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The need for industrial policy coordination in the African Continental Free Trade Area


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ON 21 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 percent 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 .
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African Aairs, 118/470, 182193 doi: 10.1093/afraf/ady054
© The Author(s) 2018. Published by Oxford University Press on behalf of Royal African Society. All rights
Advance Access Publication 13 December 2018
ON21 MARCH 2018, 44 OF THE 55 MEMBERS of the African Union (AU)
signed the African Continental Free Trade Area (AfCFTA) agreement.
The agreement required members to remove taris 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 ocials
cited merely technical legal reasons for their failure to sign,
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
The aim of this brieng 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.
But as I shall show,
regional integration in developing country regions often creates coordin-
ation problems, some of which impede eective 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 ( 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 <
trade-area-afcfta-180317191954318.html>(21 March 2018).
2. eNews channel Africa, SA didnt sign CFTA for technical reasons: Trade minister
Davies, 27 March 2018 <
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 tarireductions(Division on International Trade in Goods
and Services, and Commodities, UNCTAD, 2018).
4. Mehdi Shafaeddin, What did Frederick List actually say? Some clarications on the
infant industry argument(UNCTAD Discussion Papers 149, 2000), p. 16.
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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 eectiveness of industrial policies. This brieng 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.
The rst 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 Africas 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 inuential
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 continents 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. 533562.
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.
Analysis of the AfCFTA has generally been
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
tarireductions, 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 consumersincome. 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 inecient at a particular moment but improve welfare in the
future. It is important, therefore, to clarify the focus of assessment. Here,
I explore the eect of the proposed AfCFTA on the prospect of successful
industrial policies in African countries in general terms. I rst 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
dened territory to catalyze the development and growth of domestic
rms or sectors or to promote structural transformation.
Such an
attempt, which might include a range of policy measures, is usually sup-
ported by suspending trade with more experienced foreign rms (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
<>(29 March 2018).
8. Dani Rodrik, Industrial policy for the twenty-rst century(CEPR Discussion Paper,
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protectionism) to create a space for learning-by-doing, in which local
rms 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 ecient allocation of
resources (given a countrys existing resources). In contrast, neo-Listians
like Ha-Joon Chang and Erik Reinert would probably support the
AfCFTA for reasons relating to market size.
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;
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 benets 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
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. 647691.
11. See Reinert, How rich countries got rich and why poor countries stay poor; Lindsay
Whiteld, 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. Africas 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
Diversication 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 dIvoire, 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
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
brieng is: how and to what extent does AfCFTA aect 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 eect unless they are supported by a tar-
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-
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. 214227.
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. 729745.
14. Ben Selwyn, An historical materialist appraisal of Friedrich List and his modern-day
followers,New Political Economy 14, 2 (2009), pp. 157180.
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its variant in the concept of the developmental state theorized by
Chalmers Johnson.
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.
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
eectiveness of the WTO inspired the policy space literature. Writers in
this eld of inquiry argued that the WTOs rules on intellectual property
rights, on control of investment, and on subsidies and tarirates 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 Tariinvariably 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 taris either to protect domestic rms 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.
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
19251975 (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. 627633; 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. 621644.
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 dierent 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 dierent 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 oers the opportunity to institute national protection
and industrial policy. I provide examples below. The eects 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 tariand the EPA with the EU, Côte dIvoire (and
Nigeria) selected chicken for protection as a sensitive product.
dIvoire 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.
Through the 2000s, most West African countries
relied on cheap EU poultry imports, which destabilized their national pro-
duction capacity. Côte dIvoire, 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 lAviculture
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 nal EPA document, which excluded the
importation of chicken into the region (due to Côte dIvoires nomination
of the product), eight regional ECOWAS countries instituted similar
chicken-development schemes and introduced both formal and informal
protection against Côte dIvoire and other regional chicken producers.
Ghana (which was a target market for Côte dIvoire) 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
Similarly, although cement was nominated for regional exclusion by
Nigeria (following its successful industrial policy in cement), Ghana, Côte
dIvoire, Togo, Sierra Leone, Benin and Burkina Faso instituted develop-
ment policies in cement within eight weeks of signing the nal EPA. The
same thing happened with sugar (Côte dIvoire, Guinea-Bissau, Liberia,
Mali, Senegal and Sierra Leone followed suit).
Such sameness in policy
Table 1 A model of sameness of industrial policy in a developing region
Country Sensitive list Scope for
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
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 eects of sensitive lists on free trade/common external
tariin 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.
As the regional common external tarihas 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 tarisys-
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 tari
was adopted, to $2.3 billion in 2011).
Also, as shown by Tobias Bünder
in his investigation of the common external tariin 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.
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 tariwas due to the constant changing of sensitive products/
remissions, which resulted partly from the inuence of interest groups on
the national government. One reason for policy sameness is the inuence
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 Botswanas manufacturing sec-
tor policy with that of South Africa, as opposed to the development of
21. Isaac Shinyekwa and Miriam Katunze, Assessment of the eect of the EAC common
external tarisensitive 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 Communitys common external tar-
ireally? The inuence of interest groups on the EACs tarinegotiations,SAGE open 8,
1 (2018), pp. 114.
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separate policies.
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.
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 tari
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 tariand national protection
may lead to the sameness of industrial policy, as in West Africa and East
Africa, not all countries can aord 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.
some of these countries could not aord the level of resources needed to
develop local cement factories. Initially, therefore, their strategy was to
encourage foreign rms 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.
Apart from sameness in policy, instability may arise as a result of a con-
tinental common external tariand/or state-level exclusion lists. Such
24. Stephen M. Kapunda and Oluyele Akinkugbe, Botswanas 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 eective 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
resulting in a change in the exclusion list; the relative
strength of dierent lobbying groups and other factors may aect 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.
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 aect the predictability
needed for industrial policies to ourish, as well as investment. This is not
merely theoretical. The East Africa Common External Tariis currently
experiencing a high level of instability due to changes in the common
external tariand exceptions in tarilines.
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 eective
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.
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 Whiteld and Lars Buur, The politics of industrial policy: Ruling elites
and their alliances,Third World Quarterly 35, 1 (2014), pp. 126144.
29. Premium Times News, MAN supports Buhari on refusal to sign African trade agree-
ment, 21 March 2018 <
man-supports-buhari-on-refusal-to-sign-african-trade-agreement.html>(28 March 2018).
30. Bünder, How common is the East African Communitys common external tari
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. 281324.
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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
Eliminating exclusion lists will be dicult 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 dierent 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 Ocials, 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 aects it.
32. See Odijie, EPA and sensitive products.
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... A regional industrial policy in the context of the African Continental Free Trade Area could bolster scale economies and complementarities to drive more production, processing, and higher-value exports from the region, and facilitate industrialization through GVCs. In addition, the agreement should be designed to promote, produce, and export specific manufactured products within the regional market based on country-specific comparative advantages (Odijie 2018). In this respect, countries in the region are heterogeneous and have different comparative advantages that can be exploited to develop regional value chains in manufacturing. ...
... Intermediate goods (industrial supplies, primary) Intermediate goods (industrial supplies, processed) and reap the benefits of free trade to boost industrialization efforts in the region. The United Nations Economic Commission for Africa estimates that the agreement will boost intra-African trade by 52 percent by 2022 (Odijie 2018(Odijie , 2019. However, the AfCFTA will not automatically accelerate industrialization across Sub-Saharan Africa. ...
... Such a negotiated system would not only resolve the issue of coordination failures but also help build domestic industrial capacity according to each country's comparative advantage and productive capacity. For this system to be successful, the region should negotiate as a unit, as well as invest in connectivity and infrastructure (Odijie 2018;Oqubay 2019). ...
... The prime objective of ACFTA was the creation of a single continental market for goods and services with free movement of people and capital to be known as the African Continental Free Trade Area (AfCFTA). It was hoped that this would pave the way and accelerate progress towards the establishment of a Customs Union (Odijie 2018). Indeed, the AfCFTA marked a significant step towards achieving the African Union's Agenda 2063 goals of accelerating Africa's integration, economic growth and development as well as promoting a common African identity (African Union Commission 2015). ...
... While some countries like Algeria, Egypt, Ghana, Libya, Mali and Morocco advocated for the creation of a political and economic federation, others like Ethopia, Liberia, Nigeria and the former French colonies wanted a more measured approach which would build on regional economic integration as a starting point (Juma and Mangeni 2018). The signing of the AEC Treaty in June 1991 marked a new beginning for the idea of African Integration (Kouassi 2007;Odijie 2018) with countries coalescing around the approach of a gradual approach to integration starting with regional economic integration (Mistry 2000). The AEC Treaty which entered into force in 1994 set out a six-step agenda for the establishment of the AEC: ...
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This study explores public sentiment in relation to the African Continental Free Trade Agreement (ACFTA) by analysing 18,481 tweets mentioning ACFTA over a three-month period. The findings highlight the dominance of actors outside the African continent in the public discourse on ACFTA thus indicating the importance of the African diaspora and foreign interests in framing the debate and influencing public opinion on the continent. They also highlight the salient issues in the public debate on ACFTA to include its potential effects on national economies and jobs as well as the potential for its exploitation by foreign interests. The study also points at a disconnect between governments and politicians promoting ACFTA on the one hand and the average citizen in Africa on the other as it shows a general negative sentiment in all regions and age groups, and more particularly in West Africa and amongst males towards ACFTA.
... SADC Industrial Development Policy Framework. The EAC industrialisation policy similarly identifies support to "strategic industries" as an intervention in response to "new challenges of liberalised markets" (East African Community Industrialisation Strategy 2012-2032 (Odijie 2019). In other words, the prospects for the development of a regional poultry VC are weakened with countries focusing on national industries while raising barriers to trade with others. ...
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The African Continental Free Trade Area (AfCFTA), though ostensibly focused on trade, is hoped to promote industrial development through diversification and regional value chain (RVC) development. However, despite the long-standing objective of using regional trade to enhance industrialisation, ambitions often run aground at the implementation stage. This paper discusses some of the practical challenges of combining the AfCFTA with industrial ambitions. It highlights the fact that regional free trade areas will continue to govern regional trade and evidence that tariff liberalisation will generate only small gains, thus underlining the importance of understanding and addressing existing challenges to promoting RVCs. In particular, the paper looks at the political dynamics that play out within and between states which could make or break regional industrialisation ambitions. While many existing challenges to industrialisation and RVC development will remain the same, the paper also highlights the political opportunity offered by the AfCFTA to address long standing regional market integration and cooperation challenges.
... The findings of this article also point to tensions within development discourses emerging across Africa. Since the launch of negotiations for the African Continental Free Trade Agreement (AfCFTA) in 2012, regionalism in Africa has been framed in terms of its potential to promote industrialization and structural transformation across the continent (Odijie, 2019;O 'Reilly, 2020). The case of the EAC's second-hand clothing ban, however, illustrates the challenges of attempting to coordinate a region-wide industrial strategy in a context where strong attachments to national economic sovereignty still endure. ...
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In this article, we engage with contemporary debates about South-South regionalism as spaces to advance collective development agendas. Our starting point is recent scholarship emphasizing regions as important political spaces where new development possibilities are being conceived in a changing global order. We build upon the emphasis this literature places on regions as sites of policy innovation but argue that insufficient attention has been paid to regional institutional dynamics. We explore these issues with reference to the East African Community (EAC) and its decision in March 2016 to ‘phase-out’ second-hand clothing imports, a decision which was soon abandoned by the majority of EAC states (the exception being Rwanda), following opposition from the US. While the EAC served as a crucial forum to conceive and promote this policy, we argue that its institutional foundations proved insufficient to produce the level of regional coordination necessary to ensure its implementation and to withstand external pressure. In this way, we also challenge the prevailing logic that portrays regional institutions in Africa as ‘empty spaces’ by both demonstrating the role of the EAC as a site of policy development and its institutional dynamics in shaping political outcomes.
... However, it requires strong coordination of energy and industrial policies at the Pan-African, regional and country level. 82 ...
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The coronavirus (COVID-19) pandemic has profoundly impacted economies, disrupted energy markets, and catalysed the pace of the energy transition with more ambitious ‘green growth’ initiatives being announced by several countries and regions. In the Sub-Saharan African (SSA) context, the pandemic has exacerbated the fragility of its economies, causing the region’s first recession in many decades and its largest economic contraction on record. This article critically analyses what the energy transition means for developing Sub-Saharan Africa’s energy and extractives industry – mining and oil and gas industry – and the attainment of the sustainable development goals (SDGs), specifically SDG 7 on affordable and clean energy, and SDG 13 on climate action. We undertake a state-of-play analysis on the attainment of these two SDGs in the sub-region, based on the following timescales: pre-pandemic (2000-2019), during the pandemic (2020-2021), and likely post-pandemic trajectory. Our findings show that fiscal constraints during the pandemic meant that several SSA countries could not implement adaptation and climate resilience measures, which were already struggling for funding pre-pandemic. Even more so, SSA also faces acute multidimensional energy poverty, made more onerous by the pandemic and prior economic dislocations such as the 2014-2017 commodities price slump. Nevertheless, in the context of the energy transition and attainment of the SDGs, SSA governments are increasingly prioritising their transition responses premised on using both conventional and renewable energy resources at their disposal. This approach also balances national priorities such as increasing energy access, industrialisation, and economic diversification. In an increasingly decarbonising world, SSA may have to offer a higher ‘transition risk premium’ on oil and gas projects due to increassing environmental, social, and governance (ESG) pressures, else it would struggle to find investors. The opposite is likely to be the case for mining, aside known country risk factors. Recognising that transitions can create winners and losers and magnify the struggles of vulnerable groups, policymakers and industry stakeholders need to ensure that citizens are equipped with new skillsets to take up the new opportunities that the transition presents. Pursuing this requires strong coordination of energy and industrial policies at the Pan-African, regional and country levels
... In addition to an end to fiscal redistribution, "The dissolution of the colonial federations…gave birth to an unprecedented array of customs, and fiscal and monetary regimes" (Bach, 1999) which continue to be an issue till today. This remains an issue not only because industrial policy coordination is needed (Odijie, 2019), but also because several states (such as Benin, Togo, Gambia, Niger and, to a lesser extent Chad), border/frontier communities and trading interest groups in other countries benefit from the large "illegal" trans-state trade, "while depending for their profit base on the maintenance of national borders and official barriers to the free flow of commerce" (Bach, 1997: 77), and therefore may oppose uncompensated regional trade liberalization and economic union, as seen in the case of the dissolution of the Senegambia Confederation (1982)(1983)(1984)(1985)(1986)(1987)(1988)(1989) (Bach, 1999). ...
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There has been a reversal of fortune in West Africa. The hinterland, which hosted the dominant medieval kingdoms of the Western Sudan, is now poorer and more insecure than the coastal spaces. Not only did the trans-Atlantic trade disrupt intra-regional trade and begin a process of extroversion towards Europe, but colonial rule reinforced the reversal of fortune and worsened coastal-hinterland disparities. This book argues that the disruption and adverse replacement of trans-Saharan (between the Maghreb and West Africa) and inter-ecological trade (between Sahara, Sahel, savannah and forest zones), as well as the adverse coastal political and economic geography (between small and large coastal states) indicate that West Africa has been significantly mal-formed. This goes beyond simple coastal-hinterland dichotomies, North Africa-West Africa binaries and regional integration-fragmentation debates. It traces this structural malformation by observing the evolution of ideas and actions held and taken by three sets of actors in nineteenth and twentieth century Africa: Atlantic and Maghrebi African elites, colonial (and aspiring colonial) powers and interior elites (of the Sahara, Sahel and Savannah). The resort of the colonial powers to large scale colonial amalgamations which facilitated fiscal redistribution was the first response to the West African reversal of fortune and coastal-hinterland disparities. Yet it was wholly inadequate, and the failure of several proposals and schemes of proper regional adaptation to the challenges of the Atlantic order have prevented the emergence of a beneficial West African compact. Coastal-hinterland disparities and the reversal of fortune have wide implication for a range of phenomena which these actors touched upon, including West African politics and political settlements, conflicts over the location of capital cities, conflicts over fiscal distribution and redistribution, access to ports, national and international railway, road and inland waterway infrastructure patterns, spatial patterns in industrial policy, willingness for supranational federation or weaker associations, insecurity in West Africa and other development-related phenomena. Coastal-hinterland disparities continue to affect politics and interstate relations in West Africa, thereby necessitating a new approach to West African development.
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African Union member states decided to establish "the African Continental Free Trade Area (AfCFTA) during the 18 th meeting of 2012 at Addis Ababa, Ethiopia. The AfCFTA aims at facilitating intra-African trade and improving Africa's trading position in the global market. In this study, we critically review and discuss the empirical studies on the topic at hand in general and the modeling approaches that have been implemented in those studies in particular. The study also gives special emphasis to the modeling approaches that are widely implemented in recent trade literature such as, inter alia, GTAP, MIRAGE, MAGNET, and LINKAGE-GIDD. Concerning the potential impact, a range of studies considered here predict that the real income impact of the AfCFTA can reach up to 7 percent from the tariff, nontariff, and trade facilitations in a dynamic setting. While the range of projected intra-trade impact is about a 33 to 82 percent increase, intra-agri-food trade is expected to grow by 22 percent, and tariff revenue loss is 0.03 percent to 0.22 percent of the GDP. The findings, in general, highlight the potential impacts of policy intervention at hand are heterogeneous across regions, countries, and sectors. This paper draws several conclusions. First, tariff reduction of the AfCFTA alone can have positive impacts. However, the gains from trade facilitations and the reduction in nontariff barriers are projected to induce the greater gains. Second, studies that used scenarios of total tariff reduction, trade in goods, and static models did not consider the full potential gain of the agreement. Includinge trade in services in dynamic model and takling structural non-tariff barriers needs to be addressed to tap the benefits. Third, the agreement's projected impacts are sensitive to on various factors. The overwhelming tariffs (100 percent) and nontariff reductions need more attention, while nontariff trade measures are increasing globally and regionalism coupled with trade wars between developed countries. Member countries overlapping in different Regional Economic Communities may pose implementation difficulties at different levels of integration by complicating the policy coordination and external joint tariff determination. The implication of lacking informal trade data can have a significant impact; informal cross-border trade in some countries accounts for around 75 percent of GDP. In that trade women play a dominating role with over 70 percent, resulting in a significant transformative impact if successfully implemented. Finally, various factors, such as public awareness of the agreement, challenges related to a person's free mobility and capital, reconciliation of domestic policies, and related adjustment costs and inequality impacts can affect the effects predicted by current models compared to actual effects of the outcomes of the AfCFTA over time.
To what extent has the regional exclusion list under the EPA shaped national industrial policy in countries within the ECOWAS region? The Economic Partnership Agreements (EPAs) are a series of bilateral free-trade systems between the EU and ECOWAS that, if ratified, will transform ECOWAS into a single trading bloc. Under ECOWAS’s completed EPA, the region is required to liberalise 75% of its imports from the EU, with a 25% exclusion list to protect existing local industries. However, local industries operate nationally rather than regionally. The regional exclusion list, which was arrived at through negotiation between the fifteen countries of ECOWAS with each country’s successful industry included in the regional protection policy, presents problems of ‘incoordination’. As trade policies such as protectionism are an essential part of industrial policy, the movement of trade policies from national to the regional space, creates the possibility of incoordination where several neighbouring countries pursue similar industrial policy on the basis of common regional protection.
Economic transformation is driven by successfully implemented industrial policy, but industrial policy is inherently political. We cannot understand why some governments pursue and implement industrial policy better than others without understanding its politics. This article addresses the conditions under which industrial policies are successfully implemented. It presents an analytical approach to understanding why some ruling elite-capitalist alliances lead to better economic outcomes than others. Sub-Saharan African countries present a particular puzzle, given their low productive capabilities and the relatively small number of successful productive sectors. The article examines the most successful productive sectors in Mozambique and in Ghana in order to illuminate the conditions under which such alliances occur and their specific characteristics and outcomes.
How common is the East African Community's common external tariff really?
  • Bünder
Bünder, 'How common is the East African Community's common external tariff really?', p. 4.
Towards a continental free trade area in Africa: A CGE modelling assessment with a focus on agriculture
  • Simon Mevel
  • Stephen Karingi
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.