This is the drunkard’s song: Beer is 50pc more profitable in Africa than elsewhere
There’s a popular scene in the movies. During a dramatic ending, a battered, teary hero hugs the woman who has been a friend with benefits, or on-and-off girlfriend, and declares that he had spent years wandering in the wilderness, but now he realises that the one person he wanted to spend the rest of his life was always before him – her!
Or a rebellious “unconquerable,” beautiful young woman, who has explored all that life has to offer and returns to the basics. To the shy ex-boyfriend, who wears white shirts with vests, and oversized spectacles, and tells him she spent all the time running away because she didn’t want to be vulnerable and submit to the truth; that he, and only he, is the true love of her heart.
Reading a preview of the forthcoming book Borderless Africa: A Sceptic’s Guide to the Continental Free Trade Area by Francis Mangeni and Andrew Mold left me with a similar “I have just discovered you are the sweetheart I have been waiting for all my years feeling” about the AfCFTA.
The book does some beautiful myth-busting about intra-African trade; serves up a lot of head-twisting data; and bats like the world is coming to an end for the African Continental Free Trade Area. It also does some of the best aggregation of African economic data you will find out there.
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Mangeni and Mold’s argument out of the gate is that intra-Africa trade is not as low as it is popularly presented. They estimate it is at 28.4 percent of total trade, not the low of 10 percent to 15 percent, or 17 percent, commonly bandied about.
They trumpet the virtues of regional economic integration arrangements in Africa, as they greatly increase intra-regional trade. In the case of the Southern African Development Community (SADC, trade increased by a whopping 308 percent.
If you think that is huge, wait for this. They point out that eliminating mobile roaming charges between Kenya, Uganda and Rwanda with the East African Community’s (EAC One Network Area agreement of 2014 led to an increase in inbound roaming calls between Kenya and Rwanda of over 950 percent in the first few months.
Within SADC, they catch us up with the Chinyanja Triangle Soybean Trade initiative, which was established by the Alliance for a Green Revolution in Africa (Agra. It has grown to link 22,179 smallholder farmers to regional trade markets, supplying over 7,070 million metric tonnes of soybeans valued at more than $4 million.
They cite a study that offered that intra-African foreign direct investment (FDI will rise by between 54 percnet and 68 percent once the AfCFTA is fully implemented.
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The AfCFTA has the possibility to bring about a more competitive market on the continent, and lower prices for consumers. They pull out another study that suggests that African consumers pay around 25 percent more for their food bills than the global average, in large part because of the lack of competition.
There’s a rewards galore for those who invest in Africa. While global profitability of FDI appears to be falling, “there is an abundance of opportunities for achieving high rates of return on the continent”, they argue. Why? Because average firm profitability in African countries is significantly higher (10–20 percent compared to other emerging markets and developing economies.
Firm markups are also about 11 percent higher relative to other countries at a similar level of development — blame a lower degree of competition in the region.
Some sectors, like banking and booze, are “spectacularly profitable”. In one of the juiciest titbits, they report that in Africa, beer almost 50 percent more profitable than anywhere else in the world, with some markets like Nigeria among the most lucrative in the world.
For those drunk on beer, there are sobering moments. Writing on Africa’s great trade collapse of the 1980s and 1990s, they point out that the scale of the commodity price crash at the time was so dramatic that John Iliffe, a British historian specialising in the history of Africa and, especially, Tanzania, declared that by the mid-1990s “tropical Africa’s share of world trade probably fell to its lowest point in a thousand years.”
The AfCFTA is one of the flagship projects of the African Union’s Agenda 2063, adopted by its January 2013 Summit as “Africa’s blueprint and master plan for transforming Africa into the global powerhouse of the future”. The AfCFTA agreement was adopted and opened for signature on March 21, 2018, in the Rwanda capital Kigali, and entered into force on May 30, 2019.
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So far, 47 of the 54 signatories — or 87 per cent — have deposited their instruments of AfCFTA ratification. The train has left the station.The Kusi Ideas Festival by Nation Media Group and the Botswana government is exploring whether the train will reach its destination or derail.
In 2063, Africa will grow from 1,474,687,227 people as of last Thursday, to 3,000,000,000 — up from being just 10 percent of the global population in 1963, to one where 30 percent of the world will be African.
The way Mangeni and Mold tell it, full stomachs await them at the AfCFTA Terminus if it’s built. With competition unleashed by open markets, it’s unlikely beer will still be nearly 50 percent more profitable than anywhere else in the world. It won’t matter, though. Getting so many billions of people drunk would be even more profitable, even if brewers make only a few pennies on a bottle.
Charles Onyango-Obbo is a journalist, writer, and curator of the “Wall of Great Africans”. X@cobbo3