Thursday,20 June, 2019
Current issue | Issue 1424, (3 - 9 JANUARY 2019)
Thursday,20 June, 2019
Issue 1424, (3 - 9 JANUARY 2019)

Ahram Weekly

African development begins in Sharm

Africa has tremendous growth potential, but also a tremendous need for growth. The key is inter-African cooperation, writes Mohamed Abdel-Wahed

That the Africa 2018 Forum was hosted in Sharm El-Sheikh means a lot for inter-African and African-international cooperation. Above all, it confirms Egypt’s strong commitment to building regional integration in Africa and to optimising all available opportunities to reap the benefits from such integration. This is why it is strategically important to Egypt to take advantage of the opportunity of its chairmanship of the African Union in 2019 to do its utmost to further African integration and, in general, the implementation of  Agenda 2063, the African Union’s long-term plan to realise this continent’s developmental aspirations. 

The conference was tangibly successful in many ways. It resulted in 30 agreements involving investment, national development projects, funding and growth of small and medium-sized enterprises, and infrastructural development. In addition, $3.5 billion worth of technical cooperation agreements were signed. The conference also yielded a number of recommendations which urged: 

- Activating measures to spur investment flows by applying risk mitigation measures across the continent.

- Boosting African cooperation in investment with partners in development, financial organisations and investment banks in accordance with Agenda 2063. 

- Increasing public and private sector partnerships, especially in interconnectivity networks and transport projects.

- Putting technological development tools, such as artificial intelligence, digitalisation, information systems and mega databases, to the service of development efforts, creating new markets and jobs.

- Investing in the economic empowerment of women by supporting programmes to fund small and medium-sized enterprises and by supporting capacity-building and vocational training programmes for African youth.

- Following through on initiatives to fight corruption and bolster the principles of good governance.

As one of the most important investment events in Africa, the Africa 2018 Forum is a means to achieve many objectives. It creates opportunities for each participant state to present the actions it took to encourage investment and attract new investments. These could include new legislative and regulatory reforms, new investment opportunities, the incentives and competitive advantages that potential investors would enjoy, and guarantees for investment capital. The event also helps facilitate close and effective coordination between COMESA countries as they carry out and strengthen the regional integration process. At the same time, it offers private sector firms and commercial institutions a single venue to meet directly with African decision-makers, to air new ideas for promoting investment and to better familiarise themselves with the major challenges that hamper investment in Africa and the possible solutions to such problems.

The forum is also a means to encourage young entrepreneurs to acquaint themselves with the capacities and resources of the continent and how to manage investments in it after honing the necessary skills in the workshops organised by COMESA’s Regional Investment Agency. Also, during the forum, young African entrepreneurs have the chance to present their proposals and ideas to potential investors, international donor organisations or businessmen keen to invest in Africa, and to explore new marketing opportunities for their products during their direct interactions with others in the forum.

Africa 2018 is precisely the type of forum that helps Africa stimulate investment, promote inter-African trade and generate projects and enterprises involving this continent’s many natural resources. At the same time, forums of this sort open avenues for reducing dependency on traditional foreign partners, thereby giving African countries greater overall autonomy and freedom from outside pressures. At the same time, they contribute to the realisation of sustainable and comprehensive development which, in turn, creates employment opportunities for young people, thereby keeping them from contemplating the extremely hazardous alternative of illegal migration in search for a livelihood. 

At another crucial level, the African forum presents an excellent opportunity to work for security and peace among African countries, since it brings together so many African heads of state who, in bilateral meetings on the sidelines of the conference, can iron out their differences and resolve any disputes. In fact, this is the very heart of what COMESA is about. Although it is a regional organisation with economic aims, it is actively dedicated to the realisation of regional peace and security, which is the indispensable stay for the region’s economic and social development. Article 163 of the COMESA Treaty calls for “strengthening the political relations between the countries of the region and promoting cooperation in various fields in order to achieve security and peace for the countries of the region”. 

Many young business leaders did, indeed, take part in the activities of Africa 2018. In sessions especially dedicated to young entrepreneurs, they presented their ideas and experiences to diverse audiences of fellow businesspersons, investors and public figures. These sessions were arranged in response to a recommendation that emerged from this year’s World Youth Forum, also held in Sharm El-Sheikh, and that called on the Egyptian government to do all it could to help create a regional centre for entrepreneurship which would furnish the necessary support to nascent enterprises in Egypt and elsewhere in the region.

The lion’s share of Africa 2018 was dedicated to women and specifically the role women play in setting the continent’s priorities and how to enable women to strengthen this role. The activities towards these ends fell under the heading, “Empowering Women in Africa”.

In other sessions, participants discussed a number of problems hampering efforts to attract investment to Africa. Foremost among such problems is a widespread negative image of the investment climate in the continent (bureaucratic and financial corruption, swindles and scams that new investors face, the monopolisation of strategic investment sectors by ruling elites and their cronies, deteriorating security situations in some countries, underdeveloped infrastructure, a large number of landlocked countries, inadequate banking systems, a proliferation of barriers aside from tariffs, etc) which keeps this geographically vast economic market relatively small, regardless of generally low living standards in many African countries. Many COMESA members have introduced structural reform programmes in order to address these problems and create an encouraging investment climate for the private sector.

Still, the risks are growing fewer as African economies deregulate and diversify. Also, COMESA now has insurance agencies such as the African Trade Insurance Agency. This pan-African agency, based in Kenya, insures African exports and also provides insurance against political and security risks, and credit risks, thereby helping to reduce the costs of doing business in Africa. In addition, all COMESA countries are members of the Multilateral Investment Guarantee Agency and the International Centre for Settlement of Investment Disputes which are both World Bank members.

Some African governments have made important strides towards letting the private sector drive the economic development process. In addition to bold and concrete reform programmes, they have eliminated obstacles to investment, reducing the cost of doing business and creating an attractive investment climate in these countries. But the private sector can also contribute toward this end by investing around $93 billion a year to help in infrastructural development and the improvement of logistic services. Private capital could also be invested in the manufacturing sectors in the continent, especially in light of the abundance of inexpensive raw materials and labour. The McKinsey Institute estimates that Africa has the potential to double its industrial output in 10 years and to create permanent employment for 14 million African youths. 

Among the major challenges facing the continent, in general, is rapid population growth. The current population of around 1.21 billion is expected to double by 2050 by which time Africa will be home to 41 per cent of the world’s youth. This could be an opportunity if treated in the spirit that this is an addition to African resources rather than a burden. But for such an additional resource to be used appropriately, African governments will need to create sufficient job opportunities for that large number of youths, which in turn means developing the appropriate comprehensive development strategies that will bring on board the private sector, expand trade sectors, open markets abroad and attract investments into major sectors in industry, agriculture, crafts, construction, etc. In the process, African governments will need to eliminate the obstacles that hamper the ability of local manufacturers to produce and export their products, which requires infrastructural development, closer regional integration, and educating and training new generations in ways that meet the demands of the labour market.

A report by UN Economic Commission for Africa has raised another important concern: the rise of sovereign debt in Africa to over 60 per cent of the continent’s GDP, whereas it should not exceed 40 per cent. Africa must take bold steps, in the framework of a collective commitment to realistic solutions, to introduce sound financial and fiscal policies that link loans with investments. The report also stressed the need to raise the capacities of staffs in debt departments in African ministries of finance and to develop clear and accurate databases. 

The writer is an expert in national security affairs.

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