Africa must build stronger cross-border value chains if it is to achieve any success in expanding intra-regional trade. That’s the view of IDC chairperson Busi Mabuza who told delegates at a recent South African Heavy Haul Association (SAHHA) conference in Boksburg that Africa’s economic situation was “a shocking contrast to the trade we see in more integrated economies”. Africa has a population of around 1.2bn people – but its intraregional trade is generally pivoted somewhere between 12-18%. In comparison, the UK and France have populations of around 66m and 65m with a trade balance exceeding by more than half Africa’s entire intra-continental trade potential. Of course the relative trade prosperity between Britain and its nearest European neighbour could soon change, but the startling insights shared by Mabuza were focused on Africa’s current position, and not on post-Brexit predictions. It will, however, require acrossthe-board investment in all levels of infrastructure as well as education and innovation if the world’s largest under-performing continent wants to benefit from objectives set out in the establishment of the African Continental Free Trade Agreement (AfCFTA). “The IDC believes there is an opportunity for significant involvement in this regard,” Mabuza said. At the forefront of the corporation’s funding focus are those projects that support the integration of value chains throughout the southern African region. Yet the need for funding is too great for organisations like the IDC alone to meet demand. “To be more effective there is a clear need for stronger cooperation with other financiers, be they commercial or multi-lateral institutions.” Apart from merely echoing previous calls for high-level, large-scale investment, Mabuza has urged development finance institutions (DFIs) to come up with novel products built on equity, venture capital, and targeted development funds. “We believe that if we work together as DFIs we can accelerate the development process through partnerships with global players, drawing on capital investments, and facilitating rapid access to new technologies.” Ultimately, much more will have to be done by countries as a whole to build AfCFTA from the inside out, which will require “a lot of support of from our political principals”. Mabuza also underscored the importance of local down-stream value extraction. “SADC countries trade raw commodities with the rest of the world, commodities that are beneficiated outside of the continent, only to be re-imported back into the countries of respective origin after they have been processed for the consumer market.” Challenges aside, moves were afoot to bring Africa up to speed with progress elsewhere in the world, she pointed out. She also told delegates at the conference, which was themed around seeking solutions to technical hurdles facing the heavy haul industry, that it was encouraging to witness research work done so far by SAHHA, all in preparation for an industry 4.0 conference that the International Heavy Haul Association would be holding in Norway next year. However, Mabuza warned that Africa’s perceived readiness for the 4th industrial revolution appeared to be lagging behind global peers. Quoting an assessment by the World Economic Forum (WEF) earlier this year, she said that out of 15 African countries, production levels had been seen to be “in the nascent category, defined as limited and placing these countries at risk of the future”. The WEF indicated that on the entire continent, South Africa was the only country whose production levels approximated those of leading first world producers. It all stood to reason, Mabuza said, that “an African market has the potential to facilitate the integration of different economies in various stages of production so that, according to our respective competitive advantages, we are able to add growth to value chains that should straddle our borders.”
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An African market has the potential to facilitate the integration of different economies in various stages of production. – Busi Mabuza
