Posted on June, 14, 2019 at 09:07 am
Yet while the AfCFTA offers an ambitious vision of intra-African free trade, proponents say it requires billions of dollars in cross border infrastructure investment to become a reality.
decrepit roads to non-existent power networks and patchy airline connections, many countries are ill-equipped to enable trade flows, even if governments tear down tariffs and legal barriers.
In a bid to crowd in such vital infrastructure investment and unlock the full potential of the AfCFTA, Dr Khaled Fouad SHERIF Vice President Regional Development, intergration and Business Delivery for the Bank told the Guardian that AFDB has launched a new regional integration strategy until 2025.
According to Sherif, said that the new strategy will set ambitious, measurable targets to boost infrastructure and allow countries to pursue cross-border integration.
“I think its much more specific than it ever was. We’re trying to facilitate the construction of 9000km of cross-border transmission lines, enhance construction or rehabilitate about 16,400km of cross-border roads, support construction of rail lines and transport corridors, increase transport links wherever possible and use investments in infrastructure as a way of creating market linkages.
“Our main purpose is to help all of our countries enhance the level of trade and investment amongst each other to create an economic zone that is very much like the blocs that exist in North America, Europe and Asia.”
The ambitious and wide-ranging strategy involves increasing air travel to 13.5m passengers, supporting ICT projects to increase African internet connectivity to 30% and ensuring that financial services are greater than 5% of African GDP. These are all objectives that the strategy aims to push through by 2025.
Reaching these targets will boost intra-African trade to between 20% and 23% of all traded merchandise by 2025, according to the AFDB.
But given the huge challenges, how realistic are the goals?
Sherif says that a shrewd focus on improving basic infrastructure is crucial to unlocking the other benefits.
According to 2016 data, Africa has just 204km of roads per 1,000sq km of which only one quarter are paved, compared to the world average of 944km per 1,000sq km, of which more than half are paved.
Without major progress on transport and electricity, major investors are unlikely to be persuaded to back more complex projects.
“Obviously we have to find a way of facilitating the construction of road networks to allow goods to move freely.
“The same thing would apply to transmission lines – there are countries where there is an abundance of energy and others that are still in the dark.
“You’re not going to get much cross border or regional investment if you don’t have roads or electricity.”
Sherif says that the AFDB will target infrastructure projects which enable trade as a means to bringing down the continent’s vast food import bill – estimated at some $35bn annually.
“Our strategy this time is to be very specific as to what parts of the continent are worth investing in for immediate effect to try and bring down Africa’s food imports by creating corridors by which the continent can sustain itself,” he says.
“Part of our regional integration strategy is to effectively create a business environment through which investors have the ability to go in, make long term investments and partner with governments through different vehicles.
“To make that happen every government needs a PPP law, every country needs to be uniform in the way it interfaces with the private sector, it needs to allow repatriation in the way its neighbours do.
“That legal framework is now beginning to mould itself in a way that is going to allow the kinds of investments you’re talking about.”
Indeed, while progress is evident, some countries such as Nigeria and Morocco still need to be persuaded of the case for greater regional integration.
Nigeria, Africa’s largest economy, remains an AfCFTA holdout under the protectionist presidency of Muhammadu Buhari, who has imposed import controls during his time in office. But Sherif believes that Nigeria will eventually be won round when the financial gains become apparent.
“The whole objective is to make sure AfCFTA becomes something everyone ratifies.
Source: IPP Media