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TOKYO INTERNATIONAL CONFERENCE
2003-09-29 As you all know, Africa is the cradle of mankind. All human beings (Homo sapien sapien) emanated from Africa. Evidence has now shown that until 100,000 years ago, all human beings were living only in Africa. It is, therefore, tragic and paradoxical that when the out-of Africa human beings came back to that Continent, around the 15th Century, they came as predators – slave traders, colonizers, etc. The last 500 years of interaction between Africans and Europeans, in particular, has not been a happy one. It has not been an equitable one. Africans were also involuntarily involved in a war with Japan in Burma on behalf of European colonizers.
Eventually, Africa had to win her freedom by a combination of peaceful and armed means of struggle. Since independence, the interaction between African countries, if Uganda is to be taken as one of the examples, has not been equitable. Yes, Uganda has received “aid” from Western countries and Japan. However, that “aid” has been wiped out several times over by the inequitable trade arrangements. These unfair trade arrangements confine us to producing raw materials whose prices inexorably go down for very good scientific reasons. These raw materials are easy to produce. Hence, all countries with similar climatic conditions produce them. Thereby leading to over production and, therefore, declining prices. Besides, as science and technology advance, either new raw materials are identified, new techniques evolve or fewer quantities of the same raw materials are used. Thereby, either diminishing the use of the raw materials or rendering them irrelevant altogether. The fate of copper is one good example. Copper was a raw material for telephone wires in the old telecommunications technology. With new techniques of wireless telecommunications technology, less copper is demanded. Hence, the collapse of the copper prices. African countries such as Congo-Kinshasa and Zambia that had considerable prosperity based on copper in the 1960s have fallen on hard times.
However, the greatest subversion to Africa’s development has been accounted for by the protectionism in EU, USA, Canada and Japan. Why are the coffee prices for the bean coffee always going down? One of the causes is the crowding by many Third World countries into the production of coffee because they have no other free window for exporting raw materials or food products. There is protectionism on wheat, sugar, beef, dairy products, corn, cotton, etc. not to forget intermediate products such as steel. The only remaining windows are, therefore, those provided by coffee, tea and rice – products that the temperate developed countries cannot produce. The Third World countries, therefore, crowd on those few windows and drive the prices down.
On account of these inequitable arrangements, Sub-Saharan Africa has, since 1970, lost US $2080 billion in lost trade opportunities while it has only got between US $160 - 165 billions in Aid. This is justified by the World Bank report as thus:
“Over the last three decades, Africa has been marginalized from World trade. Africa’s share of World exports has dropped by nearly 60% from 3.5% in 1970 to 1.5% by the end of the 1990s. This dramatic decline in Africa’s export market share represents a staggering income loss of US $70 billion annually, an amount equivalent to 21% of the region’s GDP and to more than five times the $13 billion in annual aid flows to Africa”.
(source: Internet – www.worldbank.org/afr/trade/wb_assistance_2003 _03.pdf)
The western countries and Japan are, therefore, making a big mistake in not seizing the opportunity created by the end of decolonization and the Cold War to make amends for the great wrongs they inflicted on Africa as well as other colonized peoples.
The west and Japan must expunge ego-centrism and, through free trade, create equitable opportunities for all the people of the World.
The total world value of agricultural products is US $558 billions. Therefore, the ending of agricultural subsidies by the USA, Canada, EU and Japan is a sine qua non for global, balanced and universally beneficial development. It is a sine qua non in ending of the 5 centuries old parasitism of the West, in particular, vis-avis Africa. I have, in the recent past, described AGOA (Africa Growth Opportunity Act) as the first act of solidarity between the West and Africa in the last 500 years. Both the tariff-free and quota-free access to American market are the two elements in this arrangement that are most attractive.
There is pressure by our Third World colleagues (India, Japan, Brazil, etc.) to implement the removal of quotas by December 2004. This move will adversely affect Sub-Saharan Africa, which was beginning to benefit from this equalization means. My view is that the quotas should be maintained up to 2008. This will give Africa (Sub-Saharan Africa) a chance to catch up. Asia and Israel got these preferences much earlier than us.
By 2020 the population of Africa will be about 1,300 million people. Marginalizing such a big portion of the human race is not only morally bankrupt but it is also economic madness. Currently, the size of the American (USA) market is US $11 trillion. Yet their population is about 290 million people. Africa’s population is 800 million (almost 3 times that of the USA); yet our purchasing power is still only US $500 billion i.e. USA’s purchasing power is twenty two (22) times greater than that of the entire African Continent the USA population being only a third of ours notwithstanding.
Why is this so? It is because Africans have got low incomes. They have low incomes because, most of them, have no jobs. They have no jobs because there is little investment as far as adding value to the raw materials is concerned. Consequently, there is massive loss of value from Africa to the Developed World (the total coffee business in the world is US $71 billion, yet the coffee producing countries only get US $5 billion).
There is little investment in Africa because the individual market sizes of the African countries, as a consequence of the colonial political balkanization of the Continent, which has not yet been addressed, are too small to be attractive to investment in this era of global liberalization. At the same time, the negotiating clout of individual African countries in trade matters is small.
As a consequence of all this, the great and growing African population is marginalized and also under-utilized for purposes of enhancing global prosperity through consumption. The Africans under consume and they, therefore, under serve their interests and the interests of their partners in the World. WHO (World Health Organization) recommends that an adult human being consumes 50 kgs of white meat and 30 kgs of red meat; 200 litres of milk per annum. However, the consumption in Uganda is only 3.6 kgs of meat and 40 litres of milk per annum. Consequently the investors in the meat and milk sector are currently suffering with an artificial problem of “overproduction” of milk and meat. Yet, if the Ugandans had jobs and, therefore, incomes, this artificial “overproduction” would disappear. I am a beef farmer. I currently sell my beef to the abattoir at 90 cents (American) – less than one dollar – per kilogram. I sell a litre of milk at 10 cents (American). I am told that beef in Japan goes for US $200!! This is “Kobe beef”. What is this “Kobe beef”? It is beef where the cow is massaged, given alcohol and have music played for it! What do these 3 therapies produce? Meat that is well “marbled”, a state where the fat is well mixed with the beef fibres. My people, for the last 7,000 years, have been looking after cattle that produce beef that has got these very qualities and more. In addition to the proper “marbling”, our cattle have yellow fat, which is low in cholesterol. However, the protectionist regime in the World cannot go for such mutually beneficial interactions among World peoples.
The most important development stimulus, in my opinion, for African economies is market access (tariff free, quota free with prolonged quota period to allow for the resurrection of the African economies). In the 1960s there were other bottlenecks to African economic growth. One major factor at that time was the state interfering with the private sector often aggravated by a form of pseudo nationalism that resulted in the sequestration of foreign businesses in particular. Idi Amin, the dead dictator of Uganda, took this pseudo nationalism to absurd and catastrophic levels when he uprooted the very productive Asian community of Uganda (originally from India and Pakistan). These mistakes have long been corrected. Everywhere in Africa, the slogan of “private sector-led growth, export-oriented strategy for growth and transformation” is being heard. This is the time, therefore, that our partners must remove the other distortion that has crippled Africa’s growth – restriction to market access through the parasitic protectionism.
The collapse of the recent trade talks in Cancun was unnecessary. The meeting was mismanaged by both the developed and developing nations. The procrastination by the developed countries over the abolition of subsidies in Agriculture is iniquitous. It should stop. Similarly, precipitous actions by the developing countries on account of the Singapore issues – transparency in Government procurement, competition (rules governing monopolies, cartels, etc.) and investment. All this can be discussed. The position of the EU and Japan on the Singapore issues is not unreasonable at all. There are issues Uganda will never accept that are contained in those Singapore issues. One such issue is employment. By welcoming foreign investment into my country, I am looking for the following advantages: employment for my people; widening our tax base either directly or indirectly; utilizing my utilities (electricity, telephones, etc) and, where possible, utilizing our raw materials provided the price is competitive. Therefore, it is not possible that investment receiving countries should give up, at least, this one advantage – jobs for their people. Other issues should be negotiable provided the issue of agricultural subsidies is resolved. The money Africa will get from a freed global trade is much greater than giving preference to local companies in Government procurement.
A small country like South Korea earns US $163 billions (2002 est.) from exports. If there was a totally freed trading atmosphere, I am sure, South Korea would earn more. How much would they earn if they were excluded from international trade and confined themselves to giving preference, in terms of Government procurement, to local companies? I have not been able yet to assess how much big countries like India and China earn through their companies selling to their Governments (railways, Government schools, Government departments, etc). Surely, we should, be able to discuss with the EU, Japan and the USA on these issues. These developed countries need compensatory equitable opportunities if they are to give up their prosperity, albeit parasitic on others, that they currently enjoy. This should not have broken the talks.
The argument by the USA, EU, Japan, etc about the domestic constituencies is infuriating. These are the very countries, along with the World Bank and IMF that have been riding roughshod over the Africans to force them to liberalize. This, in many cases, has caused riots. Yet many of the African countries have remained steadfast on the path of reform (liberalization, retrenchment, etc). How can it be that richer countries, with greater opportunities, where people are literate and can follow involved arguments (because of education), cannot take rational decisions, designed at removing irrationalities, so as to ensure greater global prosperity, the citizens of rich countries included? This is nothing but failure of leadership by the political elite and economic technocrats of the Developed countries.
Will these egocentric moves by the rich countries result in the perpetual marginalization of Africa? Not necessarily. The real problem lies in Africa trusting false friends. They trust people who do not care about their legitimate interests. They are always magnanimous to people who are mean to them. It is not necessarily a bad idea for Africa to be orphaned. It will help them to grow and stand on their own. It will help them to wake up from the illusion of having “benefactors”. Through integration in Africa, once the Africans become disabused of the promises by pseudo friends, they will form a powerful and credible bloc or a number of blocs. Once the Africans forgot about the promises of Harold Wilson in 1966 to liberate Zimbabwe (formerly Rhodesia) and were disillusioned with Reagan’s and Margaret Thatcher’s “Constructive engagement” with the racist regimes of Southern Africa, they were able to rally and liberate themselves. Africans, on their own, got rid of Idi Amin, Mobutu, etc. Africans, however, this time, must take radical and decisive steps, which are within their means, to stop this 5 Centuries old marginalization.
I wish to salute the Government of Japan for giving some Least Developed Countries’ goods market access with zero tariff rate and quota free access. This is why I came for this Conference although I had a lot of internal work. I did not go to the UN General Assembly on account of being busy. However, I came here, mainly, because of this positive development. I encourage the Japanese Government to expand this approach. However, this is only half the necessary journey. Removing the agricultural subsidies is the real solution. Even if I do not face taxes or quantitative limitations, but local Japanese products are given subsidies, my products, which are not subsidized, are disadvantaged. Removal of tariffs and quotas helps those products that have no local rivals. Economies of the Developed countries will also benefit. The depression that has, for some years, hit many of the Asian economies including Japan could be, partly, due to your saturated market. Soggy ground cannot absorb more water. Similarly, an over saturated market cannot absorb more goods or services. This, inevitably, affects your economy. Yet there is a whole Continent of 800 million people that is starved of many goods, services, employment and capital on account of accumulated disadvantages. On the other hand, in Japan, you have surplus capacity of capital and production. Why not combine these two types of needs – need for employment, goods, services and capital in Africa on the one hand and surplus capacity of capital and production in Japan on the other hand?
I thank you.
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