Peter Mandelson: To erase poverty, Africa needs both trade and aid

To argue that free trade has failed these countries is simplistic

Share

This week at the G8 summit in Edinburgh the European Commission will be arguing for a significant boost to spending on trade development assistance for developing countries. This money is needed for Africa, and every euro of it is crucial to building the long-term solution to Africa's poverty. If we care about ending poverty in Africa for good, we have to match debt relief and humanitarian aid to the continent with a new commitment to building Africa's capacity to benefit from free and fair trade.

Debt relief and humanitarian aid for Africa have rock star advocates and new political cachet; aid for trade has none of this high-profile glamour. Yet it goes to the heart of Africa's current crisis. Africa's share of global trade is falling. If we could only succeed in reversing that decline, the benefits for Africans would be enormous. A 1 per cent increase in Africa's share of global trade would deliver seven times more income every year than the continent currently receives in aid.

A recent report by the development NGO Christian Aid argued that twenty years of free trade had proved to be a failure for many countries in Africa. They are right in their analysis but wrong in their conclusion. Right in that the report serves as a timely reminder that the world's poorest countries need more than access to our markets to prosper. Wrong in blaming free trade in itself for these countries' continuing problems. Every country on the Christian Aid list is either struggling with a poorly diversified economy, or massive infrastructure deficiencies, or is burdened with population growth so rapid that it drives down per capita income faster than even a liberalised economy can build it up. Free trade is not a magic wand: it is only when it is combined with policies that improve poor countries' capacities to trade that the higher living standards it in principle holds out the hope of, can in practice be delivered.

From landlocked Zambia it costs more to ship a ton of maize to neighbouring Tanzania than it costs to send the same ton of maize from Tanzania to Europe or the United States. Poor roads in Uganda add the equivalent of an 80 per cent tax to every dollar's worth of clothing exported to market. In most of sub-Saharan Africa, power supplies are so bad that 30 per cent of the start-up cost of most businesses goes on generators. In most European and American ports, it takes a day to clear a container through port: in Ethiopia, it takes thirty days. To argue that free trade has failed these countries is simplistic and ignores the huge structural obstacles in the path of even the most determined modern African entrepreneurialism. It is these obstacles to trade that the G8 must address through aid for trade.

Poor countries like Uganda and Zambia already receive completely non-reciprocal tariff- and quota-free access to the European market under our Everything But Arms initiative, and the rest of the developed world badly needs to live up to its 2001 commitment to match the access Europe provides. But like many countries in Africa, they remain barely able to use it. Market access without capacity-building and without substantial aid for trade is like putting a plate of food in front of a man while tying his hands behind his back, never mind withholding the knife and fork.

As well as providing funds to help build the capacity to trade, we need to support the development of regional markets in Africa. We need to assist African countries in producing the stable banking and services sectors that are the key to attracting committed capital investment.

Through regional market building and the Doha Development Round of trade negotiations, we need to chip away at the tariff walls that still surround many individual developing countries in Africa. Sometimes these tariffs protect vulnerable industries and need to be lowered with care, and they can be an important source of government revenue. But they also encourage reciprocal barriers which are a massive disincentive to trade and thus a greater drag on fiscal revenue. The World Bank estimates that an ambitious agreement on tariff reduction as part of the Doha Round could produce an extra $269bn a year in income for Africa and the rest of the developing world alone.

The Edinburgh G8 summit will rightly be regarded as a serious failure if it does not deliver further aid for Africa and consolidate steps already taken on debt relief. But it also has to find the aid-for-trade that is the key to the trading strength needed to sustain development in Africa in anything beyond the short term. Aid will save a life in Africa today and tomorrow. Free and fair trade can lift millions in Africa out of poverty for good.

The writer is the European Union trade commissioner

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Business Analyst - 12 Month FTC - Entry Level

£23000 - £27000 per annum: Recruitment Genius: A Business Analyst is required ...

Recruitment Genius: Chefs - All Levels

£16000 - £23000 per annum: Recruitment Genius: To succeed, you will need to ha...

Recruitment Genius: Maintenance Engineer

£8 per hour: Recruitment Genius: This is an opportunity to join an award winni...

Recruitment Genius: Telesales Executive & Customer Service - Call Centre Jobs!

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Day In a Page

Read Next
George Osborne appearing on the BBC's Andrew Marr Show on Sunday, 5 July 2015  

George Osborne says benefits should be capped at £20,000 to meet average earnings – but working families take home £31,500

Ellie Mae O'Hagan
The BBC has agreed to fund the £650m annual cost of providing free television licences for the over-75s  

Osborne’s assault on the BBC is doing Murdoch’s dirty work

James Cusick James Cusick
Isis in Syria: Influential tribal leaders hold secret talks with Western powers and Gulf states over possibility of mobilising against militants

Tribal gathering

Influential clans in Syria have held secret talks with Western powers and Gulf states over the possibility of mobilising against Isis. But they are determined not to be pitted against each other
Gaza, a year on from Operation Protective Edge: A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians

Gaza, a year on from Operation Protective Edge

A growing population and a compromised and depleted aquifer leaves water in scarce supply for Palestinians
Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously

Illnesses, car crashes and suicides

Dozens of politicians, bureaucrats and businessmen linked to Indian bribery scandal die mysteriously
Srebrenica 20 years after the genocide: Why the survivors need closure

Bosnia's genocide, 20 years on

No-one is admitting where the bodies are buried - literally and metaphorically
How Comic-Con can make or break a movie: From Batman vs Superman to Star Wars: Episode VII

Power of the geek Gods

Each year at Comic-Con in San Diego, Hollywood bosses nervously present blockbusters to the hallowed crowd. It can make or break a movie
What do strawberries and cream have to do with tennis?

Perfect match

What do strawberries and cream have to do with tennis?
10 best trays

Get carried away with 10 best trays

Serve with ceremony on a tray chic carrier
Wimbledon 2015: Team Murray firing on all cylinders for SW19 title assault

Team Murray firing on all cylinders for title assault

Coaches Amélie Mauresmo and Jonas Bjorkman aiming to make Scot Wimbledon champion again
Wimbledon 2015: Nick Bollettieri - Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!

Nick Bollettieri's Wimbledon Files

Vasek Pospisil must ignore tiredness and tell himself: I'm in the quarter-final, baby!
Ashes 2015: Angus Fraser's top 10 moments from previous series'

Angus Fraser's top 10 Ashes moments

He played in five series against Australia and covered more as a newspaper correspondent. From Waugh to Warne and Hick to Headley, here are his highlights
Greece debt crisis: EU 'family' needs to forgive rather than punish an impoverished state

EU 'family' needs to forgive rather than punish an impoverished state

An outbreak of malaria in Greece four years ago helps us understand the crisis, says Robert Fisk
Gaza, a year on from Operation Protective Edge: The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas

Gaza, a year on from Operation Protective Edge

The traumatised kibbutz on Israel's front line, still recovering from last summer's war with Hamas
How to survive electrical storms: What are the chances of being hit by lightning?

Heavy weather

What are the chances of being hit by lightning?
World Bodypainting Festival 2015: Bizarre and brilliant photos celebrate 'the body as art'

World Bodypainting Festival 2015

Bizarre and brilliant photos celebrate 'the body as art'
alt-j: A private jet, a Mercury Prize and Latitude headliners

Don't call us nerds

Craig Mclean meets alt-j - the math-folk act who are flying high