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African Affairs, 118/470, 182–193 doi: 10.1093/afraf/ady054
© The Author(s) 2018. Published by Oxford University Press on behalf of Royal African Society. All rights
reserved
Advance Access Publication 13 December 2018
BRIEFING
THE NEED FOR INDUSTRIAL POLICY
COORDINATION IN THE AFRICAN
CONTINENTAL FREE TRADE AREA
MICHAEL E. ODIJIE*
ON21 MARCH 2018, 44 OF THE 55 MEMBERS of the African Union (AU)
signed the African Continental Free Trade Area (AfCFTA) agreement.
1
The agreement required members to remove tariffs from at least 90 per-
cent of trade within the continent. The initial agreement was not signed
by Benin, Botswana, Burundi, Eritrea, Guinea-Bissau, Lesotho, Namibia,
Sierra Leone, South Africa and Nigeria. Although South African officials
cited merely technical legal reasons for their failure to sign,
2
the Nigerian
president expressed fear that free trade might hurt domestic industries. In
essence, the AfCFTA raises a number of issues usually associated with
free trade: social cost, private adjustment cost and public adjustment
cost.
3
The aim of this briefing is to discuss the issue of industrial policy coord-
ination in relation to the AfCFTA. In principle, the AfCFTA will aid
industrial policy in countries with small markets by providing a large mar-
ket, which is an essential component of successful industrial policies,
according to Friedrich List and his followers.
4
But as I shall show,
regional integration in developing country regions often creates coordin-
ation problems, some of which impede effective industrial policy imple-
mentation. Trade policies are an essential part of industrial policy, and
the movement of trade policies from the state level to the regional level
*Michael E. Odijie (meo27@cam.ac.uk) is a postdoctoral fellow at the Center of African
Studies, University of Cambridge.
1. Loes Witschge, ‘African continental free trade area: What you need to know’,Al
Jazeera, 20 March 2018 <https://www.aljazeera.com/news/2018/03/african-continental-free-
trade-area-afcfta-180317191954318.html>(21 March 2018).
2. eNews channel Africa, ‘SA didn’t sign CFTA for technical reasons: Trade minister
Davies’, 27 March 2018 <https://www.enca.com/money/trade-minister-rob-davies-explains-
why-sa-didnt-sign-the-cfta>(29 March 2018).
3. Mesut Saygili, Ralf Peters, and Christian Knebel, ‘African continental free trade area:
Challenges and opportunities of tariffreductions’(Division on International Trade in Goods
and Services, and Commodities, UNCTAD, 2018).
4. Mehdi Shafaeddin, ‘What did Frederick List actually say? Some clarifications on the
infant industry argument’(UNCTAD Discussion Papers 149, 2000), p. 16.
182
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(or in this case the continental level) should be accompanied by an
equivalent movement of industrial policies (except in regions that have
undergone industrialization); otherwise, coordination problems will arise
and reduce the effectiveness of industrial policies. This briefing analyzes
some of these problems in relation to African regional integration and
then extrapolates to the continental scale via AfCFTA. In doing so, it
shows why the inclusion of an institutional mechanism for policy coordin-
ation in the AfCFTA process is important.
Background to the AfCFTA
Laura Páez of the United Nations Economic Commission for Africa
divided the post-independence integration process into three overlapping
phases, with the AfCFTA representing the third phase.
5
The first period
of regional integration occurred during decolonization in the 1960s, when
integration was perceived to be closely linked with achieving and preserv-
ing independence. The Organization of African Unity (OAU) in 1963,
along with other less successful unions, operated with a mandate to pro-
mote independence. The second phase of regional integration occurred
from the 1970s, with regional organizations created either to promote eco-
nomic integration or to solve regional problems (for example, the goal of
combating colonial and white-minority rule in South Africa led to the
establishment of the South African Development Community). The third
phase of Africa’s integration started with the Abuja Treaty of 1991, fol-
lowed by the Sirte Declaration of 1999, both of which envisioned the cre-
ation of an African Economic Community, and the creation of the AU
(built from the ashes of the OAU).
The Abuja Treaty, which detailed the creation of an African common
market, provided the context for the current continental free trade agree-
ment. Rather than competing for relevance with the several regional orga-
nizations (as the OAU had in the past), the treaty co-opted these
organizations as part of a six-stage process of achieving continental free
trade. Formulated in 1991, the Abuja Treaty emerged against the back-
drop of trade liberalization (as part of structural adjustment lending pro-
grammes) and the Maastricht Treaty, both of which played influential
roles in the move to create an African free trade area. Recent literature
addressing the negotiation and signing of the free trade agreement has
presented it as an action plan for the promotion of intra-Africa trade,
restructuring the continent’s economy to move it away from that created
5. Laura Páez, ‘A continental free trade area: Imperatives for realizing a pan-African mar-
ket’,Journal of World Trade 50, 3 (2016), pp. 533–562.
6. Saygili, Peters, and Knebel, ‘African continental free trade area’; UNCTAD, ‘From
regional economic communities to a continental free trade area: Strategic tools to assist
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by the colonial structure.
6
Analysis of the AfCFTA has generally been
positive.
7
Although Mesut Saygili, Ralf Peters and Christian Knebel raised
some questions about short-term adjustment costs, they still came to a
positive conclusion.
Unless Africa is used as the unit of analysis, a fuller study of the impli-
cations of the free trade agreement is impossible. Once a particular state is
treated as the unit of analysis, the question of winners and losers arises.
One must consider not only winning and losing states, but also winning
and losing stakeholders such as consumers (who win or lose in terms of
prices), the government (in revenue), labour (in employment prospects)
and manufacturers (in production capacity and markets). The links
between stakeholders are important to bear in mind. For example, whilst
consumers may obtain products more cheaply in a free trade zone due to
tariffreductions, consumers also represent labour that must be employed
to earn the income required for purchasing; this is important, because
cheap imports may come at the expense of domestic sectors that provide
the basis for employment and consumers’income. Furthermore, whilst
one of the components of free trade is the free movement of labour (so
that displaced labour can seek employment elsewhere in the region), per-
fect mobility and the conversion of labour are not easily achieved. The
link between manufacturing capacity (which sometimes has to be learned
and gained through a protectionist wall) and the future welfare of a state
and its citizens is also important to bear in mind. The protection of a sec-
tor may be inefficient at a particular moment but improve welfare in the
future. It is important, therefore, to clarify the focus of assessment. Here,
I explore the effect of the proposed AfCFTA on the prospect of successful
industrial policies in African countries in general terms. I first explain why
industrial policy is relevant before showing how free trade may retard suc-
cessful industrial policies in Africa.
Relevance of industrial policy and productive power in Africa
By industrial policy I mean an intended attempt by the government of a
defined territory to catalyze the development and growth of domestic
firms or sectors or to promote structural transformation.
8
Such an
attempt, which might include a range of policy measures, is usually sup-
ported by suspending trade with more experienced foreign firms (that is,
negotiators and agricultural policy design in Africa’(Division on International Trade in
Goods and Services, and Commodities, UNCTAD, 2018).
7. Saygili, Peters, and Knebel, ‘African continental free trade area’; Tralac, ‘African contin-
ental free trade area (AfCFTA) Legal Texts and Policy Documents’, 22 March 2018
<https://www.tralac.org/resources/by-region/cfta.html>(29 March 2018).
8. Dani Rodrik, ‘Industrial policy for the twenty-first century’(CEPR Discussion Paper,
2004).
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protectionism) to create a space for learning-by-doing, in which local
firms increase productivity through the act of producing and (potentially)
become internationally competitive. There are grounds to think that both
mainstream economists and development scholars (of the Neo-Listian
variety) are likely to support the promotion of continental free trade in
Africa. Mainstream economists generally support trade liberalization
based on the argument that it leads to the most efficient allocation of
resources (given a country’s existing resources). In contrast, neo-Listians
like Ha-Joon Chang and Erik Reinert would probably support the
AfCFTA for reasons relating to market size.
9
For example, due to their
relatively small populations, countries like Ghana and Rwanda cannot
provide the market basis for the promotion of large-scale manufacturing.
Friedrich List and his followers were aware of this problem;
10
List pro-
posed unifying small countries to create an internal market big enough for
industrialization. For modern Listians like Erik Reinert, a large internal
market is necessary to explore the benefits of increasing returns, which are
associated with scale production in manufacturing. In this sense, integra-
tion would aid countries like Ghana and Rwanda by creating a larger
internal protected market.
There are two interrelated reasons for the importance of industrial pol-
icies to most African countries today. Historically, the economic activities
of production sectors can be categorized as either agriculture or manufac-
turing. Economic development (interchangeably referred to as economic
transformation or industrialization) is the movement or reallocation of
production factors from agriculture to manufacturing. This rough picture
corresponds to the conceptualization of economic transformation pro-
vided by Friedrich List, Arthur Lewis and modern advocates of industrial
policy.
11
The theoretical foci are not agriculture and manufacturing per
se, but the multiple complex and interacting processes and features asso-
ciated with both activities. For example, manufacturing is characterized
by a high entry barrier, increasing returns to scale and imperfect competi-
tion, and thus enjoys technological rent, which reduces costs and price
making; agriculture is characterized by a low entry barrier, diminishing
returns to scale, perfect competition and price taking. Heterodox econo-
mists have argued that economic transformation moves the economy
9. Erik S. Reinert, How rich countries got rich and why poor countries stay poor (Constable,
London, 2008), p. 73; Ha-Joon Chang, Globalization, economic development and the role of the
state (Zed Books, London, 2003), p. 305.
10. Shafaeddin, ‘What did Frederick List actually say?’, p. 16; Mauro Boianovsky,
‘Friedrich List and the economic fate of tropical countries’,History of Political Economy 5, 4
(2013), pp. 647–691.
11. See Reinert, How rich countries got rich and why poor countries stay poor; Lindsay
Whitfield, Ole Therkildsen, Lars Buur, and Anne Mette Kjær, The politics of African industrial
policy: A comparative perspective (Cambridge University Press, Cambridge, 2015).
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away from an asset-based system running on unskilled labour towards a
knowledge-based system running on skilled labour. Africa’s specializa-
tions are mainly in agriculture and asset-based economic activities run-
ning on unskilled labour with few connections to the economy at large.
Industrial policies are needed to promote manufacturing and economic
change.
Diversification through industrial policy is needed also because agricul-
tural products promoted by the colonial economy that currently constitute
a large portion of exports in African countries, such as cocoa in Ghana
and Côte d’Ivoire, are susceptible to diminishing production factors: a
reduction in the production factor (usually land or forest) leads to increas-
ing inputs (more fertilizers, more labour, etc.) with no corresponding
increase in output. This process of diminishing returns has already been
experienced in several African countries, and the outcome is usually an
increase in poverty, due to the price-taking nature of agricultural
exports.
12
In sum, African countries have to diversify and industrialize not
only because they are specializing in the wrong type of economic activities
but also because the current economic system is not sustainable due to
the changing factor state. The immediate question for the purposes of this
briefing is: how and to what extent does AfCFTA affect the prospect of
successful industrial policy in African countries?
Trade and industrial policy alignment
Trade policies are the foundation of industrial policies. Industrial policies
are by no means limited to trade policies, but as List put it, other indus-
trial measures ‘will have little effect unless they are supported by a tar-
iff’.
13
The supporting structure, parameters and boundaries of trade
policies (that is, the State) are also those of industrial policies; although
cases of regional industrial policy (in terms of a region within a state) dif-
fer from the industrial policy advocated by Neo-Listians. Rightfully, there-
fore, as Ben Selwyn stated in his class-based critique of Neo-Listian
industrial policy advocates, there is a state bias implicit in the notion of
industrial policy promoted by Neo-Listians, in that industrial policy advo-
cates tend to ignore Marx and his class-based critique of the state and
instead use the capitalist state as the central actor in catch-up develop-
ment.
14
There is a strong or a hard state at the core of industrial policy or
12. Michael Odijie, ‘Sustainability winners and losers in business-biased cocoa sustainabil-
ity programmes in West Africa’,International Journal of Agricultural Sustainability 16, 2
(2018), pp. 214–227.
13. Ho Sai-wing, ‘Distortions in the trade policy for development debate: A re-
examination of Friedrich List’,Cambridge Journal of Economics 29, 5 (2005), pp. 729–745.
14. Ben Selwyn, ‘An historical materialist appraisal of Friedrich List and his modern-day
followers’,New Political Economy 14, 2 (2009), pp. 157–180.
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its variant in the concept of the developmental state theorized by
Chalmers Johnson.
15
But recent developments in international trading systems have wea-
kened state capacity to pursue industrial policy by dislocating some trade
measures from the state. The multilateral trade system is the classic
example, leading several neo-Listians, such as Ha-Joon Chang and Robert
Wade, to caution that the movement of trade policies from the state level
to the multilateral level limits the success of industrial policies.
16
The very
existence of the World Trade Organization (WTO), as an intergovern-
mental organization that regulates international trade, illustrates multilat-
eral misalignment, as it removes policy power from the state. The
effectiveness of the WTO inspired the policy space literature. Writers in
this field of inquiry argued that the WTO’s rules on intellectual property
rights, on control of investment, and on subsidies and tariffrates strip
developing countries of some of the vital instruments used by developed
countries to industrialize. Similarly, the movement of trade policies from
the national to the regional level (i.e. regional integration) creates issues
of policy space for national industrial policy.
Regional organizations that carry out trade liberalization and eventually
impose a Common External Tariffinvariably move trade policies from the
state level to the regional level (more than the multilateral WTO does),
while industrial policy stays at the state level. Whilst this presents no prob-
lem for developed countries that have undergone industrialization (as with
the WTO), in a developing region several problems of policy space may
arise for industrial policy makers. The problem of policy space in regional
integration has been acknowledged, and the solution most often promoted
is the notion of a national sensitive list. This is a list of products that indi-
vidual countries can either totally exclude from free trade or on which
they can impose high tariffs either to protect domestic firms or to imple-
ment industrial policies.
Under the current AfCFTA agreement, African countries are expected
to liberalize 90 percent of their trade with the option of protecting 10 per-
cent, enabling them to realize the protection of domestic production and
industrial policy.
17
If the region negotiates a trade system with another
region, the protection of individual countries determines the regional pro-
tection (exclusion) list. For example, the Economic Partnership Agreement
15. Chalmers Johnson, MITI and the Japanese miracle: The growth of industrial policy
1925–1975 (Stanford University Press, California, 1982).
16. Ha-Joon Chang, ‘Policy space in historical perspective with special reference to trade
and industrial policies’,Economic and Political Weekly 41, 7 (2006), pp. 627–633; Robert
Wade, ‘What strategies are viable for developing countries today? The World Trade
Organization and the shrinking of “development space”’,Review of International Political
Economy 10, 4 (2003), pp. 621–644.
17. Witschge, ‘African continental free trade area’.
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between African regions and the European Union (EU) required West
African regions to liberalize 75 percent of their trade and use the other 25
percent to protect regional production systems/industrial policies. Whilst
this type of exclusion list may seem to solve the problem of national indus-
trial policy, it presents a new set of problems relating to coordination.
These problems are as follows. As one advantage of regional integration
for smaller countries is market size, it is vital to ensure that industrial pol-
icies do not promote the same products for different countries in a
regional integration system (via a national sensitive list), not only because
the market will not be large enough for them (although this is important),
but also, and more importantly, because neighbouring countries will end
up with exclusion lists (protection) against each other in the same pro-
ducts. This may lead them to develop sectors whose products cannot be
exported to regional markets due to exclusion lists. In African regions, in
which most countries are looking to institute industrial policies, the logical
conclusion of regional integration when trade policies are located at the
regional level is the sameness of industrial policy, due to the signals that
trade policies give to the government (instead of trade diversion). Because
national industrial policies are subordinate to the regional trade policy
and the regional protection list (which cover different national products),
regional trade guides all countries in the region on what to select for
national protection.
Assuming that a region has four countries, A, B, C and D, their
national sensitive products make up the regional protection list when
negotiating trade with another region. A product selected by country A
(due to national production capacity/prospects or an attempt to develop
the sector) gives B, C and D scope for industrial policies, as they are now
expected to protect these products. The reasons for this are several. For
example, interest groups in countries B, C and D will point out that
regional protection offers the opportunity to institute national protection
and industrial policy. I provide examples below. The effects of this same-
ness of industrial policy are to prevent any one country from succeeding
and at the same time to impose a price burden on consumers. Table 1
explains the problem of a lack of coordination/sameness of industrial pol-
icy in a developing region.
For example, in West Africa, during the negotiation on the regional
common external tariffand the EPA with the EU, Côte d’Ivoire (and
Nigeria) selected chicken for protection as a sensitive product.
18
Côte
d’Ivoire had protected chicken since 2004: initially to protect livelihoods
from cheap poultry imports from the EU, and later, in 2010, to institute
18. Michael Odijie, ‘EPA and sensitive products: The danger for industrial policy “inco-
ordination”’,Journal of Contemporary African Studies (forthcoming, 2018).
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an export market.
19
Through the 2000s, most West African countries
relied on cheap EU poultry imports, which destabilized their national pro-
duction capacity. Côte d’Ivoire, however, reaped the rewards of instituting
a protective policy, which revitalized its poultry sector and created a minor
export sector in the region, especially via the exportation of eggs to coun-
tries like Ghana, Liberia and Burkina Faso. This promising sector led to
an industrial initiative in 2011 (Plan Stratégique de Relance de l’Aviculture
Moderne): a 10 year plan designed to build an export sector on the founda-
tion of the regional market of ECOWAS. However, within less than a
month of the signing of the final EPA document, which excluded the
importation of chicken into the region (due to Côte d’Ivoire’s nomination
of the product), eight regional ECOWAS countries instituted similar
chicken-development schemes and introduced both formal and informal
protection against Côte d’Ivoire and other regional chicken producers.
Ghana (which was a target market for Côte d’Ivoire) launched a poultry
revitalization programme only six days after the document had been signed.
Regional protection led interest groups to compel the government to pur-
sue similar policies instead of relying on imports from neighbouring
countries.
Similarly, although cement was nominated for regional exclusion by
Nigeria (following its successful industrial policy in cement), Ghana, Côte
d’Ivoire, Togo, Sierra Leone, Benin and Burkina Faso instituted develop-
ment policies in cement within eight weeks of signing the final EPA. The
same thing happened with sugar (Côte d’Ivoire, Guinea-Bissau, Liberia,
Mali, Senegal and Sierra Leone followed suit).
20
Such sameness in policy
Table 1 A model of sameness of industrial policy in a developing region
Country Sensitive list Scope for
industrial
policies
Country A Computers Countries B, C
and D
Country B Bottled water Countries A, C
and D
Country C Cars Countries A, B
and D
Country D Telephones Countries A, B
and C
Total regional exclusion/protection =computers, bottled water, cars and
telephone
19. Ibid.
20. Ibid.
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removes the vital advantage of a large market and closes the regional mar-
ket, which had been to some extent open before free trade (given the
absence of protectionist policies). This is illustrated in the table above.
West Africa is not the only region in which this problem has arisen.
Researching the effects of sensitive lists on free trade/common external
tariffin the East African Community, Isaac Shinyekwa and Miriam
Katunze concluded that ‘several products are produced in almost all the
countries; these include cement, sugar, rice, cigarettes and tobacco pro-
ducts, milk and wheat’.
21
As the regional common external tariffhas led
to sameness in attempt to build capacity, far from developing internal pro-
duction capacity in the above products, production capacity is actually
decreasing in some cases, and importation under the exorbitant tariffsys-
tem (by virtue of sensitivity) has increased, placing a huge burden on con-
sumers (the importation of sensitive goods from outside the region
increased from $700 million in 2005, when the common external tariff
was adopted, to $2.3 billion in 2011).
22
Also, as shown by Tobias Bünder
in his investigation of the common external tariffin East Africa, other
forms of lack of coordination unfolded in the East African Community,
notably the instability of the sensitive goods/remission process, which
removed the predictability needed for investment in any sector.
23
A duty
remission scheme allows countries to reduce or eliminate duties (this
applies to both sensitive and non-sensitive products) from outside coun-
tries. The high rate of instability in the East African Community common
external tariffwas due to the constant changing of sensitive products/
remissions, which resulted partly from the influence of interest groups on
the national government. One reason for policy sameness is the influence
of interest groups on national industrial policy.
The problem of a lack of coordination may be viewed as short-term
and transitional. Certainly, this is true if the transition ends with a
regional political unit. But the possibility of a complete political union is
remote, and in regions like the Southern African Customs Union
(SACU), which was established in 1910, a lack of coordination has taken
diverse forms. Stephen Kapunda and Oluyele Akinkugbe, for example,
observed that a seemingly successful industrial policy implemented in
Botswana is usually replicated by South Africa (and other regional
players). They called for the integration of Botswana’s manufacturing sec-
tor policy with that of South Africa, as opposed to the development of
21. Isaac Shinyekwa and Miriam Katunze, ‘Assessment of the effect of the EAC common
external tariffsensitive products list on the performance of domestic industries, welfare, trade
and revenue’,Economic Policy Research Centre (Research Series 129, 2016), p. 10.
22. Ibid.
23. Tobias Bünder, ‘How common is the East African Community’s common external tar-
iffreally? The influence of interest groups on the EAC’s tariffnegotiations’,SAGE open 8,
1 (2018), pp. 1–14.
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separate policies.
24
Similarly, Farai Zizhou showed that a lack of coordin-
ation in SACU led to the disintegration of the Botswana Hyundai vehicle
assembly plant. The moment that the plant showed signs of progress,
other regional countries (in this case South Africa) used the advantage of
regional protection to pursue their own interests.
25
With the CFTA, the
African continent is faced with the prospect of a lack of coordination on a
continental scale.
Implications for the AfCFTA
The 10 percent exclusion list and the prospect of a common external tariff
in the AfCFTA give African countries the space to build production cap-
acity in exactly the same products as their neighbours, and at the same
time to institute protection against each other (within the scope of 10 per-
cent) in these products. This will lead to a sameness of industrial policy
and numerous resulting problems. One caveat relates to capital-intensive
sectors. Whilst a regional common external tariffand national protection
may lead to the sameness of industrial policy, as in West Africa and East
Africa, not all countries can afford to pursue industrial policies in capital-
intensive sectors. For example, in West Africa, Nigeria selected cement
for protection due to its ongoing industrial policy on cement. This
prompted Ghana, Ivory Coast, Togo, Sierra Leone, Benin and Burkina
Faso to institute industrial policies promoting cement production.
26
But
some of these countries could not afford the level of resources needed to
develop local cement factories. Initially, therefore, their strategy was to
encourage foreign firms to inject capital to take advantage of their indus-
trial policies on cement. But instead, the Nigerian cement giant took
advantage of the industrial policies implemented by other ECOWAS
countries to set up factories there. Similarly, Nigeria selected sugar during
the EPA negotiations after attracting investment of more than $3 billion
to the sugar sector within a year of implementing the Nigerian Sugar
Master Plan. Although several neighbouring countries used regional pro-
tection to implement similar policies, no other West African country
could attract such investment.
27
Apart from sameness in policy, instability may arise as a result of a con-
tinental common external tariffand/or state-level exclusion lists. Such
24. Stephen M. Kapunda and Oluyele Akinkugbe, ‘Botswana’s industrial development pol-
icy and policy harmonization within SACU: Challenges and opportunities’, in Brendan
Vickers (eds), Industrial policy in the Southern African Customs Union (Institute for Global
Dialogue, South Africa, 2008).
25. Farai Zizhou, Linkages between trade and industrial policies in Botswana (Southern
African Development Research Network, Pretoria, 2009).
26. See Odijie, ‘EPA and sensitive products’.
27. Ibid.
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instability may injure the prospect of effective industrial policy. As selec-
tion is driven by domestic political factors, a change in the composition of
the ruling elite (through election, for example) usually alters the sectors
promoted,
28
resulting in a change in the exclusion list; the relative
strength of different lobbying groups and other factors may affect the posi-
tions of ruling elites. We have already seen that for countries that refuse to
sign the AfCFTA, domestic lobbies have a role to play. In Nigeria, for
example, the Manufacturers Association of Nigeria lobbied the federal
government not to sign the free trade system.
29
Equally, after signage and
implementation, withdrawal or a change in national provisions (such as an
exclusion list) may be provoked by political change or a change in the
relative power of stakeholders. Such changes affect the predictability
needed for industrial policies to flourish, as well as investment. This is not
merely theoretical. The East Africa Common External Tariffis currently
experiencing a high level of instability due to changes in the common
external tariffand exceptions in tarifflines.
30
This has prompted the pri-
vate sector and other stakeholders to raise serious concerns. On a contin-
ental scale, such instability will create numerous obstacles to effective
industrial policy.
The AfCFTA currently has no programme governing industrial policy.
Instead, African continental free trade is expected to encourage intra-
Africa trade; for example, the United Nations Economic Commission for
Africa estimated that the agreement will boost intra-African trade by 52
percent by 2022.
31
This is in turn expected to promote industrialization,
or change in economic activities. However, a mechanism must be found
to deal with the lack of coordination that is likely to occur at a continental
level, as well as to promote industrialization in general. In relation to
ECOWAS, I have proposed three possibilities for tackling the problem of
industrial policy coordination following regional integration: (1) eliminat-
ing national exclusion lists (so that countries have no tools for implement-
ing protection against each other); (2) instituting a negotiated regional
division of labour (that assigns countries the right to pursue industrial pol-
icies and develop productive power in several sectors to serve the entire
28. See Lindsay Whitfield and Lars Buur, ‘The politics of industrial policy: Ruling elites
and their alliances’,Third World Quarterly 35, 1 (2014), pp. 126–144.
29. Premium Times News, ‘MAN supports Buhari on refusal to sign African trade agree-
ment’, 21 March 2018 <https://www.premiumtimesng.com/business/business-news/262651-
man-supports-buhari-on-refusal-to-sign-african-trade-agreement.html>(28 March 2018).
30. Bünder, ‘How common is the East African Community’s common external tariff
really?’,p.4.
31. Simon Mevel and Stephen Karingi, ‘Towards a continental free trade area in Africa: A
CGE modelling assessment with a focus on agriculture’, in David Cheong, Marion Jansen,
and Ralf Peters (eds), Shared harvest: Agriculture, trade, and employment (United Nations
Conference on Trade and Development, Geneva, 2014), pp. 281–324.
192 AFRICAN AFFAIRS
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regional market); or (3) developing a regional industrial policy (in which
the region is seen as a unit and industrial policies are made based on trade
policies).
32
Eliminating exclusion lists will be difficult to achieve, because small
countries have to be able to protect their sources of livelihood. The third
option, instituting a regional industrial policy, is similarly unlikely,
because it requires the region to operate as a political unit. The only real-
istic option is a negotiated division of labour (as recommended by
Friedrich List in his atavistic account of regional integration for industrial-
ization), in which states are assigned the productive right to promote and
export particular products to the regional market using the advantage of
regional protection. If, for example, Malawi were to negotiate the right to
promote plastic (either due to having a source to raw material or for any
other reason), it could develop a plastic industry for the entire continent,
while its neighbours negotiated the rights to different products. Such a
negotiated system would not only solve the problem of coordination but
also bring the issue of industrialization to the fore. The problem is that
the lack of coordination has not generated enough attention.
Currently, several institutions are being created to oversee the imple-
mentation of the AfCFTA, such as a Secretariat, an Assembly of the
African Union Heads of State and Government, a Council of Ministers of
Trade, a Committee of Senior Trade Officials, a Dispute Settlement
Body, and committees for the implementation of various other matters. It
would be sensible to create a similar body for industrial policy to explore
potential problems and propose solutions that acknowledge the crucial
role of industrialization in the region and how free trade affects it.
32. See Odijie, ‘EPA and sensitive products’.
193THE AFRICAN CONTINENTAL FREE TRADE AREA
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