truly pan-continental trade, underpinned by concrete and substantial agreements. With many African countries on the point of making the transition from dependence to sustained growth, regional trade is the golden key. That’s why last month, South Africa hosted a summit of 26 different countries, representing 600 million people and over half of Africa’s entire GDP. These leaders agreed to aim for a free trade area covering more than half the continent in just three years. ECOWAS, on this, the twentieth anniversary of the Abuja Treaty, is also determined to develop its own free trade area, bringing Africa a step closer to the dream of an African Economic Community from shore to shore. With a strong and unified voice in global trade, Africa can deliver a better deal for its citizens, and be a significant driver of growth for the world in the era ahead.
We need political leadership from all of Africa’s leaders to achieve this. As Africa’s leaders show the vision and will to get this done, so real leadership is required from the rest of the world too. Trade rules must be open and fair to all. When the G20 meets in Cannes in November, we will together be pressing the need for duty and quota free market access for the poorest countries, for sustained commitment to a global trade deal.
Never before has there been a time quite like this. We are used to thinking that the problems of our world will be always with us. But the economic revolution underway has brought within reach the steps to eradicate poverty in Africa. It is now possible to imagine an Africa no longer dependent on aid, and a real source of growth for the whole world. And the road to get there lies through freeing up the wealth creating power of enterprise and trade.
This challenge falls to our generation of leaders. For too long 55 nations’ borders have been allowed to hold Africa’s people back. It is time to make African free trade the common purpose of the continent and the wider world. To set Africa on a path to prosperity and stability would be a wonderful legacy from our generation to the next.