Economic
integration of African countries, which would lead to the much-sought
development, has been hinged on the immediate support for building of value
chains across growth sectors.
The
observation is rather opposed to the current status of African economies known
for huge bilateral and multilateral transactions with countries outside the
continent, solely on commodities that are not processed.
Leading the
call at the 24th yearly general meeting of the African Export-Import Bank (Afreximbank) in Kigali, Rwanda, the
country’s Minister of Finance and Economic Planning, Claver Gatete, reiterated that building regional value chains have
the potential to generate enormous benefits for the continent’s economies.
“The
creation of regional value chains in Africa along several product lines could ease
the integration of African economies into global value chains. In this context,
on-going efforts to deepen regional economic blocks within Africa offers
tremendous opportunities to draw on economies of scale to transcend the natural
and environmental constraints imposed by geography,” Gatete told the Afreximbank Advisory Group
on Trade Finance and Export Development in Africa.
He noted
that although African trade had witnessed remarkable growth, especially over
the last two decades, rising from $210 billion in 1996 to $1.2 trillion in
2015, its share of global trade had barely changed, remaining at about 15 per
cent, compared to 67 per cent in Europe, 53 per cent in Developing Asia, and
about 37 per cent in America.
He commended
Afreximbank’s support to Rwanda’s economic transformation, noting that the bank
had provided direct financing, amounting to $155 million in support of
development projects.
But
Afreximbank’s Executive Vice President, Finance, Administration and Banking
Services, Denys Denya, said the
resounding success achieved by some countries in Asia, in particular China and
Korea, and the critical role played by intra-regional trade in their
development. This, he said, presented Africa with valuable lessons for
positioning intra-African trade as a key pillar for economic growth, and
sustainable development.
Noting the
challenge posed to Africa by small size of the economies and market
fragmentation, he argued that connecting the host of small and disconnected
markets through deepening of intra-African trade and economic integration would
create an environment where firms gained access to hitherto non-existent larger
markets.
He affirmed
that Africa’s progress toward economic development and structural
transformation had been hindered by over-reliance on export of natural
resources, primary commodities and a deficit of export diversification, which
limited the ability of countries to effectively develop regional value chains
to enhance their integration into global value chains.
Also,
Afreximbank’s Chief Economist, Dr.
Hippolyte Fofack, explained that the bank’s fifth strategic plan, under its
“Impact 2021: Africa Transformed,” is designed to address the challenges facing
African countries on their path to development. Its first two pillars – Promoting
Intra-African Trade, and Industrialisation and Export Development, would
support the economic diversification and trade openness, which had been
identified as the key to attaining and sustaining growth. (Guardian)
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