Regional Integration Key to Driving Africa’s Growing Competitiveness

Poor economic integration and the low levels of trade and cooperation among its countries have, once again, been identified as the biggest impediments to Africa’s growth and ability to become the prosperous economic giant it could.

Speaking at the launch of the Africa Competitiveness Report 2013, at the World Economic Forum on Africa being held in Cape Town yesterday (9 May), WEF chief economist Jennifer Blanke, and her fellow panellists, had a simple message: Africa must integrate if it is to be competitive, diversify its economic base and create enough jobs for its young population, fast-urbanizing population.

The report says increased intra-Africa and international trade can fuel competitiveness on the continent, lowering costs and result in economies of scale, thus potentially increasing the variety and quality of goods and services produces on the continent.

The importance of this cannot be over-emphasised. For too long now, everybody has been harping on about the need for Africa to produce high quality goods and beneficiate its raw minerals. The time for meaningful action on this front is long overdue.

It is indeed a great pity that, as the report shows, Africa has not reaped the fruits of trade liberalisation to the extent of such places as Asia and some Latin American countries.

Instead, you have the unfortunate situation whereby access to African markets has become easier while inefficient border administration reduces the price competitiveness of African products in global markets, adding to the costs of imports.

Another major problem is Africa’s poor infrastructure, which hampers regional integration. To put this into perspective, it is worth quoting another panellist, Mthuli Ncube, chief economist and vice president of the African Development Bank, at length.

He said: “Sustained high economic growth often occurs in an environment where there is a meaningful infrastructure development. It is therefore imperative that planning for both national and regional infrastructure projects is coupled with the requisite legal and regulatory framework that will allow for increased involvement of the private sector. . .  Improved infrastructure investment in Africa is crucial for the continent’s competitiveness and productivity. . .”

The problem of integration was to be later echoed, perhaps more pointedly, a while later at the plenary session by Donald Kaberuka, president of the African Development Bank Group.

He said he was baffled him by the continued need for visas for travel within the continent. This, he said, often made it difficult even for him trying to enter the countries that need his helps with developmental finance. Now, how’s that for shooting yourself in the foot?

How much longer will Africa continue scoring developmental own goals before its leaders really start appreciating the need to bring down the barriers to trade within the continent, thus making it more cost effective to transport goods their countries trade with one another, thus benefiting from their huge market of almost a billion people, for the mutual benefit of their countries?

Surely, working towards the goal of making Africa both prosperous and at peace with itself in the next 50 years starts now?

The good news is that The Africa Competitiveness Report 2013 paints a picture of hope for the continent – one where strife is increasingly being replaced by growing development, surging international investor interest and greater prosperity.

The continent, it says, has experienced an average growth rate of more than 5 percent over the past decade, compared to the developed world still reeling from the effects of the global financial crisis. However, the continent still faces the challenge of using its impressive growth for the benefit of its entire population. The Africa Competitiveness Report 2013 is available at www.weforum.org/acr.

Thabo Leshilo is a Director at FH SA.