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Integrating Africa - Thoughts from the annual meetings of the African Development Bank Group

Wednesday June 26 2019

By BANKELELE
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Earlier this month, the African Development Bank (AfDB) held its series of annual meetings from June 11 – 14 in Malabo, Equatorial Guinea. It had a theme of “regional integration” which is one of the “High 5’s” or strategic development priorities of the bank alongside to “feed Africa”, “light up Africa”, “industrialise” Africa, and “improve the quality of life for the people of Africa”

A key theme of the meetings was that the stellar growth levels in Africa, of over four percent, were still not enough to create enough jobs and produce sufficient food on the continent. The continent’s population is expected to double from 1.2 billion today to 2.5 billion by 2050, and Africa will have a working-age population that will be larger than India and China. It is also expected that by 2050, there will be 60 percent more demand for food in Africa and over three times more consumption for dairy and meat products.

In terms of feeding this growing population, a session was held on food security in collaboration with South Korea agencies, where we learnt that Korea ranks “Tongil Rice”, through which they achieved self-sufficiency in rice production, as their top national invention - ahead of Code-Division Multiple Access (CDMA), semiconductors, nuclear reactors, ship design, and high-speed trains. But also that while the global agro-industry business is worth $8 trillion (Sh800 trillion), which is nine times bigger than ICT, and ten times bigger than the auto industry, African governments still look down on this huge opportunity for African agriculture. The level of funding to agriculture is less than four percent in Kenya and also across Africa.

BOOST TRADE

The AfDB meetings came just ahead of the African Continental Free Trade Area (ACFTA) going live in July 2019, described as being the broadest free trade area since the establishment of the WTO. The goodwill from the ratification of ACFTA is expected to boost trade among African countries, which is currently low, estimated to be at 18 percent compared to Europe’s regional integration is at 70 percent and Asia’s 60 percent.

It was said that the potential economic benefits of full implementation of the $3.4 trillion (Sh340 trillion) African market can offer substantial gains based on a number of optimistic scenarios, with the greatest beneficiaries of the increased trade likely to be 16 landlocked countries on the continent and those in the Central Africa region.

Policy actions by different African governments that will lead to the greatest growth for countries of up to 4.5 percent per year, included removing bilateral tariffs, eliminating non-tariff barriers, and keeping rules of origin simple. Others include synchronising financial governance frameworks having open skies to competition, open borders for goods and services and pooling electrical power. We can also add integration of the two hundred mobile money systems, and integration of remittance systems to bring the cost of sending money across African borders down to below one percent from the current charges of between seven and 10 percent.

OPENING BORDERS

Increasing trade will come from opening your borders and opening your markets as others do the same. It is nice to have leaders talk in faraway meeting places about increasing markets for exports, but what happens when foreign citizens and products enter the Kenyan market? Aside from the Chinese fish and hawkers, there is concern about chicken and eggs from Uganda, Wheat from Egypt, sugar from Zambia, and COMESA.

How do we balance talk about reviving and supporting Kenya Airways while Ethiopian Airlines will always underprice Nairobi flights and Emirates to fly about 1,000 people in and out of Nairobi every day? You can have Kenyans managing hotels in West Africa, and Kenyan banks opening branches in other countries but what about having tour vans and drivers from Tanzania, Nigerian songs and Tanzanian artistes dominating our radio airplay and music royalties?

Finally, one of the measures to track integration is an Africa Visa Openness Index by the Bank that analyses the ease of movement of African people. As of 2018, 25 percent of African countries allowed other African nationals to visit without needing visas while in 24 percent others, they could get a visa on arrival, but Africans still needed to apply for visas before they can visit 51 percent of the countries. Kenya is number nine on the index, an improved ranking following President Kenyatta’s announcement of a new visa-on-arrival policy for all African visitors. The index is topped by Seychelles and Benin who offer visa-free access to all visiting Africans, while the meeting host Equatorial Guinea was ranked last as it requires a visa from visitors from all 53 other African nations.

Twitter: @bankelele