Until the African Continental Free Trade Area (AfCFTA) plays its role of aggregating and integrating small and medium enterprises, it will remain a mere 'Podium to the Streets' talk, experts have warned.
The call was made on Wednesday, August 16, during the official opening of the Golden Business Forum in Kigali.
The forum under the theme Creating African Wealth under the African Continental Free Trade Area, is bringing together over 1000 delegates to among others identify and facilitate business opportunities across Africa, as well as promote engagement between developers, investors and financiers.
The AfCFTA, being the world's largest trade bloc, experts said, is crucial in setting the stage for increased integration, competitiveness, economic diversification, and investment in African economies.
However, there is a mountain to climb, but according to Monique Nsanzabaganwa, the African Union Commission (AUC) Deputy Chairperson, Africa has the unique opportunity today to shape "African Wealth" under the AfCFTA and turn current challenges into real business opportunities to unlock the potential of the immensely rich and diverse continent.
Here are five things that should be done:
1) Private sector should stand up to the task
The AfCFTA is an important key to unlocking Africa's immense opportunities, being the world's largest trading zone in terms of the number of participating countries (55) but it is also more relevant when viewed against the backdrop of the current global supply chain disruptions, which are bringing in train, inflation, and threats of economic recessions.
However, the private sector not Government is central to the full realization of the AfCFTA.
If statistics are anything to go by, the private sector in Africa accounts for over 80 percent of total production, two-thirds of total investment, and three-fourths of lending within the economy.
The sector also provides jobs for about 90 percent of the employed working-age population.
2) Women, startups should not be left behind
Although Africa is home to plenty of endowments, most of which remain untapped in some places and a curse in others, experts argued that the Wealth of Africa under the AfCFTA resides in the millions of micro, small and medium enterprises, the majority of whom are women-owned and youth startups and still operate in the informal sector.
"Small and medium enterprises are the backbone of the African private sector accounting for over 90 percent of businesses and 63 percent of employment in low-income countries while contributing over 50 percent of the Gross Domestic Product," Nsanzabaganwa said, quoting the UN Economic Commission for Africa.
For instance, she said, economic powerhouse companies of this world have this in common,
"They mastered to integrate their small and medium enterprises into their value chains. As a result, they harnessed innovations, inverted in R&D (Research and Development), and produced a diverse range of products, better quality at lower cost, thereby enhancing their global competitiveness."
"My message to the Business community today is, for you to own the AfCFTA market you must integrate small and medium enterprises in your value chains. Failure to do will undermine Africa's capacity to produce and consume Made in Africa, thereby creating wealth for others, outside the Continent."
3) Reversing the order of things
Creating wealth under the AfCFTA implies reversing the order of things and taking 'From the Streets to the Podium' instead.
"That is why I commend the PSF for taking a pragmatic step to approach tapping the AfCFTA from the ground up," she added, "For, the AfCFTA will be implemented by Private Sector, not Government. So, how will the "from the Streets to the Podium" approach work?"
4) Boost growth
For the AfCFTA to be truly the engine of African wealth, it is imperative that we boost growth to above 7 percent (doubling from 4 percent projected for 2023) and double investments to 40 percent of GDP.
According to the African Development Bank (AfDB) recently published its economic outlook for the continent, projections indicate that the continent is expected to outperform the global GDP growth rate of 3.4 percent, with moderate growth of 4.1 percent in 2023-2024.
Eastern Africa is projected to lead this growth, expanding by 5.1 percent in 2023 and 5.8 percent in 2024, outpacing regional and global partners.
Five African countries, namely Ivory Coast, Benin, Tanzania, Ethiopia, and Rwanda are among the top 10 fastest-growing economies in 2023.
"For the AfCFTA to be truly the engine of African wealth, we need a deliberate public-private joint effort to harmonize policies, standards, and regulations; connect people and products to markets through physical and digital infrastructure and logistics; de-risk small and medium enterprises to access finance; develop regional value chains and change mindset to start believing in Made in Africa products."
5) Seeking opportunities for trade and investment
To create wealth under the AfCFTA, Africans ought to seek out the opportunities available for trade and investment between respective countries.
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Africa currently imports over $300 billion worth of goods from outside the continent, with just over $50 billion as food imports, including maize, wheat, rice, and soybeans take up nearly 75 percent of these agricultural imports.
"Herein lies the opportunity for our continent, for our business persons, and for our communities. Why must Africa, with 60 percent of the global arable land, still import vast quantities of food?"
Investment opportunities abound in agricultural commercial farming on the continent.
Value addition and agro-processing is a key pillar of the AfCFTA private sector strategy precisely because of the potential that Africa has to feed itself and the rest of the world.
Equally important are cross-border investments that can help add value to the mineral beneficiation process, transforming the abundant natural resources innate to the African continent.
At the same time, manufacturing for key industries like textile, leather, and other light industries can spearhead Africa's structural transformation and lead to achieving the real potential of this immense continent.
"However, this is a gradual process that requires maximum effort from all parties involved but the end goal is shared success which we all greatly benefit from."
