The World Bank’s 1981 Berg Report laid the groundwork for a misguided strategy of structural adjustment and economic liberalization in Africa. It promised that by encouraging trade liberalization, Africa would realize its potential in agriculture, thereby driving much-needed economic growth. The reality, however, has been starkly different.
The Berg Report, authored by Professor Elliot Berg, attributed Africa’s post-colonial economic struggles to government interventions, suggesting that dismantling state institutions, such as marketing boards, would unleash an era of export-led growth. Yet, despite the proclaimed comparative advantages and trade preferences for African products, agricultural exports have languished, stifled by protectionist policies upheld by wealthier nations.
By the dawn of the 21st century, Africa’s share of global non-oil exports had plummeted to less than half of its early 1980s levels. This decline didn’t occur in a vacuum; it was exacerbated by years of inadequate investment, economic stagnation, and an alarming neglect of infrastructure. Public spending cuts decimated the critical roads, water supplies, and other facilities necessary for agricultural producers to thrive.
Meanwhile, the high growth rates witnessed in East and South Asian economies have led to a surge in Sub-Saharan African (SSA) mineral exports—those often extracted by foreign corporations that reap the majority of the benefits. Even a collapse in commodity prices in 2014 failed to deter an uptick in Africa’s share of world exports, raising questions about the uneven distribution of gains within the global economy.
The layers of broken promises continued to accumulate with the establishment of the World Trade Organization (WTO) in 1995, following the 1994 Marrakech declaration. The Doha Development Round initiated in 2001 was marked by frustration, particularly from African trade ministers who walked out in protest at the Seattle ministerial conference in 1999. Even when exceptions for public health were introduced to mitigate the stringent intellectual property rules of the WTO, their relevance was wholly ignored during the COVID-19 pandemic.
The World Bank’s projections of a $16 billion gain for developing nations from the Doha Round were not only overly optimistic but fundamentally flawed. Numerous analyses have shown that the benefits of agricultural trade liberalization would primarily accrue to established exporters, predominantly from the Cairns Group, leaving the SSA region with net losses rather than gains. Yet, the World Bank persisted, reiterating claims that trade liberalization would benefit all developing countries, despite evidence to the contrary.
The restrictive nature of WTO trade rules has systematically narrowed the policy space for developing nations. African governments were led to believe that a Doha Round agreement would lead to reduced agricultural subsidies and tariffs imposed by rich countries, particularly in Europe. However, decades of neglect in both physical and economic infrastructure have left African nations ill-equipped to take advantage of new opportunities for export growth.
What should be clear by now is that the anticipated gains from the Doha Round were illusory at best. Thandika Mkandawire warned that the WTO trade regime would further disadvantage African nations, especially without preferential treatment from the European Union under the Lomé Convention. These warnings were not heeded, and the projected gains from trade liberalization were ultimately what economists deemed “one-time” improvements that failed to address the structural issues plaguing African economies.
The impact of these misguided policies is palpable. Structural adjustment programs have decimated the competitiveness of African smallholder agriculture. Wealthy nations have disproportionately benefited from their agricultural exports, buoyed by subsidies that have rendered African goods less competitive. Even the prospect of reducing agricultural subsidies in wealthier nations could lead to increased food prices, further straining African economies.
We now face a sobering reality: the uneven effects of trade liberalization have not been adequately addressed, leading to a situation where Africa stands to lose significantly from ongoing agreements like the Doha Round. The few gains projected for SSA are dwarfed by the staggering losses, with estimates suggesting a potential loss of up to $122 billion due to trade liberalization measures.
It is imperative to recognize that mainstream international trade theory provides no justification for the liberalization of trade in SSA. The reality is that trade, while it has the potential to foster growth, cannot trigger it in isolation. A weak investment-export nexus in Africa presents significant barriers to export expansion and diversification.
As we reflect on the past decades, the evidence is overwhelming: trade liberalization, in the context of structural adjustment programs, has exacerbated deindustrialization and food insecurity across SSA. The continent remains in a precarious position, with limited access to markets in wealthier nations, particularly the U.S., making Africa an afterthought in international trade discussions.
The expiration of the African Growth and Opportunity Act (AGOA) has only intensified these vulnerabilities. With African leaders scrambling for extensions and facing the prospect of steep tariffs, the consequences of failed trade policies loom large. While there are hopes tied to the African Continental Free Trade Area (AfCFTA), it remains to be seen whether regional integration can overcome the fundamental issues of competitiveness and economic resilience that have historically plagued SSA.
In conclusion, the imperative for social justice, equality, and human rights in the global trading system cannot be overstated. The systemic inequities that underpin these trade policies must be dismantled and reformed if we are to create a more equitable economic landscape. Africa deserves a fair chance at development, free from the shackles of exploitative trade practices that have long stifled its potential.
This article highlights the importance of POLICIES FAIL AFRICA.
