Global events can be the catalyst to unlocking Africa’s economic potential

The 54 countries of the African continent together represent the world’s fastest growing regional economy, second only to Asia, with a combined GDP of $3.4-trillion (R60-trillion) and consumer spending power projected to reach $2.5-trillion (R44-trillion) by 2030.

With a growing, youthful, increasingly urbanised and increasingly middle-class population of about 1.5 billion, vast mineral resources and 20% of the globe’s land mass ripe for boosting agricultural output, Africa has the potential to be a key driver of global trade and economic growth.

The World Bank estimates that full implementation of the African Continent Free Trade Agreement (AfCFTA), creating the largest free trade area in the world, will boost Africa’s income by $450bn (R8-trillion) by 2035 (a 7% gain) and increase exports by $560bn (R10-trillion), mostly in manufacturing.

Twelve African countries dominate the ranking of the world’s top 20 fastest growing economies (and SA is not among them).

Looking at these numbers, one has to ask: Why are we not doing more to take advantage of this potential?

Nelson Mandela Bay, the Bay of Opportunity, already hosts the Africa headquarters and in many instances is the anchor for manufacturing operations for the continent and several multinational corporations.

We have the geostrategic advantage of our two ports, including Ngqura as one of the few deepwater ports on the continent, creating a hub of both north-south and east-west shipping routes, linking into transshipment and trade into Africa.

Those are just two of many reasons for local businesses to be thinking about Africa.

This is not to say we should be turning our backs on solid trading relationships with other parts of the world, even amid the turmoil and economic threats raised by the US’s tariff moves; but there is untapped opportunity to diversify businesses and export markets right here on our doorstep.

Companies in Africa that rely on exports to the US are now in a vulnerable position because we have not paid attention to the enabling market on our own continent, which should be acting as a shield against global economic headwinds.

The fastest growing African economies are heavily tied to oil, and Africa’s bounty of minerals is a key driver in many others, meaning these economies are highly vulnerable to local supply disruptions as well as price fluctuations in global markets.

This is one of the key reasons we need to shift from exports of raw materials at low margins to local beneficiation and become a source of high margin value-added products, with greater opportunities for job creation and deeper value chains.

This applies as much to agriculture and agro-processing as it does to minerals and oil.

The promise of AfCFTA is creation of a single, continent-wide market for goods and services, business and investment.

Operating as a single market will give industry massive, continental scale to support diversified industrialisation — if we can unify as African states on actioning the infrastructure, policy and regulatory enablers.

It’s a massive market and if we all play our part and play to our strengths, rather than working in sectoral or national silos, or trying to locate an entire manufacturing value chain in any single country, there is no reason for any sector or country to be disadvantaged by increased competition.

This has the potential to broaden economic inclusion, creating jobs and business opportunities, and raising individual and state incomes; thereby lifting millions out of extreme poverty and reducing over-reliance on external markets and foreign aid.

There is no arguing that there are major stumbling blocks to doing business in Africa — among them unreliable power supply, political and economic instability, infrastructure deficits, and inconsistent connectivity networks, both digital (internet access, ICT infrastructure) and physical (transport and logistics).

However, in all these challenges lies opportunity too.

The challenges around roads, transport, mobility, infrastructure, food security, and clean water supply can all be addressed from within the continent, with the resources, people and technology that we have, in turn creating business and employment opportunities.

For example, as assemblers and sellers of trucks and yellow equipment, and with depth of expertise in civil engineering and mega construction projects, SA businesses have the opportunity to get involved in the infrastructure development needed to enable trade and mobility.

Supplying vehicles to transport materials, construction sites, agricultural products to processing facilities; providing diverse mobility solutions, including affordable and suitable e-mobility to serve the massive movement of people and goods to and within urban areas; technology innovation in manufacturing; sustainable agriculture; e-commerce and financial services — these are all within the capabilities of local business.

AfCFTA aims to streamline the diverse and variable regulatory environments across different countries — around business permits, customs procedures, tariffs, regulatory measures such as rules of origin for vehicles and sanitary standards for food products, and cross-border financial regulations — to enable the free flow of goods, people, information and capital across borders, improving both intra-continental trade and integration into global supply chains.

What is needed now is the political will of African countries to shift gear from talking to action, to reach agreement and implement.

African legislators hold the power to create the enabling environment we are all yearning for, that supports the economic and human development interests of an entire continent.

There is hope that current global events will be the catalyst that gets us working together to unlock this opportunity.

• Celestin Ndhlovu is executive vice-president: corporate services at Isuzu Motors SA and deputy president of the Nelson Mandela Bay Business Chamber.

The Herald 

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