Africa’s route to sustainable development is through creating an enabling environment for African companies to easily trade within the continent as well as invest in other African countries.
Dec. 18, 2021
4 min read
Africa must trade, invest in the continent
Malawi prisdent Lazarus Chakwera
- Africa will not just be free to trade, but free to demand a better seat at the table of nations
- Lack of a vibrant industrialized sector weans Africa from being a source of cheap raw materials
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Such an enabling business environment ensures that Africa’s proceeds from natural resources such as diamonds, gold and platinum remain in the continent to finance its development agenda, instead of benefiting other economies in Europe, Asia and the US.
Currently, the business landscape is structured in such a way that African countries, which possess the bulk of natural resources trade more with the outside world than among themselves, and much of the resources are exported in their raw form, with most of the value-addition and beneficiation taking place outside the continent, thus benefiting other countries.
This trade imbalance is caused by various factors including poor infrastructure built during the colonial era to disallow any smooth movement of goods, services and people between African countries, as well as the imposing of non-tariff barriers between African countries.
Another major factor is the lack of a vibrant industrialized sector that weans Africa from being a source of cheap raw materials for other countries in the west and east.
It is for this reason that the continent has established the African Continental Free Trade Area (AfCFTA) to promote the smooth movement of goods and services across borders, as well as allowing African countries to harmonize regional trade policies to promote equal competition.
The AfCFTA, which was established by African leaders in 2012 and became operational in 2021, covers a market of 1.2 billion people across all the 55 Member States of the African Union (AU).
It has a gross domestic product of $2.5 trillion, and is envisaged to become the world’s largest free trade area since the formation of the World Trade Organization in 1995 when all the AU member states have ratified it.
And as a vehicle to promote the AfCFTA, the African Export-Import Bank (Afreximbank) in collaboration with the AU set up the Intra-Africa Trade Fair (IATF) - a platform for linking international buyers, sellers and investors as well as allowing participants and visitors to profile and share market information and investment opportunities in support of intra-African trade and the economic integration.
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Speaking at the ongoing second edition of the IATF that runs 15-21 November in Durban, South Africa, the chairperson of the Southern African Development Community (SADC) President Lazarus Chakwera of Malawi said Africa must trade more with itself as well as invest in itself to ensure sustainable development.
“Africa cannot be a free trade area until as Members States we remove obstacles that hinder Africans from trading freely across Africa and when that happens, Africa will not just be free to trade, but free to demand a better seat at the table of nations, and that time is now,” President Chakwera said.”
He said once the continent addresses the issue of lack of market access for African companies within the continent, Africa will experience economic growth.
President Cyril Ramaphosa of South Africa concurred, saying African countries should take advantage of the IATF to market their products as well as seek new trade opportunities.
“It is about using the combination of the continent’s raw materials and industrial capacity, finance, services and infrastructure to produce quality finished goods to local and global markets,” President Ramaphosa said, adding that “it is about creating a market large enough to attract investors from across the world to set up their production facilities on the continent.”
He said it is also imperative for Africa to resist the temptation of becoming a transhipment centre for products from other continents.
“Trade is built on a bedrock of investment. We must therefore find ways of attracting more investment into our economies, and, crucially, we must encourage African businesses to invest in each other’s countries…We can no longer have a situation where Africa exports raw materials and imports finished goods made with those materials.”
Chairperson of the IATF Advisory Council, Olusegun Obasanjo, who is a former President of Nigeria, said the fair was “one of the key initiatives in support of the AfCFTA which provides an opportunity for the continent to achieve economic emancipation and self-reliance.”
“The IATF is an important component in righting the wrongs of the past and breaking down borders. It is aimed at building bridges to help us achieve the ambitions of Agenda 2063 – The Africa We Want,” he said.
Agenda 2063 is Africa’s long-term blueprint for inclusive growth and sustainable development for unity, self-determination, freedom and collective prosperity.
Over 1,000 exhibitors are participating at second edition of the IATF, while over 10,000 visitors have so far graced the event, with deals worth over US$40 billion expected to be signed by participating companies, up from the US$32.6 billion recorded at the inaugural fair.
The inaugural edition of the trade fair was held in Egypt in 2018.
Rwanda was expected to host the second edition of the fair before it was moved to South Africa due to logistical challenges related to the COVID-19 pandemic. sardc.net