World Trade Organization chief wants to ‘double or triple’ Africa’s share of world trade
Global trade is expected to slow sharply this year as high energy prices and rising interest rates weigh on the economy. The World Trade Organization (WTO) predicted in October that after rising 3.5% in 2022, trade volumes will increase by only 1% in 2023.
Given the uncertainty over the strength of China’s rebound from the Covid lockdowns, the outcome could be better. Either way, Africa could start reaping the benefits of a free trade agreement that comes into force in 2021.
The landmark African Continental Free Trade Area (AfCFTA) agreement created the world’s largest new free trade area since the establishment of the WTO.
The same year, the Nigerian Ngozi Okonjo-Iweala was appointed Director General of the WTO, thus becoming the first woman and the first African to hold this position. She recently spoke with CNN’s Eleni Giokos about the future of trade on the continent. The following interview has been edited for clarity and length.
The AfCFTA came into effect in early 2021. It’s been an amazing journey. Has the WTO been able to follow visible changes on the ground?
Okonjo-Iweala: [AfCFTA] is important – it creates a market of 1.4 billion people and more. The fact that ratification has taken place — that we have ratified 44 out of 54 countries — is already good progress. But I learned that in business, things take so long.
I am an economist, I want things to change, but on the trade side it takes time.
Intra-African trade [as a proportion of the continent’s imports and exports] is stuck at about 15%. You are currently talking to CEOs to learn about their experience. What do they need and what do they tell you in terms of cross-border trade on the African continent?
Okonjo-Iweala: This 15% is too little. Africa’s share of world trade at 3% is too low. We have to do something to double and triple that. We need to overcome the challenges in front of the continental free trade area: we need the infrastructure to function, we need to digitize more, in order to overcome some of the bureaucratic obstacles that make trade difficult, and we need to reduce the business costs.
Talking to CEOs, I think the problem is [identifying] industries where we can use this large market to enter regional and global value chains. Pharmaceuticals is one of them, and that’s where I got interested in what we can do to decentralize the manufacturing of vaccines, therapeutics, and diagnostics. What we have seen during the pandemic is that Africa needs to get its own manufacturing capacity, and that comes right down to what can make the continental free trade area work.
You are the first woman and the first African to lead the WTO. What changes, if any, have you had to implement in this huge institution with regards to African politics, and what impact would you say you have had?
Okonjo-Iweala: It’s the beginning, but one of the most exciting things is being here [at the WTO] as an African it’s just to see how much we benefit from it. What I tried to do when I arrived was to urge members to pick up the pace at which these negotiations are taking place.
I am very happy that in June 2022 we were able to conclude the agreement on fisheries subsidies to reduce the 22 billion dollars [in worldwide subsidies] that lead to illegal, unreported and unregulated fishing in our waters.
Another thing we benefit from is the TRIPS agreement [a set of international rules governing intellectual property, including patents on medicines]. We had the pandemic, and we used to import 99% of our vaccines – we still do, for the most part – and 95% of our pharmaceuticals. We were able, at the WTO, with African countries lobbying with other developing countries, to get an agreement to waive contracts for a period of five years so that our industry would have the capacity to manufacture these things.
Now we have the challenge of inflation, high food prices due to the war in Ukraine, food price volatility and energy challenges. What have we done? We got an agreement to provide food to people who need it, like the Horn of Africa. The World Food Program had encountered difficulties in accessing humanitarian food supplies. WTO members have agreed that they will not impose restrictions on the export of food, so that the WFP can have easy access to it. This is a net benefit for our continent.
These are just three areas where I think we have been able to do something concrete. For me, business is not just about talking about rules, it is about achieving achievements that can benefit the ordinary man and woman on the streets of Africa.
Trade is synonymous with globalization, but globalization has been reviled in recent years. Could you explain to us how important trade is in poverty reduction, particularly in the African context?
Okonjo-Iweala: Globalization has helped lift more than a billion people out of poverty, let’s not forget that. But there is no doubt that not everyone benefited. There were poor people in rich countries who were left behind… and there are poorer countries – many on our continent – who have yet to benefit.
But does that mean we can’t benefit from it in the future? The answer is no. We need a new type of globalization, I call it re-globalization, which will benefit our countries by attracting all those who have been left behind.