Africa speaks
Trans-regional African trade set to pick up
An anticipated increase in demand for goods and services within Africa has the potential to give innovative companies with turnovers of between R300-million and R1,2-billion the opportunity to expand beyond the limits of their own borders, writes Karl Gotte, head of commercial banking at Standard Bank.
Investment between Africa’s regions will also be a crucial driver of financial integration, which at the moment remains too limited.
The latest African Economic Outlook (AEO) 2016 notes banks operating in Africa account for about one-third of Africa’s total value of trade finance, estimated at USD 320 billion. However only 19% of bank trade finance is devoted to intra-African trade and this is not uniformly distributed across Africa.
The key is to be able to benefit from strong consumer demand and financial services have a crucial role to play in facilitating this development.
As the leading bank on the continent, Standard Bank will continue to play a leading role and has already been facilitating major networking events from East to West Africa to encourage cross-border collaboration, business partnerships, trade and development. We believe more “open innovation” and trusted partnerships are needed to open the doors that are needed to bring about change at the regional and Pan African levels.
We will continue to drive this growth, for example, by combining these events with our successful business incubator programmes, which gives businesses the tools and platforms they need to succeed. Entrepreneurs and entrepreneurial activity will be the lifeblood of our regional economies in the future – and they need the financial sector to support them every step of the way.
As a bank which calls Africa home, Standard Bank has already done a lot of the “hard yards” in the past and is well positioned today to drive this growth.
While the opportunities are immense, bringing down trade costs remains a major hurdle. It is estimated for example that intra-African trade costs are around 50% higher than in East Asia, and are the highest of intra-regional costs in any developing region. The result of these high costs is that Africa has integrated with the rest of the world faster than with itself.
However, from a financing perspective, significant green shoots are taking root. Foreign direct investment into Africa has risen from about USD 10 billion in 2000 to about USD 55 billion in 2015, with investment within Africa playing a key role in this expansion – led by South Africa, Nigeria and Kenya in sectors like banking, retail and telecommunications.
With the right commitment and foundations in place so many markets in Africa can become dominant players. For example, only 5% of Africa’s imported cereals come from other African countries. In Europe, by comparison trade between nations typically accounts for more than 50% of all transactions.
Africa’s total exports comprise 80% raw commodities and 20% manufacturing. In contrast, 60% of intra-Africa trade is manufactured products, against 40% for primary commodities. The AEO report rightly points out that manufacturing is a good driver of productive employment and would push Africa further up the global value chain.
By 2050, Africa’s population will rise to over 2-billion people, representing 25% of the world’s population, against 15% today. Both cities and rural areas will grow fast and their interactions will intensify and jobs will need to be created for the youth entering the labour market.
The key for businesses is to have the right processes in place to manage the disruptive nature of the all of these changes. A more agile, versatile and innovative approach will be needed to doing business.
Entrenching a pan-African mindset to business will take time – but it needs to happen. If businesses are to take full advantage of these opportunities, the region needs more companies that develop true scale.
According to McKinsey’s recent Lions on the Move report, the vast majority of Africa’s 100 top companies built growth by developing a strong position in their home market first – only 14 started with Pan-African strategies. Nearly half of the 100 major firms have remained focused on their home market even as they have grown in scale, while the rest have steadily expanded into regional or pan-African markets. Not surprisingly, almost all the companies that have remained focused on their home market are based in Africa’s biggest economies.
The points is that multinationals usually build pan-African business and the experience of multinationals demonstrates that pan-African presence takes time to develop, requiring a long-term vision and a step-by-step approach. Most of the large multinationals operating in Africa have been on the continent for more than 25 years, according to the report, and most are present in more than ten countries, and their longevity and geographic footprint are closely correlated to their revenue base.
It has been found that companies that have moved from domestic to regional strategies have used their “first mover advantage” to build scale quickly at home and then use that as the basis for moving aggressively into other markets. Yet a meaningful presence in one or more of Africa’s largest markets is an essential part of a successful pan-African growth strategy.
Despite recent shocks and challenges, Africa’s household consumption and business spending are both growing strongly, offering companies a $5,6-trillion opportunity by 2025, according to McKinsey.
While Africa’s manufacturing sector today underperforms those of other emerging economies, output could expand to nearly $1-trillion in 2025 if Africa’s manufacturers were to produce more to meet domestic demand from consumers and businesses, and work with governments to address factors hindering their ability to produce and export goods.
It is time for companies and governments, as well as the financial sector, to play a greater role in ensuring more economies can benefit from intra-African trade – the future for Africa shines very brightly if they do.
Source:IT-Online
Unstoppable Africa 2023 has concluded, leaving a profound mark on the African continent. The two-day Global Africa Business Initiative (GABI) event aims to boost Africa’s standing in the global economy and establish the continent as the foremost destination for business, trade, and investment. This transformative gathering on the sidelines of the UN General Assembly has not only chartered the course for economic growth but has also solidified GABI’s pivotal role as a catalyst for change and progress.
On the second day of the event, Caroline Wanga, CEO of Essence Ventures, emphasized the importance of authentically portraying African narratives. She highlighted that the continent’s rich heritage has traditionally been expressed through its unique storytelling methods. Wanga stated, “In discussing Africa, it’s vital to engage in genuine dialogue. We’ve celebrated our heritage through our distinct method of storytelling, which the world is longing for now more than ever. As the overseer of Essence Ventures and other platforms, I am committed to ensuring our tales are told from a position of strength and authenticity.”
The final day of the Unstoppable Africa 2023 featured a chorus of leading private sector voices. Notably, leaders from the business and media world such as Jeff Wong, EY Global Chief Innovation Officer; Niraj Varia, CEO of iProcure Ventures; Lakeshia Ford, Founder of Ford Communications; Claudia Kwarteng–Lumor, Founder of Kollage Media, producers of GLITZ AFRICA Magazine and Somachi Chris-Asoluka, CEO of The Tony Elumelu Foundation (TEF).
Complementing these luminaries were esteemed figures from government and international organizations, including President Masisi, H.E. Felix Tshisekedi, President of the Democratic Republic of Congo, Adebayo Olawale Edun, Minister of Finance and the Coordinating Minister of the Economy for Nigeria, Joy Basu, Deputy Assistant Secretary, Bureau of African Affairs at the US Department of State.
Unstoppable Africa Conference: Dr. Akinwuni Adesina and H.E. William Ruto (Image: Supplied)
Leaders from global business, investment, government, sports, and the arts gathered in New York on Thursday, 21st September to mark the commencement of “Unstoppable Africa”. The event by the Global Africa Business Initiative (GABI) seeks to elevate Africa’s prominence in the global economy and position the continent as the premier destination for business, trade, and investment.
The two-day event is co-convened by the United Nations Deputy Secretary General, Amina J. Mohamed and the Chairperson of the African Union H.E. Moussa Faki Mahamat on the sidelines of the United Nations General Assembly in New York. GABI, coordinated by the UN Global Compact, serves as a pivotal forum for Heads of State and Government, CEOs, investors, policymakers, industry experts, and U.N. leaders to discuss and strategize the way forward for Africa’s dynamic business landscape. “Unstoppable Africa” is a powerful affirmation of GABI’s unwavering commitment to redefining Africa’s economic narrative.
On day one, the flagship event attracted an impressive array of speakers and participants, including the Presidents of Ghana, H.E. Nana Addo Dankwa Akufo-Addo, Kenya, H.E. William Samoe Ruto, Senegal, H.E Macky Sall Poland H.E Andrzej Duda and H.E Mia Mottley, Prime Minister of Barbados. In addition to government ministers, “Unstoppable Africa” welcomed a who’s who of renowned business titans such as Mo Ibrahim, the Sudanese-British businessman and philanthropist, Phumzile Langeni, Deputy Chairman of Imperial Logistics; Non-Executive Director of DP World Group, James Manyika, Senior Vice-President of Research, Technology and Society at Google-Alphabet, and Brad Smith, President of Microsoft among others. Senegalese artist Baaba Maal set the tone for the event with a captivating performance calling for peace and prosperity in Africa while actor Arsema Thomas engaged in an insightful interview conducted by the event’s host Folly Bah Thibault from Al Jazeera English.
UN Secretary-General António Guterres opened the two-day forum making a compelling call for the “delivery of justice” – a theme central to the continent’s sustainable development. The UN Secretary-General stated that “justice means reforming outdated, unfair and dysfunctional global financial systems and ensuring African representation at every multilateral table”.
H.E. Mia Mottley, Prime Minister of Barbados emphasized the difference between ambition and meaningful action, in the context of Africa. Recognizing the emerging unity and collaborative efforts across the continent, she highlighted the imperative for accelerated progress in Africa. Her message underscored the urgency for nations to move from plans to concrete actions that catalyze transformative change on the continent.
During a major event announcement, Dr. Akinwumi Adesina, President of the African Development Bank (AfDB), announced a transformative partnership with Google, creating a Centre of Excellence for coding in Africa.
Other announcements on the day included The Democratic Republic of Congo’s (DRC) commitment to positioning the country high-up in the batteries and electric vehicles value chains, unveiling a new 1,000-hectare space in Kolwezi, with special economic zone status. DRC’s Minister of Industry, H.E. Julien Paluku, appealed to global investors to join these initiatives in addressing climate change while advancing economic growth. the launch of Ghana’s Energy Blue Zone Initiative, heralding a major stride in the country’s energy transition and investment plans.
The “Unstoppable Africa” event promises to continue its momentum into the second day, where further thought-provoking discussions, innovative solutions, and collaborative endeavors are set to shape Africa’s role in the global economy. Leaders from various sectors, including business, government, and civil society, will come together to exchange ideas, forge partnerships, and chart a course toward a more prosperous and sustainable future for Africa and the world.
Ayomide Idogun is the co-founder at the New African Movement, an initiative aimed at ensuring Africa is conducive for Africans. Ayomide is a development strategist, policy analyst, and military historian with a major flair for transformative change through strategic thought, leadership, and empowerment.
Recently, he had the opportunity to be a delegate at the Arab Youth International Model United Nations Conference, now known as the Best Diplomats Conference, held in Dubai. Beyond the piquancy that came with meeting over 150 people from about 80 countries, and the experience of learning different cultures, the delegates were largely charged with proffering solutions to solving the global food crisis. Ayomide represented the great people of Guatemala, who sadly are no strangers to this phenomenon, with 4.6 million people at the least, facing the hunger crisis, and suffering hugely from food insecurity.
This led him to come up with prospective solutions, to ensure farmer empowerment, and the mitigation of factors hindering food supply minimized to the barest minimum, so as to ensure Guatemala does not just become self-sustaining, but grows to the point of exporting food produce to other Nations. His efforts did not go unrewarded as he bagged the Outstanding Diplomat Award, in recognition of his outstanding negotiation, leadership, and overall performance during the course of the conference.
He is a trainer and speaker with core area in leadership, capacity building and development. Some of his engagements amongst others, includes, training members of the African community in the United Arab Emirates, on capacity building and maximizing potentials, to ensure their time and resources are utilized to maximal effect. And at the maiden edition of DisruptHR Lagos, organized by OutsideinHR, where he spoke on the role COVID-19 played on priorities for humanity, and the ever-changing landscape of work.
Ayomide Idogun holds a degree in Policy and Strategic Studies from Covenant University, a second degree in History and Strategic Studies from the University of Lagos, and he is currently enrolled in the School of Politics, Policy and Governance, where he is undergoing the Public Leadership and Policy Programme.
