Find the latest insight by the Executive Director of the Pan African Chamber of Commerce and Industry (PACCI), Mr. Kebour Ghenna, on the creation of the African Business Council (ABC) by the African Union and whether it will really benefit SMEs or have the opposite effects.
One Voice: Who’s Voice?
Sow the wind and reap the whirlwind. [Hosea 8:7]
The African Union Commission is midwifing the African Business Council (ABC), but what does it really know about business in the first place? Anyway the Commission believes it’s important to unify business to speak in one voice over the AfCFTA. To do this, it proposes a Council composed of business membership organizations, such as industry associations and chambers of commerce and “…companies which are, or which parent company, is headquartered in a member state of the African Union and which have direct operations (e.g. manufacturing, distribution, and marketing) in the African region. The annual global turnover of the MNCs should be above USD 100,000,000. The Executive Board can grant exceptions to these requirements. All parent and subsidiary companies, or affiliated companies, and all companies under substantially the same control or management shall be considered as a group and shall be considered as a single member.” [Extract from the draft article of association proposed by the AUC]
You see where we’re going with this, don’t you?
A year ago, such things would have been considered impossible. But now, everything is possible… no matter how weird, grotesque, un-African and incredible.
The core of the African Continental Free Trade experiment was to enlarge the economic possibilities of all countries involved… not to shower benefits to the top and offer miniscule gains to the rest.
But now, the AU Commission is getting so extraordinary and bossy, it decides for business: who gets what… who trades with whom… who sits on top… and why… It even dictates business who to ask for membership dues!
Everybody knows multinational dominate the pulse of economic life, of economic fate and fortunes, their decisions strongly influence not just the global economy, but also all facets of social and political activities. In fact, multinationals, be it African or from elsewhere, are politically distinct as well as economically, they act politically in ways that diﬀer from domestic ﬁrms, and even from large domestic ones. Take the US, for example, studies show that many of the policy positions multinationals alone have championed have become US policy in recent decades and indeed have helped create the globalized world economy that we live in today.
In fact, there exists ample empirical evidence showing multinationals diﬀer in a number of important ways from purely domestic ﬁrms: they tend to be large and highly productive. They also tend to be the largest exporters, the most integrated into global value chains, employers of the most high skilled workers, and the largest spenders on R&D. This gives them a valuable position in any economy. That’s why they are the most ardent supporters of preferential trade agreements and bilateral investment treaties. They prefer to have decisions made at the supranational level where they may have even greater inﬂuence than domestically.
In recent past we’ve witnessed globally how multinational corporations inserted themselves into the trade negotiation process, packaging such factors as patent rules as trade issues – in intensive lobbying efforts backed by campaign donations, and in public relations campaigns – in order to serve their special interests. Rather than enlarging the economic possibilities of countries involved, trade agreement negotiations of this type often disrupt the lives of those in the middle and at the bottom, while showering benefits on the top and offering miniscule gains economy-wide, hence ruining the economy, undermining social stability, and corrupting governments. It seems once again that multinationals have muscled their way to a central role of influencing the AfCFTA negotiations, with the support and consent of the AU Commission.
By all means, let industries organize the way they think is best for their mutual interests. Stop promoting what looks like class warfare in the name of “African Continental free trade.”