Today there are moves to start a process of moving Africa towards a regime of free trade. This is something that will bring great benefits and should be encouraged, but it needs to be understood properly and pursued in the right way. A continentwide free trade area is often presented as creating something new, but this is only true from a very short historical perspective. If we take a longer view, we should realise that what should be aimed at is undoing one of the most harmful and exploitative legacies of colonialism and imperialism. In many ways, this is as much about restoring a historical legacy as it is building something new.
In Africa today, it is widely recognised that one of the major barriers to wider prosperity and growth is the internal tariff barriers and border controls. Crossing borders and moving goods from one state to another is a difficult and often slow process, one that also generates opportunities for corruption and rent-seeking. The economic life of many parts of Africa is severely distorted by these measures, leading to misallocation of investment and waste. It also drives an enormous black economy of smuggling and illicit migration, which is a primary force in the appearance and strengthening of organised crime groups, some of which have links to terrorism or insurrection. Therefore, this is a security problem as well as an economic one, and it contributes to political instability in many places, particularly the Sahel region.
Over the years, there have been a number of measures to address this issue. The most notable have been a series of regional trade agreements and free trade areas, such as ECOWAS in West Africa, EAC in East Africa, and ECCAS in Central Africa. These have brought mixed results so far; they have brought real improvement but have also been hampered by persistent political obstruction and failure to move in critical areas. They do have the advantage, however, of reflecting natural, geographically determined economic zones or regions. These have a historical basis, as we shall see. They also overlap, particularly in the Great Lakes region, and this, in turn, suggests a possible way forward that builds on that past. The form that way forward has taken now is the creation of an all-Africa free trade area (AfCFTA). This was agreed initially in 2008, with a more detailed plan confirmed in 2018. It has now about to come into force.
Some of the commentary on the African Free Trade Zone suggests that this is the realisation of Cecil Rhodes’s dream of an Africa united economically from the Cape to Cairo. This misunderstands both Rhodes’s vision, which was part of an imperialist project, and the contemporary project. The key point is that, understood properly, this is not a matter of creating something de novo, building up the infrastructure for something new and artificial that would not exist without this pan-continental building. Rather it should be about undoing one of the worst legacies of colonialism, the tearing apart and division of what were once enormous and extensive trade and production networks and, with them, natural and robust economic systems.
Take, for example, West Africa. In the pre-colonial era, the whole of the area now covered by ECOWAS was a single and integrated economy. This was produced by dense trade and exchange networks that connected the coastal regions with the inland ones and beyond them the Sahel. The movements of goods and payment ran over great distances with routes running both East to West and North to South. This can be traced by the movement of goods from their place of origin to very distant locations, by evidence of the movement of people between major trade hubs and urban centres, again often over long distances, and above all by the movement of the major monetary exchange units. The most important were cowrie shells, collected most often in ‘strings’ of either forty or one hundred. These originated in the Indian Ocean and were the major currency unit there. Still, they made their way in massive quantities to what is now the ECOWAS region and circulated there. We can now trace the old patterns of exchange by finds of the ‘shell money’ (Green, 2020). The other medium was specie coins, particularly silver thalers (dollars) and golden dirhams. Some of the latter came from West Africa itself, while others came from the greater Middle East. These were ‘store of value’ money, used for major capital purchases and transfers and exchanged at a market-determined rate for ‘shell money’.
If we trace the routes of the trade system and plot its nodes and hubs, we can discern a natural economic region stretching from Senegambia round to Douala and from the Atlantic coast to the edge of the Sahara. All of this was held together by largely unchecked trade. The region was also connected to the wider world and the rest of Africa (as the flow of cowrie shells indicates). It was linked to the Mediterranean littoral of the Maghreb by North-South routes across the Sahara, the ‘golden trade of the Moors’ as one famous work described it, and to the Nile Valley and the wider Middle East by routes that traversed the Sahara from West to East. That, in turn, connected East Africa and beyond that the Indian Ocean via the Great Lakes and Rift Valley and the Red Sea. Finally, there was from the seventeenth century onwards trade with the Europeans along the Atlantic Coast, primarily in slaves but also other products, and this connected the region (at a terrible human cost) to the West Indies and Latin America. (There was also significant trade in slaves in the trans-Saharan and Indian Ocean routes).
A similar picture can be painted for other regions of Africa. East Africa, and the Swahili Coast, in particular, was a key part of the massive Indian Ocean trade system which connected East Africa to the Horn of Africa and the Middle East and also the Indian sub-continent and the Persian Gulf and Hormuz (which in turn gave access to Central Asia). On the other side, the Rift Valley and the Great Lakes connected that region to Western, Northern, and Southern Africa.
The pattern all over Africa was for there to be large regional trade circuits, which reflected and grew out of geography. These covered very large areas and integrated production and exchange of all kinds within those areas (Green, 2020; Fauvelle & Tice, 2018). They also featured a common monetary system in each of the regions, one that arose not from the presence of an overall imperial power (for was no such power anywhere at that time) but from the bottom up, out of the trade relations of large numbers of people. The trade circuits may be thought of as spontaneous or natural since they did not derive from or require an overarching political power. The various trade regions or circuits were in turn connected to each other by longer-distance trade routes, often organised around major hubs at points where different systems overlapped.
All of this was destroyed or severely damaged by colonialism. After the Berlin Conference, which carved up Africa in a way that paid no attention to the social, economic, and even geographical realities, the colonial powers moved to put controls in place on the newly created borders and to restructure the economic life contained within those borders to their own advantage. The old natural regional economies were ripped apart and fragmented as European neo-mercantilism was imposed on Africa. The reconstruction of the colonies’ economies were aimed deliberately at disrupting the ‘horizontal’ economic relations that had existed and replacing them with extractive ones, in which activity in the area within the colonial borders was oriented towards production for export to the metropolitan market of the imperial power, with profit flowing mainly in that direction. All this created new colonial economies that were deliberately subordinated to a wider imperial system.
The project of Rhodes, alluded to earlier, was to have a single such imperial system for most of Africa, as part of a wider British imperial system. All of this damaged and disrupted the trade and economic links that had evolved over hundreds of years right across Africa. Even where a more ‘hands-off system of indirect rule was followed (as with Lugard in Nigeria, for example), the effect was to disrupt indigenous and long-standing connections. Elsewhere, particularly in the French colonies, strong colonial administrations were created. These disrupted and sometimes destroyed indigenous African systems and institutions, with subsequent disastrous results (Ayittey, 2006a).
All of this produced a poisonous legacy, but it was made worse by the post-independence policies of many African states. This was dominated by the idea of state-led development (derived ultimately from Imperial Germany) in which import substitution and domestic manufacturing development was a key component. The experience of Ghana under Nkrumah was the classic demonstration of the weakness of this model and its bad economic and political results. Still, the same story can be told all over Africa. One problem was that the import substitution took place within an economic unit defined by the colonial borders and these units were artificial and, in many cases, unnatural. That is, they ignored and cut across the reality-based trade and economic systems whose development had been disrupted or cut short by the eruption of European colonialism into Africa after 1860 (Ayittey, 1993).
However, those human and geographical realities have persisted. The attempts by post-independence governments to impose border controls and tariffs as a part of their nation-building programmes has run up against ‘dark’ economic relations, illicit trade and smuggling, informal money transfers and monetary systems, and illegal migration (the last on an often massive scale). What all this shows is the strength and resilience of the underlying patterns and relations and their ability to survive and even grow in the face of forceful efforts to reorient economic activity towards the new units created by colonialism. However, the result of this clash of forces is waste, corruption, and the maldirection of a lot of economic activity.
All this suggests how we should think about the move to an all-Africa free trade area and about the way to move towards it. The opportunity is to undo the bad effects of colonialism and allow both the regional African economies and the continent’s economy as a whole to resume their natural development. There is the bonus that modern technology of transport and communications means that the integration can now happen at a truly continental level, as we now have the means to circumvent the natural barriers that held this back in the past, notably the central African rain forest belt and the lack of extensive navigable waterways and natural harbours. It also means that African leaders should be very wary of creating such a free trade area by means of the imposition of uniform rules produced by a political bargaining process from the top down.
This top down model may have worked in the case of the European Union or NAFTA, but even there, it has reached a limit and is now causing serious problems. There will be specific areas where that approach is necessary, but generally, the thing to do is learn from Africa’s history and simply remove existing barriers and obstacles. You can then allow the economic networks and systems that were chopped up by colonialism to return and to develop further, with much greater extension, thickening, and deepening (Ayittey, 2006b).
The historical experience of money in Africa also has lessons. It is a fool’s errand to try to emulate the EU and create a single fiat currency from the top down, and (as in the EU) this would have disastrous results if it were ever to happen. Governments should continue to issue their own monies but make them freely exchangeable and, most importantly, allow the emergence of spontaneous additional money systems that work across borders. These will involve mobile telephony rather than cowrie shells, but, as before, the result will be to help tie together the many peoples of an enormous continent.
Dr Steve Davies is the Head of Education at the Institute of Economic Affairs.
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