Could Africa Become The New Eurozone?

OPINION

The Eurozone structure has been characterised over the years by crisis after crisis, and more generally believed to be a cataclysm sustained by neoliberal capitalism and other mechanisms of a free market system.

Recently, 53 heads of state gathered in Rwanda for the 10th Summit of the A.U., to consider the legal instruments for the mechanisation and officially launch the biggest free-trade agreement since the World Trade Organisation, the African Continental Free Trade Area.

Economic insecurity and greater risk, increased inequality, social malaise — and greater capital freedom coupled with a dearth of egalitarianism — are all factors contributing to the failure of the "neoliberal" methodology.

The agreement initially reached in 2012 is an initiative aimed at deepening the economic and social integration of the African continent, founded on a purported realisation of common interest, obligation, commitment and benefit. Regardless of an already existing immigration predicament across porous African borders, the agreement will generally ensure that the arrangement fosters free movement of persons, capital, goods and services.

Generally invented to encourage "structural economic transformation", the agreement will liberalise services by compelling states to combat non-tariff measures aimed at restricting imports and exports of goods and services, as well as removing tariffs on 90 percent of goods.

Furthermore, opening the summit, Rwandan president Paul Kagame asserted that "the creation of one African market necessarily entails a metamorphosis in how we think and act. The full involvement of the private sector is needed more than ever before. The purpose of today's forum is to discuss how to make the most of the new opportunities we are creating for ourselves."

What is Africa doing? Are we administering more neoliberal shock therapy to a continent ridden with social inequalities? Africa appears to be sedated by an economic acumen synonymous with that of the Eurozone and the North American Free Trade Agreement (Nafta).

The aforesaid anxiety is perhaps best captured by the erstwhile leader of Ethiopia, Meles Zenawi. While decrying Africa's acquiescent behaviour towards Bretton-Woods institutions the IMF and the World Bank, he correctly wrote off Africa's character as "that of a people who were told to fear God" — referencing Africa's fear of challenging neoliberal orthodoxy.Could this attitude perhaps be triggered by the fact that the A.U. currently draws 80 percent of its funding from the European Union?

How hurriedly have we forgotten the years 2008 to 2010? They marked a turning point in the operations of the E.U. and the eruption of a global banking crisis, which ultimately turned into a global recession and gave rise to a sovereign debt crisis, which generally raised eyebrows about the viability of what is perceived to be a "neoliberal union". Who says Africa is immune to this?

Neoliberals of the ilk of Cyril Ramaphosa are of the abysmal view that a common monetary union for Africa could increase economic efficiency and at the same time preserve financial stability.

Some African economies are not functioning optimally, and consequently face at least four major, related economic challenge:

1. High debt levels and public deficits;
2. Weaknesses in the banking systems;
3. Economic recession and high unemployment;
4. Persistent trade imbalances within Africa.

Now that the continent is attempting to assimilate to a more market-radical variant of neoliberalism, Nigeria, perhaps the only fearless actor, withdrew its participation. This following the Nigerian Labour Congress cautioning the president against committing to a "renewed radioactive neoliberal policy".

Neoliberals of the ilk of South African President Cyril Ramaphosa are of the abysmal view that a common monetary union for Africa could increase economic efficiency and at the same time preserve financial stability. Financial vulnerability as a result of asymmetric shocks could result, because of disparities between member economies.

The problems of the A.U. are consequential of the fact that there's always a nonentity when the bulk of African problems arise, which again indicates disintegration and the lack of cooperation between states in the A.U.

Some African states are already fraught with public debt and budget deficits, which could be exacerbated by an unprogressive economic convergence. South Africa could potentially be accused of seeking to preserve its own interest and accrue its own benefit, rather than that of the African continent as a whole. For instance, South Africa could be utilising the agreement for the huge benefits it could bring to the country's trade.

Also, the absence of strong coordination and political leadership in confronting regional issues by the A.U., and the organisation's seismic failures in implementing some of its programmes, particularly the progressive 1991 Abuja Treaty, may be partly why the initiative might fail.

The problems of the A.U. are consequential of the fact that there's always a nonentity when the bulk of African problems arise, which again indicates disintegration and the lack of cooperation between states in the A.U. Short-term management of sporadic national politics rather than a strategic handling of twofold continental and domestic issues in the years ahead is likely to cause an inescapable general crisis.

Also, the unequal level of achieved industrial development and indebtedness of some African countries will cause political tensions between the core and the peripheral states, which will also give strength to a probable fragmentation of the zone.

But most worryingly, the African leadership seem to ignore the fact that such an approach could create social disorder, broaden the gap between rich and poor, and lead to political instability. Such a situation could lead to a severe legitimacy crisis in Africa with uncontrolled social outcomes.

Many of the problems experienced in the Eurozone were blamed on the dogmatic application of neoliberal policies, and those outcomes could trigger the belief among African citizens that a sightless assimilation to neoliberal dogmas could present a scary dystopian nightmare for Africa.