This blog is a recap of the session on “Achieving Inclusive Growth through Greater Trade Opportunities” at IGD Spring Frontier 100 Forum in Nairobi, Kenya.
By Meixi Zhou
Greater trade opportunities offer tremendous economic promise in Africa. This session uncovered the details on how African companies can take full advantage of trade opportunities to boost their export potential and drive Africa’s economic transformation. The discussions focused on how the great opportunities in Africa can lead to transformation and growth in society and the panelists also presented the opportunities and challenges of both inter-regional and overseas trade.
Phyllis Wakiaga, CEO of the Kenya Association of Manufacturers, moderated the panel. She started the conversations by asking what role the respective organizations that panelists represent play in regional and international trade, and what opportunities and challenges there are in Africa.
Zohra Baraka, Founder and Executive Director of the Mohazo Ex-Impo Ltd., stressed the role her company played in “creating jobs and markets for people”.
Baraka highlighted four challenges that African businesses face in exporting abroad: access to finance; tediously long due diligence process; untimely delivery; and the lack of innovation. She shared the best practices of her company in training its workers to produce high-quality products. She appealed to the banking and finance sector to provide more loans for African industries to employ more workers.
Dr. Hippolyte Fofack, Chief Economist and Director of Research and Knowledge Management of the African Export-Import Bank commented that IGD Frontier 100 Forum is a timely event, since only 15% of total African trade happens within the continent, making Africa the region that trades the least among itself in the world. He said, “Closing the intra-Africa trade gap is not an end. It will reduce Africa’s exposure to global shocks.” Dr. Fofack emphasized that the manufacturing sector accounts for 50% of intra-Africa trade, thus being a key area to create employment opportunities.
In terms of achieving inclusive growth, Finn Holm-Olsen, Director of Trade Promotion & AGOA at East Africa Trade Hub emphasized the necessity to spread the wealth in companies backwards in the value chain and diversify the economy from a country’s standpoint. He also pointed out that the Trade Hub is working with both buyers and investors, because investment is going to be key in the next 5 years. He also attached great importance to capacity building, meaning that many factories, especially in the apparel sector are not operating at their full capacity. The gap has been in the backward linkages in textiles and accessories, so there are big opportunities that countries like Kenya can tap into.
Rajeev Arora, the Kenyan Ministry of Industry, Investment and Trade Chief Textile and Value Chain Advisor praised the Kenyan government for its pragmatic move in having inclusive growth by bringing a new constitution. But he also pointed out some African governments are not aware of what values they are holding and what they can create as a game changer of investment and trade. Two major challenges exist, which are the policy gap and the lack of competitiveness. He encouraged to reduce power cost and to enhance logistics by clustering investment industrial zones and creating a value chain approach.
Stéphane Eholié, Chief Executive Officer of Société ivoirienne de manutention et de transit (SIMAT), commented that the finance of long-term resources and the lack of regional logistics are the major difficulty for African businessmen to do business outside their own countries. But he is glad to see that some African governments have started to have political willingness to boost intra-Africa trade.
“Africa is the land of opportunity”, Rajeev Arora noted in the conversations, quoting McKinsey’s Lions on the Move. It is high time to push for the improved partnership between the African governments and private sector to boost intra-Africa trade and achieve inclusive growth.