16 BUSINESS DAY C002D5556 Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong> In Association With “ Creating a continental market Forty-four African countries sign a free-trade deal But Nigeria is among the protectionist holdouts LET’S get together,” sang the choir to the rhythm of Bob <strong>Mar</strong>ley, as a succession of African leaders signed an ambitious, continent-wide free-trade agreement in Kigali on <strong>Mar</strong>ch 21st. Although all 55 members of the African Union (AU) had been involved in negotiations around the grandly named Continental Free Trade Area (CFTA), not all were ready to sign as one. On the day, 44 put pen to paper. Among the holdouts was Nigeria, Africa’s largest economy. Paul Kagame, Rwanda’s president and the host of the AU summit, had no time for sceptics. “Some horses decided to drink the water. Others have excuses and they end up dying of thirst.” The logic of the deal is sound. Trade in Africa is still shaped by relationships and infrastructure dating back to the colonial era. Countries mostly sell primary commodities to other continents. Only 18% of their exports are traded within Africa, where they often face high tariffs. The CFTA is meant to change that by creating a “single continental market for goods and services”. UNCTAD, a UN agency, reckons that eliminating import taxes between African countries would increase regional trade by a third and lift African GDP by 1% over time. Currently, nearly half of this trade is in manufactured goods. Services would also be opened up.But not everyone is convinced. Muhammadu Buhari, Nigeria’s president, cancelled his flight to Kigali amid domestic pressure. An official says Nigeria was given just a few days to read the text, which he worries will hurt incumbent businesses.Some protectionists fret that importers will slap “Made in Africa” labels on goods from elsewhere. “It will kill our industry and kill our jobs,” says Ayuba Wabba of the Nigeria Labour Congress. Such instincts run deep in Nigeria. Its biggest company, Dangote Cement, was nurtured with import restrictions, which shielded it from foreign competition. Chiedu Osakwe, Nigeria’s chief negotiator, is nevertheless confident that his country will sign in due course. Big countries such as Nigeria stand to gain most from the deal, which will help their firms expand regionally. Many of the details of the accord are still to be agreed upon. Countries are supposed to eliminate tariffs on a list comprising 90% of products (although they have not yet agreed what will go on this list). In practice, however, that could allow them to leave unchanged duties on most of their current imports, which are concentrated in a narrow range of goods. Tariffs are not the most important barrier to trade. A bigger obstacle is that standards and licences are different across Africa. Take the example of a large South African retailer with stores elsewhere on the continent. It has a big warehouse where employees take products such as tubes of toothpaste out of the cartons that are used in South Africa and repack them into ones that comply with labelling rules in other countries. Red tape also slows things down. The Trade Law Centre, a South African think-tank, looked at the time taken for customs and port handling in Africa and in Singapore, and then imagined closing the gap by a fifth. The economic gains would be roughly double those expected from eliminating tariffs. The CFTA will try to lower these hurdles to trade, though there is little sign of the EU-style machinery that makes Europe’s single market work. Big plans can go stale. A mooted free-trade area for the Americas is now defunct. This one will come into force only when it has been ratified by 22 signatories. Trade patterns will not change until countries start making things that their neighbours want to buy. But some countries are galloping ahead, hopeful the rest will catch up. “ Digital privacy The Facebook scandal could change politics as well as the internet Even used legitimately, it is a powerful, intrusive political tool MY GOAL was never really to make Facebook cool. I am not a cool person,” said <strong>Mar</strong>k Zuckerberg, the boss of the social-media giant, in 2014. That has never been more true. His company has spent the past year stumbling through controversies over the peddling of fake news and enabling Russian manipulation of American voters, with various degrees of ineptitude. Then, on <strong>Mar</strong>ch 17th, articles in the New York Times and Britain’s Observer newspaper suggested that a political consultancy, Cambridge Analytica, had obtained detailed data about some 50m Facebook users and shared this trove of information and analysis with third parties, including Donald Trump’s presidential campaign. The result is a corporate crisis—and a political reckoning. Republicans and Democrats alike have called on Mr Zuckerberg and the heads of other tech firms to testify before the Senate. America’s consumer watchdog, the Federal Trade Commission (FTC), has also reportedly launched an investigation into Facebook’s privacy policies and whether it violated a consent decree of 2011 requiring the social network to notify users about how their data are shared. British MPs have called for Mr Zuckerberg to come before a select committee. Even Facebook’s allies have unfriended it. On Twitter, Brian Acton, a co-founder of the popular messaging app WhatsApp (which Facebook bought for $22bn in 2014), encouraged people to “#DeleteFacebook”. News of his post pinged around the internet, including on Facebook itself. Investors, who have forgiven months of bad headlines in light of Facebook’s strong financial performance, are growing jittery. Between <strong>Mar</strong>ch 16th and <strong>Mar</strong>ch 21st the firm’s share price fell by 8.5%, erasing $45bn in market value. Facebook is still the world’s eighth-most-valuable publicly listed firm, but shareholders worry that politicians in Europe and America may impose onerous restrictions on data, suppressing growth. The Cambridge Analytica scandal reveals Facebook’s morphing, porous privacy policies and the company’s cavalier approach to oversight. The data on Facebook users were obtained by Aleksandr Kogan, a researcher at Cambridge University, who enticed some 270,000 people to take part in a survey in exchange for a small fee. When those users installed the survey app, they shared details about themselves and—unwittingly—their friends, around 50m Facebook users in all. Surprisingly, before 2015 Facebook’s rules allowed the mining of social connections without each user’s consent. What happened next was never permitted by Facebook. Mr Kogan provided these data to Cambridge Analytica, which then allegedly shared them with customers, including Mr Trump’s campaign. Cambridge Analytica is backed by Robert Mercer, a Republican donor; Steve Bannon, formerly a top adviser to Mr Trump, used to serve as an executive. (The Economist used Cambridge Analytica for a market-research project in the past.) Although news of Cambridge Analytica’s peddling of Facebook data was first reported in December 2015, the social network reportedly did not respond until eight months later, with a letter asking the firm to delete the data. It seems not to have checked that this was done. The lax response is evidence of wider “systemic operational problems”, says Brian Wieser of Pivotal Research, who follows the firm. If reports are to be believed, Cambridge Analytica has a habit of pushing ethical and legal boundaries to gather data. On <strong>Mar</strong>ch 20th Alexander Nix, its chief executive, was suspended after recordings were aired on British television that seem to capture him describing manipulating people for information. Britain’s data-protection regulator, the Information Commissioner’s Office, is expected to search Cambridge Analytica’s offices.
Monday <strong>26</strong> <strong>Mar</strong>ch <strong>2018</strong> BUSINESS DAY 17