"Nowadays, anyone who cannot speak English and is incapable of using the Internet is regarded as backward."
- Prince Alwaleed Bin Talal Alsaud

International trade is a most critical element in the economic development of any progressive nation – protectionism in such a context is a total oxymoron. I believe the constructive powers inherent in international trade relations became more vivid after president Clinton came into office, and walked right into the befuddling perplexity that had become American foreign policy bereft of the guiding beacons of Capitalist vs. Communist global polarization of the cold war era. He had to get pretty creative in assembling a fairly decent foreign policy configuration from the debris of the cold war mess – he struck out for international trade relations! Reaching out and building bridges to the nations of the world via innovative and strategic trade policies – the outcome were evident in GATT, WTO, NAFTA, etc.

Now, have you ever imagined what powers one nation (or a bunch of nations) could have over another (bunch of nations) if they controlled say 10% of the others’ trade process? A lot!

This World Bank report on new trade patterns between Africa and Asia may portend significant particulars for the sub-Saharan Africa (SSA) ICT panorama.

My annotated summary of the report:

"Exports from Africa to Asia tripled in the last five years, making Asia Africa's third largest trading partner (27 percent) after the European Union (32 percent) and the United States (29 percent)."

China’s new tactics at courting African leaders – take the recently concluded Beijing summit in China, makes me wonder if China is trying to send the west a message: You are losing market share in Africa because of your high-handedness, you got too comfortable, now we are having your breakfast and moving in on your lunch, hÇŽo ba!

"Indian and Chinese foreign direct investment (FDI) in Africa also grew, with China's amounting to $US1.18 billion by mid-2006… "

While Asia accounts for one-quarter [25%] of Africa’s global exports, this trade represents only about 1.6 percent of the exports shipped to Asia from all sources worldwide. By the same token, FDI in Asia by African firms is extremely small, both in absolute and relative terms.

I wonder if this is the same kind of mistakes Africa made with EU and US from the on start? How many fortune 1000 companies in US are owned by Africans? Compare to how many top 500 African companies owned by non-Africans-- would be interesting to study the topmost Africa 500 companies’ shareholder makeup – will save that for a later blog.

Now what exactly are African FDI in India and China exactly?

Because of its cheap direct labor capacity, Africa is able to export nontraditional goods and services competitively to China and India.

It is funny Africa can actually get any leverage at all on cheap labor when dealing with India and China. But anyways, let’s not get too carried away with competitive advantage via cheaper labor – it’s pretty transient. The study details a series of reforms that should be undertaken by all the countries:

• “At-the-border” reforms, such as elimination of China and India’s escalating tariffs on Africa’s leading exports; and elimination of Africa’s tariffs on certain inputs that make its own exports uncompetitive.

   No, you don’t say! China and India have virtually flooded African markets with every conceivable consumer product  -- and they are escalating tariffs on African exports—not fair!

• “Behind-the-border” reforms in Africa, to unleash competitive market forces, strengthen its basic market institutions, and improve governance.

   In this earlier blog, I detailed some initiatives already taken by some African nations to ameliorate the harsh doing business conditions in Africa.

• “Between-the-border” improvements in trade facilitation infrastructure and institutions to decrease transactions costs, such as customs administration, transport and communications.

   A friend of mine recently told me he lost out on a refined petroleum product import deal because the foreign suppliers would only ship products on FOB basis i.e. the African buyers buy and assume 100% liability from suppliers home port. Foreigners are happy to sell us stuff – but they will not stick their necks out any further than they have to.

• Reforms that leverage linkages between investment and trade to allow African businesses’ participation in modern global production-sharing networks generated by Chinese and Indian investments in Africa.

   Credit cards are still not accepted in most parts of SSA and most credit cards coming out of Africa are not accepted internationally. Same goes for a bunch of other financial instruments.

I would like to hear more on ways to work in ICT solutions towards making SSA trade patterns smoother and more equitable.