It has become critical in this twenty-first century corporate environment that African businesses begin to engage in more bilateral trade and commerce across the continent. This is vitally important if the continent wishes to expand wealth and create job opportunities for its growing population.
It has been estimated that the population of people living on the continent of Africa will double by 2050. There is an opportunity here for business leaders such as all of you here today to help unleash the economic potentials of the continent’s diverse regions. This is essential for the creation of the millions of jobs needed to ensure a good quality of life for Africans in the future. Those good paying jobs would have to be created by dynamic entrepreneurs and corporate leaders like you. In other to make this task of creating jobs easier for the business and investment communities, governments across Africa need to evolve innovative initiatives that to transform their economies into functional and vibrant free market system.
According to African Development Bank’s statistics, Africa’s gross domestic product (GDP) growth is expected to strengthen to four and half (4.5) percent in 2015, and an impressive five (5) percent in 2016. This projected economic vibrancy is due to an expected strengthening of African exports in 2015 and 2016 as a result of an anticipated improved global economic performance. This comes at the heels of a subdued 3.9 percent growth of 2014 that was, in part, caused by an anemic global economic activity. Although economic activities were subdued across Africa in 2014, West Africa managed to achieve a robust six (6) percent GDP growth in 2014 despite the regions battle with the Ebola epidemic scourge.
If the 2015 and 2016 predicted growth projection is realized, Africa will be one of the preferred investment areas in the coming years. The governments of African States needs to implement business friendly initiatives to ensure that African businesses, and by extension its workforce, would derive maximum benefit from the expected vibrant investment climate. The time is right for the bold trade liberalization initiatives that would position Africa for sustained economic growth.
According to Africa Economic Outlook 2015, Intra-Africa trade is growing mostly within sub-regions. From 2010 to 2013, intra-African exports grew by 50% and by another 11.5% in 2013 to USD 61.4 billion. However, the share of exports between African sub-regions increased only from 11.3% in 2012 to 12.8% in 2013. This could indicate a lack of development of regional value chains and low levels of trade in intermediates between African countries. There is need for further improvement in intra-Africa trade volumes.
Currently, ECOWAS is the Regional Economic Community that has exemplified the effectiveness of member States’ nationals being able to travel Visa-free within the West African countries. This was achieved through the Protocols on Free Movement of Persons, Goods and Services, Rights of Residence and Establishment. This bold initiative has contributed to the strengthening of the ECOWAS region through the free flow of ideas, and more.
Equally, the introduction of the ECOWAS Trade Liberalization Scheme (ETLS) has streamlined the flow of trade and investment across West Africa—especially goods manufactured in ECOWAS member states. This scheme is now revitalizing our indigenous manufacturing sectors, and creating much needed jobs within the sub-region.
Another laudable initiative that is facilitating regional commerce is the ECOWAS Common External Tariff (CET)—which came into force on the 1st of January 2015, and is expected to be fully operational by the middle of the year. The single-tariff scheme is designed to standardize customs fees charged on goods imported into the 15-nation West African Economic bloc. Already, eight ECOWAS nations have adopted the single-tariff regime and a shared currency—the CFA franc, as members of the Economic and Monetary Union of West Africa (UEMOA). And it has remarkably improved the ease of doing business within UEMOA zone, and enhanced Intra-regional trade and commerce. Most business and political leaders are confident that this initiative will move West Africa further towards the establishment of an ECOWAS Free Trade Area in the near future.
As a result of this effort to further enhance the ease of transporting products and commodities to consumer markets across the ECOWAS region, work is in progress on the construction of a Two billion dollars Trans-West Africa Coastal Highway. This ambitious transnational road construction project, when completed, would link twelve West African costal nations—with feeder inland roads that would connect two landlocked countries, Mali and Burkina Faso. The project would be complimented by the implementation of the Joint Border Post Reconstruction Projects across the borders of member states.
We feel that these lofty initiatives, which are aimed at facilitating effective trade and commerce needs to be replicated continental-wide. This idea is quite in line with the African Union’s stated goal of achieving a continental economic integration scheme—the African Economic Community, by the year 2028.
We feel that there is strong support for a continental-wide economic integration effort amongst Africa’s corporate leaders and political elites such as everyone present here today. Indeed, support for regional economic integration in Africa is quite significant amongst the continent’s international development partners, as expressed at the 2010 G20 summit of world leaders, which was held in Seoul, South Korea.
Let me add here that our continent is not at all immune to the volatility in the global economy which could either facilitate or mitigate against the efforts to expedite Africa’s economic integration agenda—and finally eliminate all hindrances to free trade between African States. In the World Trade Report of 2014, the World Trade Organization (WTO) identifies major trends from the last decade that has the potential to affect African integration process. Here they are;
The increasing impact of shocks to the global economy: open trade can spread the fallout but also can help reduce volatility.
The phenomenal trade growth led by emerging economies and spurred by demand for commodities: It has helped narrow the income gap between emerging and developed countries, but Africa is lagging behind.
There are two other notable trends that will create both opportunity and challenge for Africa in the near and long term: These are:
The political will to craft effective bilateral agreements aimed at bringing down trade barriers across Africa.
Forging a unified policy position amongst African States—with diverse political and economic interests, when negotiating mega-trade agreements—i.e. Economic Partnership Agreement (EPA) negotiation between the European Union (EU) and ECOWAS member countries.
We were all witness to how an unanticipated epidemic can quickly and effectively disrupt economic activities of otherwise economically vibrant countries. This should be a lesson to us all of how quickly unanticipated events can derail our best efforts. The outbreak of the Ebola Virus Disease in Guinea, Liberia and Sierra Leone highlighted the weaknesses within the healthcare sectors of Africa. This disastrous plague uncovered many laxities in public sector managed healthcare system, and awakened us to the fact that a wholly public sector management of healthcare will not be effective enough in dealing with mass health crisis. We now know that there is a great need for a more robust private sector involvement in the provision of health services. We hope that some African entrepreneurs are in the process of, or already, taking up the slack in the healthcare arena. We desperately need more private healthcare infrastructures.
It is no secret that Sub-Saharan Africa remains the region with the most challenging business environment, but it is equally the region with some of the most promising business opportunities. Can you imagine how much more vibrant the business environment in the continent would be if the difficulties to effective business dealings were removed. This is an area that requires much attention. I have to add here that the five African countries that most improved their business environment from June 2013 to June 2014 were previously among the bottom quintile globally for ease of doing business. These countries are: Benin, Côte d’Ivoire, DRC, Senegal and Togo. This is a welcomed development for the business and investment community. However, the fact that there remain a number of challenges to doing business in these countries indicates that additional efforts are needed to further improve the business climate in these countries.
Furthermore, African economies must prepare more vigorously for a more competitive global and domestic business environment in the future. Although this year’s African Economic Outlook finds the continent poised to resume its medium-term growth trend, this rosy outlook may not extend beyond 2016. A number of internal and external factors may affect the progressive developments within Africa’s economy. It is vitally important that policymakers in Africa clearly anticipate those factors and quickly implement strategies to pre-emptively militate against all potential obstacles to the continued vibrancy of trade and investment in Africa.