'We can't depend on resources forever'

Ugandan economist has looked at commodities Africa should specialize in for trade with china

Lawrence Othieno believes Africa has to look beyond exporting just resources to China since these could run out within 50 years.

The economist says many of the continent's nations are not operating a sustainable long-term trade policy with the world's second-largest economy and could eventually be left with nothing to export at all.

"African countries need to ask themselves the question of what kind of exports to China they will have over the next 20, 30, 40 or 50 years when oil and other things have ceased to be there.

"Countries have to accept the fact that these resources are finite. They have to look to the day when they might not have these resources to trade. Now they are just sold with no value added at all without any form of processing. They could be facing having no trade relationship at all."

China is now Africa's largest commercial partner with a large part of the $200 billion of trade between the two being resources, including oil, copper and rare earths. Countries such as Angola and Mozambique have had their economies transformed by China's demand for oil.

Othieno, earnest but friendly, says African countries need to look to what other goods and services they can export and might be advised to look at Australia, which sends 27 percent of its exports to China, as a role model.

"They export a lot of coal and wool. While wool can be sustained because they will continue to rear sheep, they are aware that coal will run out. That is why they are now exporting other things such as education services. Africa too has to think of things it can export after oil and other resources."

Othieno, 33, was speaking in his office in the sprawling greenery of the campus of Makerere University, where he was until last month research fellow at the Economic Policy Research Centre, a leading East African think tank.

He has just taken up a new position as trade economist at the Ministry of East African Community Affairs, or MEACA, a body looking to set up an EU-style customs union among East African nations.

Lack of trade between countries, often due to poor infrastructure and customs borders where freight trucks are often stranded for days, is seen as a barrier to development in Africa and this is something MEACA is trying to overcome. Even setting up a euro-like single currency zone is on the agenda.

"There was to be a signing of a protocol (about a single currency) by heads of state this summer but we have to draw lessons to ensure that we do not repeat what has happened in the eurozone," he says.

"We don't have a Germany here that will be bailing the others out. So who will be the big brother? One candidate might have been Kenya but it has problems of its own. So we have to take precautions."

Othieno, who has a longstanding interest in China and has met representatives from the country's ministries of commerce and foreign affairs in Kampala, believes China's investment in African infrastructure, particularly roads and port facilities, is helping facilitate greater intra-African trade.

"If you have infrastructure linkages, it is where the market starts to develop. Not only does it make it easier for African countries to trade with each other but it also makes it easier for China to open up more markets for its own goods and not just to the coastal regions."

Othieno, who is from the Tororo District in eastern Uganda, had far from an academic upbringing.

He is the second youngest of nine children, two of whom had died before he was born. His father also died while he was very young and his mother, who dropped out of primary school as a child, was left to bring up the family.

"I am from a purely peasant background. My older brother (now in the United States) made it to university and so despite studying in my village, I had that mindset too that I would make it academically."

He went on to study economics at Makerere University in Kampala, Uganda's largest academic institution, before doing a master's in economic planning and policy.

He later studied abroad, completing another master's at Lund University in Sweden in international trade policy and law.

He started out his career as a part-time lecturer at St Lawrence University in Kampala in 2007 before moving on to the Economic Policy Research Centre, where he wrote a number of influential papers.

One with fellow academic Shinyekwa Isaac, Uganda's Revealed Comparative Advantage: The Evidence with the EAC and China, looked at the commodities Africa should specialize in with its trade with China.

Othieno says one of the big issues is the sub-standard nature of some Chinese manufacturing goods entering Uganda. About 9.3 percent of all Uganda's imports are from China.

"Some Chinese exporters are taking advantage of the institutional weakness in Africa and the fact that we don't have adequate standards or the ability to implement them. Some goods coming from China, you can use one day and the next day they have failed," he says.

Othieno would like to see pre-shipment inspection checks carried out in China and believes the current quality issues could eventually backfire as the world's second-largest economy upgrades its industry.

"When African incomes rise they might turn their backs on Chinese goods. You have to develop a certain culture of quality. If you take German brands like Mercedes-Benz, the brand is all about quality and class. When somebody sees you driving a Mercedes, they can see you are driving a quality product. China needs to start to have that mindset about its own goods."

As for Africa itself, Othieno believes it would be too easy to get carried away by the recent high levels of growth seen in many countries and to begin making predictions about the 21st century belonging to Africa.

"When Uganda was growing 7 or 8 percent around 10 years ago, people thought that within 20 years it would be a completely different economy. We are now back to 3 percent growth and some of our institutions have collapsed. So much of the growth had been fuelled by aid.

"I think much of the rest of Africa is similar. It isn't moving anywhere. There might be a few outliers, like Mozambique, maybe South Africa and Mauritius, that could meet the perception of some great future, but that is all."

Contact the writers at andrewmoody@chinadaily.com.cn and zhaoyanrong@chinadaily.com.cn

Lawrence Othieno says African countries need a sustainable long-term trade policy. Zhao Yanrong / China Daily