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Saturday, September 25, 2010

Opinion: Say NO to Protectionism, Dr. Kwesi Nduom!

Franklin Cudjoe
Franklin Cudjoe
By Franklin Cudjoe

Dr. Kwesi Nduom, former presidential candidate of Ghana's socialist party, the Convention People’s Party (CPP), and now “Shadow Finance Minister” in the newly created CPP think tank, pledged to Ghanaians this morning on TV3,a private Ghanaian television station that he will “bring Ghana's [wandering] economy home”, by having the state support the private sector, decentralise economic decision to regions and districts, all very noble ideas, but sadly, he also wants the state to impose heavy tariffs on imports Ghana can’t even compete with, as if the current ones are business and consumer friendly.

Ndoum is not the only one to hold this view. There are many think tanks and activist organisations here in Ghana and across Africa who share the view that Africa’s rice, tomato, and poultry farmers need to be protected from cheap imports. Yet the problems of African farmers lie elsewhere: they and other entrepreneurs are stifled by punitive tax regimes and the high cost of capital, not to mention our disarrayed land tenure systems which lead to low crop production.

Seems to me, creating local champions is fine, but not at all cost, when the local costs outweigh international ones? Not even for patriotic reasons else we will end up with the likes of the defunct Ghanaian carrier, Ghana Airways - whose oversight employs more cooks and crooks than pilots, with a single but usually faulty aircraft that occasionally spins its passengers in the air with careless abandon, whilst maintaining its political status as “strategic national asset”.

Arguably, the main reason the likes of Dr. Nduom support protectionism is the very offensive farm subsidies in western countries, whose abolition would indeed help to achieve a level playing field for agricultural producers around the world. Yet this view is rife with hypocrisy: the same organisations and activists promote subsidies (what they call "fair trade") for farmers and businesses in poor countries to shield them from the effects of competition.

If we in Ghana did ban rice, poultry and tomato imports, just how would we feed ourselves? Ghanaians depend on rice as a major staple in our diets, yet local production caters for only 30 percent of the rice we consume, partly due to higher costs of production, poor storage and transport facilities.

But the real problem is not "rigged" trade rules. The problem lies with us as Africans and especially our leaders, to improve our own wellbeing, and to encourage economic growth through political and institutional reforms. Intra-African trade is less than 10% - still a pale shadow of the numerous trade treaties signed in almost all the regional economic blocs.

The solution to all that ails us is not protectionism, not even aid, debt relief or "fair trade". It is to adopt institutions to harness the entrepreneurial spirit that exists in every African country, to enable Africans to trade with each other and anyone else in the world.

Establishing property rights would be an important first step; an effective, transparent and accountable legal system is another. Combined with respect for private property and the rule of law, LOWER TAXES and decentralised decision making, these broad reforms would encourage entrepreneurship, trade, innovation and even environmental protection because they empower people - rather than politicians.

Franklin Cudjoe is Executive Director of IMANI, a Ghanaian think tank adjudged the 5th most influential in Africa by the Foreign Policy Magazine and Editor of AfricanLiberty.org.

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