DAVOS, Switzerland, Feb 24- African countries have been urged to devise mechanisms that can enable them to increase regional trade and investments and in turn propel them to become an effective and strong resource on the global stage.
South Africa’s Finance Minister Pravin Gordhan points out that the continent is rich with opportunities that need to be exploited to support economic development and the competitiveness of its goods and services in the international market.
However, this can only be achieved by integrating the economies.
“Africa must take a tough look, and an optimistic look, at regional integration. As Africans we have to look at ourselves, and recognise not one country of a billion people, like two (Europe and the USA) others are, but we are 54 countries with a billion people,” he pointed out at a forum organised by Africa investor-Brand.
While the continent has been widely cited as the next frontier for economic growth, it has in the past failed to trade within itself, a phenomenon that has been blamed on numerous trade barriers.
It is estimated for instance that intra-African trade and investment stands at about 9-12 percent which is way below the 60 percent average registered by other continents.
Despite these low trade volumes the continent has proved itself as having the potential to be a key player in the international market. As such Gordhan said the continent cannot be ignored any further.
With its collective Gross Domestic Product of $2.6 trillion, one billion-plus population and $1.4trillion consumer spending potential, he pointed out, Africa will continue to be a very significant and strategic entity in the ‘unfolding new world economic order.’
“It is Africans themselves who are leading the growth of investment in Africa. Africans have confidence in Africa, which is a very important and key element because we first have to believe in the continent, and the opportunities that the continent provides for us, before the world can really buy into the Africa agenda or the African growth story,” the minister emphasised
For its potential to be fully harnessed however and for these countries to overcome the challenges in the global financial arena, political leadership and private sector intermediation are vital determining success factors, he added.
His trade counterpart Rob Davies reinforced the need for the business community to add value to their products in order to accelerate the dream to becoming industrialised countries.
“We need to add value to the mineral products that we export; we need to beneficiate the mineral products. We need to do the same with agricultural products and we need to move much more into processed food production,” Davies noted.
But while the integration process continues to remain attractive, African Development Bank President, Donald Kaberuka was cautions against merely creating institutions as a way of solving Africa’s problems.
Political will and proper legal and regulatory frameworks are crucial to attract investments into the continent which still guarantees the highest returns.
“Many investors in the past were worried by issues like; will the government interfere, will the government change laws along the way, and we say to these people: we know our continent, come with us and we will put our money on the table, and so we are able to crowd in investment,” Kaberuka assured.