For a better experience please change your browser to CHROME, FIREFOX, OPERA or Internet Explorer.

Sifiso Ntombela | How SA can drive win-win growth partnerships in Africa

16 June 2020

 

It is estimated that Africa holds 60% of uncultivated arable land in the world, implying the continent has a potential to feed itself plus the growing global population that is expected to reach 8.5 billion in 2025.

Africa’s land is rich both underneath the surface with large deposits of minerals and above surface with fertile soils good for agriculture.

Moreover, the sunny skies and large rivers and lakes make the continent an ideal place to drive renewable energy through solar and hydro technologies.

However, all the continent’s potential is constrained by the inability to invest and implement policies and programmes that build key infrastructure, transform economies and forge real continental integration.

The lack of policy implementation is holding back development in the continent. Policies, such as the Lagos Plan of Action in 1980 to the latest African Agenda 2063, which was produced by the former African Union Commissioner,  Nkosazana Dlamini-Zuma, are struggling to gain momentum and consequently perpetuates the continent’s dependency on foreign aids.

 

Policy misalignment, limited integration

The policy implementation problem also exists at member states of the African Union, which prolongs the fragmentation of the continent.

For example, the Comprehensive Africa Agriculture Development Programme (CAADP) and Africa Agenda 2063 are clear on the measures required to develop and transform the continental economy, however, when it comes to the National Development Plan of South Africa or Growth and Development Strategy of Malawi or Programme of Action of Mozambique all have no measurable targets.

Moreover, measures contained in the member states policy frameworks are not necessarily aligned to continental priorities. This misalignment between continental and member state policies are sustaining the fragmentation of the continent’s economy.

South Africa is one of the most industrialised economies in the continent and it has held key strategic positions in the continent to forge continental integration over the past two decades.

One of the key positions is the Secretary General post for the African Continental Free Trade Area, currently held by Wamkele Mene.

At the same time President Cyril Ramaphosa is chairing the African Union assembly, making South Africa a real driver of continental integration and development in 2020.

Continental integration is dependent on the appetite of African states to invest and align domestic policies to the likes of the African Agenda 2063 and African Continental Free Trade Agreement.

To realise the aspirations of making Africa a global powerhouse, African states must first deal with infrastructure deficit estimated at US$360 billion.

 

Lack of infrastructure holding back development

The continent’s infrastructure gap is constraining intra-African trade and perpetuating underdevelopment. At present, intra-African exports make up only 19% of total trade, compared to 59% and 70% for intra-Asia and intra-Europe trade respectively.

This low intra-African trading can be attributed to poor energy and transport networks.

Africa’s road access rate is 34%, compared with 50% in developing countries, electricity access rate is 30% compared to 70% in developing nations; and internet penetration rate is 6%, compared to an average of 40% in developing countries.

Over and above infrastructure deficit, product offerings is another issue that limits intra-African trade.

Because of similar natural endowments across African states, they produce and export the same products and simultaneously import similar products.

In 2018, the top exported products from Africa to the world composed of minerals fuels (HS 27), precious stones (HS 71), Ores (Hs 26), Fruits (HS 08), and Cocoa (Hs 18).

The African import basket was made up of mineral fuels (HS 27), machinery (HS 84), electrical equipment (HS 85), vehicles (HS 87) and pharmaceuticals (HS 30).

The aggregate continent’s import and exports baskets are more or less similar to trade baskets of South Africa, Kenya, Ghana, Nigeria and other larger African states.

This somewhat indicates why African states are not trading with one another.

Effectively the export basket of African states suggest that Africans are rich in minerals and agriculture but poor in processing, whereas the import basket shows that Africans are materialistic in their demand, unhealthy and food insecure.

 

For South Africa, the limited processing of products in other African markets presents an opportunity to export a diversity of products, ranging from processed food, electrical equipment and pharmaceutical products to other African nations.

Furthermore, South Africa can tariff jump and invest in these countries to boost local production and industrialisation.

If South African businesses venture into the continent, the investment and export strategy must be different to that applied to Europe, Asia and American markets.

It must be grounded in a win-win situation with the intention to drive development and growth in other African countries.

 

Source: News24

Top