To increase competitiveness, Africa needs regional integration

31/05/2013
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African countries do very little business between them, in comparison with Asian and European countries. One of the reasons for this is partly due to the weakness of regional integration. Now, how to promote intra-African investment to improve the continent’s competitiveness? What are the challenges in terms of regional integration? These were the issues discussed by the experts on May 29, during the African Development Bank’s (AfDB) Annual Meetings, in Marrakesh, Morocco. The theme of the forum was: “Promotion of intra-regional investment in Africa.”

Regional integration is the key for the future of competitiveness on the continent. Consequently, Africa needs to develop intra-African investment, according to the participants who analyzed the issue. However, trade within Africa only represents 15% of trade throughout the continent. This is a very low rate when compared to other countries. Why is regional trade so low in Africa?

The reasons are varied, according to Abbi Mamo Kedir, an economic consultant from the University of Leicester School of Management. “African countries are confronted with a lack of capital and infrastructure, and bad governance, without counting on the customs taxes, which are very expensive,” he said.

These logistical problems prevent the intra-African trade from developing. Human resources is also a serious barrier to the fluidity of exchanges, he noted. According to him, “the business world needs a qualified workforce.”

Support policies exist on the continent to promote intra-regional investment, but they have not been realized, the participants stated. What are the solutions? According to participants, investment policies need to be reformed to promote trade.

Morocco, which transformed into a regional investment crossroads in just a few years, made an effort in this sense, according to Youssef Rouissi, Deputy General Manager of the Attijariwafa Bank. According to him, Morocco is very interested in African markets. “We have five banks in several countries in Africa. Furthermore, millions of African consumers made us understand that it is possible to recover the distribution of the agribusiness industry,” he explained.

Nevertheless, even if Morocco invests in African countries, 60% of its economy still depends on Europe, namely France and Spain.

For this reason, it is paramount that Africa unites, if it wants to improve its competitiveness in the global market, said the Ugandan Minister of Justice, Kahinda Otafiire. “Until now, Africa has always exported raw material. It needs to diversify its market, for example building its own cars,” he asserted.

According to him, South Africa has known a very important economic growth over the last few years and can achieve a better level of development. However, it has not sufficiently imposed itself on the African market, despite having the potential to do so. “This is the proof that we won’t be able to talk about growth in Africa before having developed a regional integration,” the Minister assured.