President Kaberuka Discusses Regional Integration and an African Infrastructure Bond at Parliamentary Speakers Conference
The potential to grow intra-African trade is significant and, while it has more than doubled over the past five years, it remains a disappointing figure, Dr. Donald Kaberuka, President of the African Development Bank, told the annual Conference of Speakers of African Parliaments in Johannesburg on Thursday.
The theme of this year’s conference, held at the Pan African Parliament in Johannesburg, South Africa, was on the role parliaments in promoting intra-African trade to achieve development and employment in Africa.
In his speech, Dr. Kaberuka said that trade still held tremendous unrealized potential as a driver of growth on the African continent, but that the opportunities for regional integration had not been fully exploited. In fact, he noted, intra-African trade accounts for only 20% of the continent’s overall trade. “The benefits of increased regional trade are not in any doubt,” he said. “They include improved food security, increased potential for regional value chains to drive exports, including to global markets and new opportunities through the growth of trade in services.”
However, Dr. Kaberuka pointed to three pervasive challenges: “Firstly, Africa’s lack of adequate hard infrastructure, in particular transport; secondly, problems with the ‘soft’ infrastructure – the institutions and regulations to facilitate trade links which includes the overall business environment; and thirdly, a myriad of firm level challenges that affect our private sector, as well as the emergence and sustainability of exports such as quality, meeting standards, access to finance.”
Dr. Kaberuka emphasized that while all aspects of infrastructure development across the continent needed attention, an aging railway network dating back to the colonial era and maritime ports with limited capacity were in urgent need of expansion and upgrades. The question Dr. Kaberuka posed to delegates was how legislatures could facilitate the process of economic integration. He said that Africa’s founders had laid the basis with political liberation. They had achieved much, including the epic struggle to free Africa of the last vestiges of colonialism and apartheid. “As we embark on a new era, there can be no question, there is much unfinished business politically: building peace, security and rule of law. However most people would now agree the struggle in Africa must be that of economic liberation through integration,” Dr. Kaberuka stated.
But training is just one part of the story, Dr Kaberuka told the conference. “What we need is the free movement of talent, to match up skills with opportunities. At present, movement of skilled Africans is limited from moving to those places where their skills are most needed and best rewarded. As a result, promising industrialization projects are unable to find the managers and technical specialists that they need.”
Dr. Kaberuka acknowledged the global competition for talent means African professionals, including doctors, engineers and accountants, are lured elsewhere, and steps must be taken to reverse this brain drain. “Our immigration laws and policies – at the regional and national levels – have to contain incentives to attract and retain the best and the brightest. This includes looking at ways to entice home our professionals in the diaspora”.
Speaking on the need to find home-grown solutions to finance Africa’s infrastructure needs, President Kaberuka reiterated his proposal for an Africa Infrastructure Bond that would ensure both security and high returns, while channeling resources into high impact investments that would dramatically impact African growth: “Let each Central Bank invest only 5 percent of its reserves in an Africa Infrastructure Bond. Managed by the African Development Bank, such an investment would in the first year total $22 billion – sufficient to make a major impact on some of the key very profitable projects.”
Dr. Kaberuka noted that the African Development Bank is willing to design such an instrument and to provide its expertise. “There is a whole range of technical issues around this proposal which I will discuss with Finance Ministers and Central Bank Governors next month,” he said, adding: “But I want to count on African Parliaments to give full support to this proposal”.