Over the years, African leaders and Africans, in general, have been made to believe that liberalization of trade is an advantage to the continent and is meant to create market-based pricing which helps exporters get better prices for their products and give products available more affordable alternatives from abroad.
There is evidently more misconception than truth in the above narrative, and believing that this is the case in Africa today is a myth that needs to be addressed.
The most evident footprint of Liberalization of Trade is that of turning small African countries into dumping grounds for cheap substandard products such as Food, Beverage, Drugs, Cloths, etc. at the detriment of local producers.
Trade Liberalization undermines the local industries that produce or those that would have started to produce these products that are brought from abroad. Bringing the products to flood the local markets and cripple local industries and entrepreneurs isn’t even the main issue, the main issue is the sad fact it is either these products are substandard and endanger the lives of the people or are most of the time unfit for use.
Africa is home to millions of budding industries and you will agree that what these industries and entrepreneurs need is a healthy business environment to operate in addition to nurturing and protection from government especially at the early stages.
Facing incontestable competition with multi-national companies and foreign products available at cheaper prices is not healthy for emerging business as more people will always go for substitute products especially as they are from abroad. This is further assisted by the age-long notion that goods and services are more authentic when they are from abroad or delivered by a foreigner.
New businesses in Africa do not need all that unnecessary competition from bigger companies from abroad all in the name of Liberalization of Trade. The bigger foreign companies will most likely swallow up the smaller ones.
For example, a new beverage manufacturing plant in Nigeria cannot be expected to win the market against an established manufacturer from China or Europe, and hence cannot compete equally.
So, many infant industries in the African continent fail to take-off and/or under extensive trade liberalization.
This problem is also experienced in the area of imported food such as rice, wheat, milk, etc.
Developed countries which have an excess of these food items reduce their price and export them to Africa to get rid of this excess at any price at the detriment of the local industries in those countries which obviously they do not care about. This is why it is the duty of government to protect these infant indigenous companies from the undue competitions from abroad.
If such a situation is not controlled, Africa will never be able to produce its own food. In addition liberalization of export of raw materials robs local industries of raw materials which can fetch higher prices from more efficient external competitors.
Liberalization of Trade as a result, cripples African economies and discourages production and entrepreneurship.
What are your thoughts?
Header Image Credit: Enda-CACID