Kigali, Rwanda — Activities marking the 24th Annual General Meeting of the African Export-Import Bank (Afreximbank) opened in Kigali last week, with Claver Gatete, Minister of Finance and Economic Planning of Rwanda, calling for the building of regional value chains to have the potential to generate enormous benefits for African economies.
"The creation of regional value chains in Africa along several product lines could ease the integration of African economies into global value chains," said Gatete in an opening address during the seminars of the Afreximbank Advisory Group on Trade Finance and Export Development in Africa.
"In this context, ongoing 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," he continued.
Gatete 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 in Rwanda.
Denys Denya, Afreximbank's Executive Vice President in charge of Finance, Administration and Banking Services, said that 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, presented Africa with valuable lessons for positioning intra-African trade as a key pillar for economic growth, and sustainable development.
Also noted was the challenge posed to Africa by the small size of economies and market fragmentation; and Denya 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 said that Africa's progress toward economic development and structural transformation had been hindered by over-reliance on export of natural resources and 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.
Dr Hippolyte Fofack, Afreximbank's Chief Economist, said that the Bank's 5th strategic plan, known as "Impact 2021: Africa Transformed", had been 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 economic diversification and trade openness, which had been identified as the key to attaining and sustaining growth, he said.