The Citizen (Dar es Salaam)
12 November 2009
The existence of smaller markets is one of the main reasons why Africa is increasingly being shunned by many of the promising foreign investors, and the individual countries continue to be marginalised in global foreign direct investment (FDI) flows.
The tiny markets are certainly not attractive to the global venture capitalists and other entrepreneurs to whom high and maximum returns on investments matter the most.
No wonder Africa receives less than four per cent of the global FDI! Last year, this amounted to some $1.7 trillion, but is now forecast at less than $1.2 trillion for this year, and $1.4 trillion in 2010, due to the ongoing the global recession.
With such a gloomy picture, the move by the EAC, Sadc and Comesa to form a single free trade area is not only timely, but also strategically relevant. In fact, the idea, which was mooted in October 2008, is long overdue. Its implementation should be fast tracked to attain the desired results.
Many in this region will be surprised to learn that in the eyes of international investors and sometimes their regional and domestic counterparts, the EAC is not big enough to be a competitive FDI destination. So is Sadc, which includes South Africa, the largest economy on the continent.
In the same context, Comesa does not have the requisite commercial clout and business allure to attract the level of FDI required to propel the economies of the member states to prosperity.
The Africa of the future will require a bigger integrated market like the EU's.
Therefore, efforts to create one should start now. The envisaged giant EAC/Sadc/Comesa market that will comprise 26 states, accounting for some 527 million consumers, and a GDP of $624 billion, is a step in that direction.
We commend the three blocs for leading the way in harnessing the continent's resources to exploit its vast commercial potential. Time has come for the streamlining Africa's 30 or so regional trade arrangements, which scatter effectiveness as each nation belongs to about four such groupings on average.
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