‘Democracy delivered by economic inclusion.’ The Kenyan head of UNCTAD, Dr Mukhisa Kituyi, spoke to New African’s J. P. O’Malley about the role of his agency given the current wave of global populism and the threat to multilateral trade agreements.
In December 2016, the United Nations Conference on Trade and Development (UNCTAD) published The Least Developed Countries Report 2016. It forecastsa significant reduction – from 48 in 2016 to 32 in 2025 in the total number of LDCs in the world: that is countries across the globe that have been classified by the UN as
The definition of LDC’s takes into account things like low Gross National Income (GNI), weak human assets, as well as a high degree of economic vulnerability.
The report predicts an overallreduction in global poverty. But for Africans, the news is not so good, primarily because by the mid-2020s, UNCTAD projects that the LDC group will include just two countries outside of Africa: Cambodia and Haiti. Currently, 34 of the 54 recognised nation states across Africa are defined as LDC’s.
Some statistics from UNCTAD’s latest report make for depressing reading. Thirty-three LDCs, for instance, have remained in the same per capita income category since 1987; while in the low-income category of LDC countries, the average income per person amounts to a paltry $750 a year.
What, then, are the reasons for such stagnation, and in some cases, a manifestation of poverty: particularly in sub-Saharan countries? While globalisation – which encourages expansion of trade with fewer protection tariffs and barriers – has certainly helped lift millions out of poverty in recent decades, not nearly enough people have benefited. And huge challenges remain.
The United Nations Conference on Trade and Development (UNCTAD) primarily works with governments across the world, as well as liaising closely with theprivate sector: to provide analysis, consensus-building, and technical assistance to boost global trade and investment.
Together with other UN departments and agencies,UNCTAD measures progress by the Sustainable Development Goals, as set out in Agenda 2030: a UN-led blueprint for sustainable development across the globe.
Since September 2013 the Secretary-General of UNCTAD has been Dr Mukhisa Kituyi. The 60-year-old Kenyan has a wide range of experience in trade negotiations, and in international economics and diplomacy.
He studied political science and international relations in Uganda, Kenya, and Norway respectively – holding academic posts in the latter two countries. And he has been a non-resident fellow of the Africa Growth Initiative at the Brookings Institution in Washington DC.
Kituyi was elected to the Kenyan Parliament in 1992, and was twice re-elected: serving as Kenya’s Minister of Trade and Industry from 2002 to 2007. Other positions he has served in include chairman of the Council of Ministers of the African, Caribbean and Pacific (ACP) Group of States, and he was lead negotiator for Eastern and Southern African ministers during the European Union-ACP Economic Partnership Agreement negotiations.
Kituyi begins our conversation by stressing the importance of how countries across the globe can help alleviate poverty in various LDC’s.
“What we are calling for at UNCTAD is for countries to return to their commitments of 0.15 to 0.2% of Gross National Income (GNI) devoted to Official Development Assistance (ODA),” says Kituyi.
“All the solidarity measures that can take each respective countries’ Gross Domestic Product [GDPs] back to levels that are healthy – at least 7% a year – will be absolutely necessary if there is any chance that the goals of Agenda 2030 are to be realised for these countries.”
As a global institution that views international trade deals as paramount to alleviating global poverty, UNCTAD has been paying particular attention to the seismic rightward shift in Western political discourse of late.
With the recent rise of far right populism – an ideology that regularly beats the drums of inward nationalism and looks askance at cosmopolitanism and globalisation – international trade deals have become a controversial, and at times even emotive topic.
First there was the UK’s Brexit last June. And then there was the US election last November. Both
results were, in one sense, a protest vote that aimed to reverse the recent trends of globalisation.
US president-elect Donald Trump, for example, has vowed to withdraw from the Trans-Pacific Partnership (TPP) on day one of his presidency, claiming that the deal outsources US jobs abroad.
The TPP, signed by 12 countries last February (but which still needs to be ratified by 11 of the members), covers 40% of the world’s economy. It was put together by the US to counter the China’s rapid growth by strengthening economic ties between the signatories; so as to slash tariffs and boost growth.
Those who have voiced their opposition to TPP, however, claim it represents a secretive deal that favours corporate power at the expense of workers’ rights, and threatens national sovereignties. So, how will numerous African nations be affected by all of this?
Whatever the outcome of TPP, it potentially means that the African Growth and Opportunity Act (AGOA) could change status from its current form in theory, although it is all a guessing game at present.
AGOA is the main tool for commercial diplomacy. It allows some African products to enter the US duty-free. The aim was to promote growth for sub-Saharan exports to the US, and of course, to build more free markets. “The main sub-Saharan African export tothe US, apart from oil, is textiles,” Kituyi explains. “For example if Vietnam [a signatory of TPP] has market access for textiles exports, it has a massive potential to wipe out the African share in the US [market] under AGOA.
“So if TPP had worked, the AGOA provisions – which have been the main engine of African manufacturing jobs under the AGOA agreement – would have been eroded by now,” Kituyi adds.
However, if Trump’sadministration turns its back on pro-lateral trade agreements, Kituyi believes the AGOA agreement could be severely damaged. “We will have to wait and see whether the AGOA agreement is going to be put in jeopardy,” he says. “AGOA has traditionally always got bipartisan support in the [US] Congress. So
we hope AGOA will be ring-fenced from the kind of political populism that goes with cutting market access for foreign enterprises.”
And then there is the rather shaky and uncertain future of trade relations that numerous East African countries are going through with the EU at the moment. Economic Partnership Agreements (EPAs) are the trade and development agreements that are currently negotiated between the EU and African, Caribbean and Pacific (ACP) countries. Right now those negotiationsare reaching a stalemate. For the Economic Partnership Agreements between the EU and the ACP countries, the original deadline for the East African Community (EAC) member states to sign the trade agreement, as a bloc, was set for October last year. But due to resistance from some countries, the final deadline is now this month.
“The main problem for the 34 African countries who presently find themselves confined to an LDC status, Kituyi believes, is catching up with the industrialised north.”
Among the EAC members, Tanzania has refused to sign, claiming that to do so would lead to the demise of its local industry. Kenya, Uganda, and Rwanda, however, are in favour of the agreement. Their main priority is
EU market access for their goods.
Many economists and analysts, however, have pointed out that Tanzania’s refusal to sign could lead to other states in East Africa suffering by undermining trade within the EAC, and beyond, in the process – and, more importantly, giving rise to partner states operating in different trading regimes.
Kituyi becomes more direct when the conversation shifts to this topic: momentarily losing the cautious diplomatic language.
“EPAs cannot be a fair deal,” he says. “Because it’s a negotiated arrangement, where you open up your markets and introduce reciprocity. It’s the best of a bad lot.
“Tanzania is playing on the fact that it has everything but a provision of market access. But it has committed to exit status by 2020. So this status of market access is going to be removed from Tanzania. It will have to eventually join a partnership agreement. So it is a short game it is playing right now.” However, there are some flaws in the EPA negotiations, which are being exposed by this current trade rift, Kituyi maintains.
“The EU, in configuring the negotiated partners, [talked about] the importance of rigid integration,”
says Kituyi. “But the reality is that Kenya is the only country in East Africa that has been pressured to sign up to the deadline to sustain existing market access – because it is not a Least Developed Country.”
Currently, Kenya is classified as a developing country, while Uganda, Rwanda, and Tanzania, are all classified as Least Developed Countries. “So Rwanda and Uganda are right in saying that hiding behind both the LDC status, and market access, is only a short-term measure,” says Kituyi.
It’s hardly surprising that our conversation keeps returning to the topic of trade and globalisation. Whether it is disenfranchised workers in the rustbelt of the US; the disillusioned working class unemployed of the north of England; or rural farmers in Tanzania; those resisting globalisation are essentially all humming the same theme tune, claiming that it is a system that does well for elites, but not for them.
The arguments, of course, differ widely, on both the left and the right. But the disillusionment is clearly there on both sides of the political spectrum. Since Kituyi is in charge of an UN agency whose fundamental ethos epitomises globalisation, it is hardly surprising that he is a staunch defender of it.
“Well, globalisation cannot die,” says Kituyi rather sternly. “I think it’s the popularity of the neoliberal version [of globalisation] – the denationalisation of the production process, and the private search for maximum profit above all – that is under threat as a model,” he says.
“So going forward, we need to ask: how can we create moreinclusive prosperity and a fairer distribution of wealth in industrial societies? The answer lies in the benefits of improved globalefficiency, rather than the model of globalisation that has existed in the last 50 years.
“While Africa has certainly supplied [materials and labour] for the globalisation process, the effect has not been as pronounced there as it has been in the industrialised north, and in Mexico, China and India: which have all benefited enormously from the denationalised production process,” Kituyi adds.
Global civic and political institutions that try to maintainsome semblance of stability and control of the world economy – such as the World Bank and the IMF – are often accused of promoting an agenda led first and
foremost by neoliberalism.
For example, the former senior vice-president of the World Bank, Joseph Stiglitz has claimed the IMF’s financial liberalisation policies in Africa during the 1980s led to market domination, where mafia clans took over rural farms.
And even Antoinette Sayeh, the former director of the IMF for Africa, told New African back in 2013, that some of the harsh criticisms of the IMF’s ruthless neoliberal-led “structural adjustment” programmes were often
justified – that the IMF had to learn from its past mistakes in Africa where they pushed for a neoliberal market-led agenda before all else.
UNCTAD, in comparison to say, the IMF or the World Bank, has often been seen as a kind of black sheep: promoting a much more progressive, and south-driven agenda than its global partners, who traditionally swing to the right economically. “Whether or not UNCTAD is a black sheep or not depends on whose eyes we are being looked at with,” says Kituyi.
“Even the IMF and the World Bank are questioning the rationale of neoliberalism, which is not the only game in town now.”
Ever the diplomat though, Kituyi is keen to stress that as the seventh Secretary-General of UNCTAD, he is a pragmatist. “An open market – if aligned with proper planning in developing countries – can mean being productive, and then trading your way out of poverty. And it’s a positive thing,” says Kituyi.
The main problem for the 34 African countries who presently find themselves confined to a LDC status, Kituyi believes, is trying to catch up with the industrialised north. Here, two things are crucial for progress, he says: technology and infrastructure. Great breakthroughs in the IT sector
have been made in certain African countries, Kituyi admits.
He cites his native homeland, Kenya, and the emergence of an up and coming high tech and highly mobile class of educated workers has sprung up.
However, the infrastructure for the digital economy, as a whole across Africa “remains extremely poor,” says Kituyi. “A person in the European Union, for instance, has 30 times as much access to fixed broadband, and five times as much access to mobile broadband, as a person in Africa. So the challenges are in infrastructure,”
“The potential is there,” he says. The major problem, however, is that many African countries [when it comes to technology] have not developed a payment system,” Kituyi posits. “[Most African countries] have not legislated on cyber crime; on the protection of intellectual property. Nor have they established the logistics for delivering goods that are ordered online. And this is the legislative and practical system that is critically important in the potential for growing small businesses.”
Kituyi cites practical solutionsin reducing countries’ debt levels across Africa. And he says it is an important developmental challenge that UNCTAD is dealing with all the time. “Already Mozambique, for example, is on the brink of a [sovereign] default. And we can see quite a few other [African] countries which are also in that
situation,” Kituyi adds.
Reducing debt will eventually help to improve the infrastructure of these countries, which in turn, will help to foster wealth creation and the evolution of a new middle class. It’s quite simple, says Kituyi: “You can’t have democracy without economic prosperity.”
“For a generation, we have been talking about the importance of democracy. I still embrace the rise of democracy. But democracy is nurtured in the fertile grounds of economic prosperity,” says Kituyi.
“If the cost of democracy does not relate positively to the dividends of economic inclusion and prosperity, then populists can shoot their way into power. So democracy must be delivering on the economic front, as a way of deepening the culture of fair competition in African politics.”