China’s growth serves as inspiration for Tanzania’s potential

18Mar 2019
Correpondent
MACATTA
The Guardian
China’s growth serves as inspiration for Tanzania’s potential

Bespite disease and war, Africa continues to show a vibrant population growth and reached the one billion mark in 2009. Demographic records show that Africa has population growth of “three per cent has an average of about 4.6 children per family” and uses less contraception than other continents.

President John Magufuli (5th L) and Chinese Ambassador to Tanzania Wang Ke (6th L) attend the handover ceremony of a China-aided library in Dar es Salaam, Tanzania, Nov 27, 2018. File photo

In the past, African customs and beliefs encouraged families to have lots of children. Today the number of children per family has dropped slightly, with the average family having one child less in countries like Tanzania, Rwanda, Ghana, Kenya, Egypt and South Africa. These are countries with birth control campaigns, more urbanization and more girls enrolled in schools.

In countries hit by civil war, the number of children per family remains high: the Democratic Republic of Congo or Burundi and Somalia have averages of around six children per family. 

In any other circumstances these figures would contribute to the economic development of the country. But in these war-torn countries, total population growth includes a high number of combat-related deaths.

To sustain their increasing populations, African countries will need an annual economic growth rate of between six and eight per cent over a period of ten years. But growth is currently only at three per cent. 

Africa has shown considerable growth in the last fifteen years; thanks to mobile technology which has opened the continent up to the rest of the world and restructured the way people do business. This is contributing to a growing, prosperous middle class in several countries and specifically in the United Republic of Tanzania.

The hosting of the football World Cup by South Africa,  for the first time in the continent, demonstrated a confidence in the future of Africa and is reassuring both overseas investors and Africans. 

But globalization of the Africa economy has brought problems like migration from rural to urban areas. This increases the wealth gap in the population.

And farmers are going to have a difficult time feeding one billion Africans. The agriculture sector grew from “2.5 per cent in 2000 to almost four per cent in 2005”; this was mainly due to the expansion of farming land. But agriculture is meeting difficulties because of the increase in population.

Another issue Africa will have to tackle is urbanization. In 1950, Alexandria and Cairo were the only cities with more than one million inhabitants but now there are around 80 cities of this size in the continent.

Life expectancy in Africa is currently at about 63 years (it used to be less than 45 years in the then Tanganyika during the colonial era). Poor conditions are exacerbated by lack of proper sanitation, poor health care and an education system that is unable to support demand. More than half of the 2.5 million people living in cities, the capital commercial city of Dar es Salaam, live in slums.

And the financial crisis might not have affected sub-Saharan Africa in the same way as Western states, but it has left African governments’ development programs looking more fragile. Young people are the key to sustainable growth and prosperity. 

By 2030, Africa is expected to be home to “1.7 billion people —potential consumers with over $6.7 trillion (U.S.)” of combined consumer and business spending. 

These numbers indicate the enormous potential of Foreign Investors including China-African relations and the benefits that could result from economic and social partnerships.

For example, the China-Tanzania Youth Forum could be an excellent beginning for long-term engagement, but such initiatives also should facilitate deals in the short run. 

Along these lines, China could create an investment fund to support Tanzania startups doing business with China and joint ventures between China and Tanzanian partners to help lift barriers to doing business and hasten economic partnerships.

Such partnerships could help generate cutting-edge research to inform policies, build human capital, and advance effective institutional, technical and policy configurations critical to policy success.

China is one of the leaders of the 4th Industrial Revolution, so special attention could be paid to digital transformation and collaboration in digital government, businesses in industries without smokestacks, and cyber security.

To build the basis for long-term relations and mutual support, China could increase the number of education, volunteering, and cultural exchange opportunities for Chinese in Africa. 

China could increase its support for Chinese conducting research on Africa, as well as for the development of a Chinese-African joint research initiative, laying the foundation for long-term friendship. 

Future agendas would gain from including experts’ perspectives on climate change, women and youth economic and political empowerment, and the future of technology, among other topics.

The enthusiasm at this proposed inaugural dialogue herein indicates these bilateral forums can have exponential effects on development, investment, and political initiatives between emerging partners. 

Africa’s advocates throughout other emerging economies should continue to share their collective knowledge with the citizens and leaders of their countries. 

As the profiles of China’s and Tanzania’s initiatives grow, China must encourage international organizations’ acceptance of key development and economic policies. 

The China’s growth in recent decades is remarkable and serves as inspiration for Tanzania’s potential at this transformative stage in its history.

The debate on the benefits of trade has dominated this decade, and Africa has cast its vote for more and better trade with itself. In March 2018, African countries signed a landmark trade agreement, the African Continental Free Trade Area Agreement, which commits countries to remove tariffs on 90 percent of goods, progressively liberalize trade in services, and address a host of other non-tariff barrier. 

If successfully implemented, the agreement will create a single African market of over a billion consumers with a total GDP of over $3 trillion. This will make Africa the largest free trade area in the world. 

Its scope exceeds that of a traditional free trade area, which generally focuses on trade in goods, to include trade in services, investment, intellectual property rights and competition policy, and possibly e-commerce.  

It’s complemented by other continental initiatives, including the Protocol on Free Movement of Persons, Right to Residence and Right to Establishment, and the Single African Air Transport Market (SAATM).

 The scale of African Continent Free Trade Area’s potential impact makes it vital to understand the main drivers of the agreement and the best methods to harness its opportunities and overcome its risks and challenges.

The signing of the African Continent Free Trade Area  in Kigali comes at a time when the benefits of trade are actively contested, and global powers that traditionally promoted trade as a crucial driver of growth are now calling into question its very tenets. 

This apprehension is not without cause. It is broadly recognized that, while globalization and trade produced the impressive economic expansion of the past three decades, the gains have not been fairly distributed. 

The World Bank population-weighted Gini index shows that inequality rose steeply between “1988 and 1998 and declined only moderately by 2013”. Although global poverty has fallen, prosperity has not been fully shared.Recent evidence by ECA shows that when African countries trade with themselves they exchange more manufactured and processed goods, have more knowledge transfer, and create more value. 

In fact, manufactured goods make up a much higher proportion of regional exports than those leaving the continent— The real test of the African Continent Free Trade Area, however, will be how quickly African countries can accelerate export diversification and product sophistication and make trade more inclusive.

Trade diversification of exports is important as it allows countries to build resilience to movements in demand, due to economic downturns in importing countries but also price dips. 

In the case of commodity exporting countries it supports a shift from an over dependence on commodities to higher-value added products and services. 

Economic diversification allows for more inclusion of small and medium sized enterprises and helps encourage innovation as more markets open. It is also productivity enhancing.

In contrast, most East Asian economies were able to diversify exports at a rapid pace and converge to the levels of China and Korea. 

Against this backdrop, the African Continent Free Trade Area (AfCFTA) is expected to enable countries to break into new African markets as they both diversify by export destination and type of goods produced.

The AfCFTA will increase intra-African trade in agricultural products by between “20 and 30 percent, with the highest gains in sugar, vegetables, fruit, nuts, beverages, and dairy products”. 

The agreement is expected to expand access to markets at the regional and international levels, thus generating state revenue, increasing farmer income, and expanding both farmer and country capacity to invest in modernizing the agricultural sector through processing and mechanization. 

The AfCFTA as a result should stimulate demand for intra-African food imports, supporting a predominantly women-led sector. Diversification should also lead to increased sophistication of export products. 

Product sophistication refers to the share of value addition in a product, or product upgrading. Increased value addition and sophistication increases productivity and increases the overall value of exports.

On the diversity criteria, African exports have generally lagged behind, and there is no evidence of quality convergence. The AfCFTA will improve export sophistication across the continent by enabling more countries to integrate regional and global value chains and consequently increase the quality of exports.

Differences in export performance and product sophistication demonstrate that across the continent there is potential for increased diversification, the creation of regional vertically integrated industries, and the development of globally competitive regional value chains.

It is promising that the 5th phase government led by exuberant Dr. JPJ Magufuli, the President of the United Republic of Tanzania is already strategizing on how to benefit from the agreement and developing clear plans of action to take advantage of national, regional, and global markets in the African Continent Free Trade Area context. 

The African Continent Free Trade Area can play a game-changing role in Africa’s economic diversification and inclusion. This is not an opportunity to be missed and 2019 will be a defining year. 

This unprecedented dynamism of the continent is creating opportunities for trade and investment and is drawing interest from an increasingly diverse group of external partners. 

Democracy is consolidating, although the prevalence of tensions and, in some countries, violence during elections point to areas for improvement. 

The demographic tidal wave looms closer, and job creation has not yet been able to catch up. Despite continued progress on governance, more efforts are needed to eradicate corruption and to elevate the voice of women and young people in the decision-making.   

 With that aim, we hope to promote and inform a dialogue that will generate sound practical strategies for achieving shared prosperity across the continent.    

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