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00:00Africa is the poorest continent in the world, and it's only getting worse.
00:05Of the world's 26 low-income countries, 23 are in sub-Saharan Africa.
00:10For decades, the Western world has been trying, if not a little half-heartedly,
00:15to help the continent out of poverty.
00:17In the early 1960s, billions were poured into infrastructure programs.
00:21In the 80s, it was mass vaccinations, and in the 90s, they wrote off all of their debt.
00:27Yet none of this has seemed to work.
00:29All sorts of reasons have been given for this failure,
00:32from corruption to colonial legacies to bad governance.
00:35But what if the actual reason was a lot simpler?
00:38Since gaining independence, Africa has been the most internally fragmented continent in the world.
00:44Just 16% of the continent's trade stays within the region,
00:48nearly four times less than in Asia or Europe.
00:51Instead, most goods are sold to countries like the US and China,
00:55markets so large that individual African nations have almost no negotiating power,
01:00ending up stuck in deals where they sell their natural resources,
01:04diamonds, gold, and oil, for literal pennies on the dollar.
01:07So what if the 55 African countries were to unify as one?
01:12Overnight, a patchwork of disconnected economies would turn into one of the largest markets on Earth,
01:18transforming Africa into a global power, able to compete with China, the US, and Europe.
01:24But while unification sounds like an obvious solution,
01:28there are powerful interests that benefit from keeping Africa divided,
01:32even if it means keeping the continent trapped in poverty for generations.
01:36This is the story of how Africa was broken, and why it's remained that way ever since.
01:42For most countries, borders evolved over thousands of years,
01:46gradually coming to represent dividing lines between ethnic groups, cultures, and political institutions.
01:52But in Africa, the opposite is true.
01:55In the late 19th century, during the scramble for Africa,
01:58European powers carved the entire continent up in a matter of decades,
02:03dividing territory among themselves in European conference rooms,
02:06borders cut across rivers, trade routes, and communities,
02:10splitting some societies apart, while forcing others into the same box.
02:14Ethnicities like the Somali people ended up being split across four countries,
02:19despite sharing a language and culture for a hundred years.
02:22So when the region gained independence, it didn't emerge as a single country,
02:26but as Somalia, Djibouti, Ethiopia, and Kenya.
02:30That meant huge Somali communities suddenly found themselves ruled by governments
02:34dominated by entirely different ethnic groups,
02:37creating deep resentment toward the states that now controlled them.
02:40By 1964, an all-out war had erupted between Ethiopia and Somalia,
02:45effectively fighting over the control of the Somali-inhabited Ogaden region.
02:50Far from being a one-off, these kind of regional conflicts came to define the area.
02:55Nigeria descended into civil war over Biafra,
02:58Sudan split after decades of North-South conflict,
03:02and the Congo collapsed into chaos almost immediately.
03:06Since 1945, roughly a third of the wars in the world have taken place in Africa.
03:11Of course, because there was so much fighting going on across the continent,
03:15large-scale regional trade became almost impossible.
03:18So in the decades following independence,
03:21intra-African trade collapsed to less than 10% of total,
03:25six times less than in Europe, Asia, and North America.
03:28That left newly independent states with practically only one viable option to fall back on,
03:34exporting raw materials directly to large industrial economies.
03:38But the thing is, for most African countries,
03:40competing in this world was practically impossible.
03:43Imagine that you were a farm,
03:44trying to negotiate a better deal to sell eggs to the local supermarket.
03:48If you ask for too high a price,
03:50the shop will just go to a different farmer,
03:52offering more or less the same product.
03:54Now imagine that you were Coca-Cola.
03:56Basically, whatever price you negotiate with the supermarket,
03:59they have to accept it,
04:01because they can't buy the same product from anywhere else.
04:03The same thing happens when countries try to trade with one another.
04:07Small countries that produce goods anyone else can copy
04:09end up getting far worse deals than large, powerful countries
04:13that produce things nobody else can.
04:15And by the 1970s,
04:16that's exactly the situation Africa found itself in.
04:19The countries that dominated the global economy
04:22were operating on a scale of entire continents.
04:25The United States, a 50-state single market alone,
04:28accounted for about 40% of global GDP.
04:31Europe was close behind,
04:33accounting for almost 25%.
04:35On the flip side,
04:36more than half of African countries
04:38had populations under 10 million.
04:40Most had no meaningful manufacturing base,
04:43and tiny domestic markets and export profiles
04:45dominated by a single commodity.
04:47And because each of these relatively small countries operated alone,
04:51they had almost no leverage.
04:53Ghana, for example, sold cocoa,
04:55almost entirely through long-term contracts priced in London.
04:59And when it attempted to push prices higher in the early 1960s,
05:03buyers simply shifted purchases to Nigeria and the Ivory Coast.
05:07Kenya faced the same problem with coffee,
05:08where prices were set by international commodity exchanges,
05:12denominated by European and American buyers,
05:15leaving producers as price-takers rather than negotiators.
05:18This inevitably meant that when one country tried to demand better terms,
05:22buyers could simply turn to another African supplier offering the same product.
05:26Instead of creating better outcomes for the continent as a whole,
05:29individual nations were set against each other.
05:32Because of this,
05:33the profits that could have funded growth were captured overseas,
05:36leaving domestic businesses without enough cash to make long-term investments.
05:41Even decades after being granted independence,
05:43African countries continued to fall behind the rest of the world,
05:47despite being home to some of the most resource-rich land in the world.
05:50Now, the concept of collective bargaining isn't exactly new.
05:53So as early as the 1960s,
05:55it was clear that the lack of unity was costing the continent a huge amount.
05:59And for a brief while,
06:00there was something of a movement to fix it.
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07:10In 1963,
07:12Ghana's first leader,
07:13Kwame Nrumah,
07:14stood in Addis Ababa
07:15and warned African states to
07:17unite now or perish.
07:19That same month,
07:2032 newly independent states
07:22signed the charter
07:23that created the Organization of African Unity.
07:26To many, this was the turning point.
07:28But there was a major issue.
07:31Because most early African governments were so fragile,
07:33if as a leader you got on stage
07:35and acted like you were willing to give away your power
07:38to a pan-national bloc,
07:39it was almost a surefire way to get kicked out of office.
07:42In fact, the very architect of African unity
07:44learned this firsthand
07:46as he pushed for continental unity
07:48early in Ghana's independence
07:50and was quickly accused of prioritizing
07:52pan-African ideals over Ghana's economy.
07:55His critics argued that instead of unity,
07:58Ghana should protect its borders,
07:59secure its own income
08:01and fix domestic shortages first,
08:03rather than tying its fate to neighbors
08:05who its economies were just as fragile.
08:07A message which even today
08:09is still coming back into fashion across the world.
08:11By 1966,
08:13just three years after the Organization of African Unity was formed,
08:17and Rumer was overthrown in a military coup
08:19while he was abroad.
08:20While unity might have been what was required
08:22to help get the continent back on the path to development,
08:25politically, it was practically impossible.
08:28A big part of the reason for that
08:29is simply that nobody's ever agreed
08:31on what unified Africa would actually look like.
08:34It's often imagined as one flag,
08:36one president and one government.
08:38But most of the economic success stories built on unity
08:41never started that way.
08:43They started by building markets.
08:45The European Union is a good example.
08:47It didn't make Europe one country.
08:50Instead, it spent decades doing the unglamorous work of integration,
08:54removing the frictions that actually stopped firms growing.
08:57Things like border checks,
08:59mismatched product standards,
09:00and payment rules
09:01so a manufacturer in Italy
09:02could actually sell in France or Germany
09:05without redesigning its product
09:07or renegotiating contracts
09:09every time it crossed the border.
09:10This is what turned dozens of national economies
09:12into something that functioned like one large market.
09:15For Africa,
09:16unity would mean turning 55 separate markets
09:19into a system big enough for firms to grow inside,
09:22where goods, money, and people
09:24can move without every border being a hassle.
09:26Without that,
09:27countries end up stuck trying to grow firms
09:29inside markets that barely exist,
09:31a problem which in Africa's case
09:33is particularly detrimental.
09:35Most African countries have populations
09:37the size of a European country,
09:39but because it's such a poor continent,
09:41the consumer base simply isn't big enough
09:43to support large-scale production.
09:45Rwanda is a great example of this.
09:47The country has made real progress
09:49over the past two decades
09:50with improving governance,
09:52rising incomes,
09:53and a reputation for being business-friendly.
09:55But as a market,
09:57it is still tiny.
09:58Rwanda has around 13 million people,
10:01most of whom have limited purchasing power,
10:03and it sits hundreds of miles away
10:04from the nearest major port.
10:06That means that firms within the country
10:08have very little opportunity
10:09to scale domestically,
10:10and at the same time,
10:12trading with African countries
10:13is still insanely expensive.
10:15To see how this works,
10:17take this example.
10:18Shipping a standard container
10:19from Mombasa to Rotterdam or Shanghai
10:21will cost around $1,000,
10:23and takes roughly 30 days,
10:26while moving that very same container
10:28just 1,200 kilometers inland to Gagali
10:31can cost up to $4,000
10:33and will likely take around 40 days
10:35because of congestion and delays.
10:37The World Bank currently estimates
10:38that transport costs within Africa
10:40are 50 to 75% higher
10:43than in other developing nations.
10:45A lot of this comes from
10:46how fragmented the continent is.
10:48Instead of one large economic system,
10:50which is designed to plan infrastructure at scale,
10:52you have more than 50 separate governments,
10:55each building roads,
10:56railways,
10:57power grids,
10:57and ports
10:58to serve their own borders.
11:00Transport networks
11:01often end up stopping
11:02at national frontiers,
11:03even when the next major city,
11:05port,
11:05or market
11:06is just a few kilometers
11:07across the border.
11:09And even if firms
11:09are able to transport goods
11:11across the country's
11:12crumbling transport networks,
11:13chances are,
11:14the second they make it to a border,
11:16they will be stopped.
11:17Because different countries
11:18use different regulatory rules,
11:19trucks have to be re-inspected
11:21every time they cross a line on a map.
11:23On top of that,
11:24average tariff rates
11:25across the continent
11:26sit at around 10%,
11:27which might not sound like a lot,
11:30but it puts African firms
11:31at a massive disadvantage
11:32compared to other major economic blocks,
11:35like the EU,
11:36US,
11:36or China,
11:37where internal trade
11:38is effectively tariff-free.
11:40Of course,
11:41small traders can,
11:42and often do,
11:43work around these barriers,
11:44rerouting goods informally,
11:46or paying bribes.
11:47That might work
11:48if you're moving
11:48a few bags of grain
11:50or consumer goods
11:51in the back of a truck,
11:52but it becomes far harder
11:53for companies trying to run
11:54multi-million dollar operations.
11:56Even if they try to bribe their way
11:58through every checkpoint and delay,
12:00the cost would quickly spiral
12:01out of control,
12:02bringing them back to square one
12:04and making it cheaper
12:05and more reliable
12:06to trade with foreign markets instead.
12:08But it's exactly
12:09those larger-scale firms
12:10that the continent desperately needs
12:12to help it industrialize.
12:14Companies capable of investing
12:15in machinery,
12:16training workers,
12:17and even building
12:18the infrastructure
12:19the continent
12:19is so critically lacking.
12:21Today,
12:22roughly 85%
12:23of all employment
12:24in sub-Saharan Africa
12:26sits outside
12:27the formal economy.
12:28As a result,
12:29manufacturing makes up
12:30only about 10%
12:31of Africa's economy,
12:33a number that hasn't
12:33really improved
12:34for a long time.
12:35That's why Africa
12:36can feel paradoxical
12:37from the outside.
12:38People see poverty
12:39and assume labor
12:40must be cheap.
12:41But for many businesses,
12:43producing in Africa
12:44is actually expensive
12:45relative to what
12:46they produce.
12:46One of the strangest
12:48examples of this
12:48is in the energy market.
12:50A factory in Nigeria
12:51or Kenya
12:52will often run diesel generators
12:54for hours a day,
12:55even while sitting
12:56a few hundred miles away
12:57from a hydro dam
12:58or gas plant
12:59in a neighboring country,
13:00simply because the grids
13:02are not connected
13:02in a way that makes
13:04cross-border power trade
13:05routine.
13:06That means,
13:06instead of plugging
13:07into a large,
13:08cheaper power source nearby,
13:10firms are forced
13:10to make their own
13:11electricity on-site,
13:13burning expensive fuel
13:14every day,
13:15for something that
13:16should be basic or shared.
13:17Due to this,
13:18many African countries
13:19end up importing power
13:20through diesel generators,
13:22fuel contracts,
13:23spare parts,
13:24and maintenance services,
13:25which are often sourced
13:26from Europe or Asia,
13:27even though the raw material
13:29exists closer to home.
13:31A unified market
13:32would help fix this,
13:33stopping borders
13:33from crossing cross-border grids
13:35and allowing countries
13:36to draw on each other's generation
13:38the same way regions do
13:39inside a single state.
13:40All of this points
13:41to the same underlying problems.
13:43Africa isn't short
13:44of resources or labor,
13:46but a market large enough
13:47and open enough
13:48for the continent
13:49to actually trade with itself
13:51and keep some of what it makes.
13:53And, to be fair,
13:54the continent has made
13:55some positive steps
13:56towards this.
13:57In 2018,
13:58the African Continental
13:59Free Trade Area
14:00was founded,
14:01which aimed to unify Africa
14:03under effectively
14:04a single market.
14:05The agreement officially
14:06came into force
14:07in 2021,
14:08with 54 of 55 countries
14:11signed up.
14:12Under the agreement,
14:1290% of goods
14:13which have tariffs
14:14will be eliminated
14:15over a period
14:16of 5 to 10 years,
14:18with the longer-rung target
14:19of free access
14:20for at least 97% of goods.
14:22But,
14:22what has happened
14:23since the agreement
14:24is telling.
14:25Trade under the agreement
14:26has technically begun,
14:27but remains limited
14:28to a small number
14:29of pilot shipments
14:30and a narrow group of firms.
14:32In fact,
14:33in 33 African countries,
14:35trade within the continent
14:36has actually declined
14:37since the agreement
14:38was signed,
14:39with intra-African trade
14:40still accounting
14:41for less than 15%
14:42of the continent's
14:44total figure.
14:44In many countries,
14:46customs officers
14:46still rely on
14:47national tariff schedules,
14:49rules of origin
14:50are unevenly applied,
14:51and the systems
14:52that are supposed
14:53to make AFCTA work
14:55have been more slow
14:56to take hold.
14:57In theory,
14:57the agreement exists,
14:59but as is often the case,
15:00actually getting people
15:01to do what they're agreed
15:02is a lot harder.
15:03A genuinely united Africa
15:05could change the continent's
15:06growth path forever.
15:07It could let firms
15:08grow larger,
15:09raise productivity,
15:10and push wages higher.
15:12Not through aid
15:13or charity,
15:14but because businesses
15:15finally have room
15:15to scale.
15:16But that only happens
15:17if unity means
15:18cutting the hidden costs
15:19that keep African economies
15:21trading outwards
15:22instead of inside
15:23with each other.
15:24So, the real question
15:25isn't whether Africa
15:26should become one country,
15:27it's whether it can become
15:29one economy in practice,
15:30and whether the people
15:31who benefit from it
15:32are willing to let it happen.
15:35under Haven
15:35is anoint for
15:35aλÎč custodian
15:35last month.
15:36There's a lot of
15:36There's a lot of
15:36greateluYES
15:36that we see
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