Africa: Harvesting New Horizons

Africa is a huge and diverse continent that cannot be described with a single and unique narrative, as the gap between the richest countries and the poorest is substantial. But, despite the differences, there are also common concerns. For example, political risk still contaminates states and internal and cross-border conflicts affect dozens of them.

In this context, intra-African free trade and regional value-added cooperation is seen as the best first step in breaking the cycle of underdevelopment that is denying opportunities for African workers and businesses. The removal of customs and other barriers will encourage constructive interaction and peaceful cooperation. And alongside with boosting trade flows, it will validate the cross-border infrastructure projects the continent needs.

The African Continental Free Trade Agreement (AFCFTA), which was signed by 54 African countries, aims to double intra-African trade by 2035. Currently at 18% intra-continental trade is relatively low compared to 47% in America, 61% in Asia, 67% in Europe and 7% in Oceania. As a consequence, the African Continental Free Trade Area (AFCFTA) is set to become the world’s largest free trade area, with a single market with a combined GDP of $3 trillion.

Moreover, building sustainable energy, transport and digital systems for people, businesses and industries will support the development of modern and reliable regional value chains, which are key to enhance the consolidation of the African Continental Free Trade Area. Improving efficient and safe connectivity between regions and promoting value-added production and enhancement of industrial competitiveness through digital means are key to advance continental sustainability. Moreover, developing logistic and transport infrastructures that are climate-neutral, as well as deploying sustainable energy production systems will significantly help the continent to grow from a sustainable and human point of view.

Great economic opportunities are waiting to be unlocked in Africa. However, from global trade wars to poor infrastructure, Africa’s economy is struggling to keep pace. Investors must see themselves as stakeholders in Africa, just as Africa must grasp the opportunity to become stakeholders in the global economy. Boosting private sector and investment capital towards Africa’s business opportunities that will come with trade liberalization and the consolidation of integrated regional value chains remains essential to speeding up sustainable economic growth and the creation of decent jobs in the region. In this context, increasing investor’s confidence in Africa yet depend on numerous factors such as enhanced policy reforms in areas like governance and rule of law, robust financial systems and transparent regulatory frameworks, or investment facilitation and capital protection, among others.

With a special focus on the socio-economic situation caused by the COVID-19 pandemic, this new edition of the New Africa Business Development Forum aims to provide a platform for Business and economic cooperation, for informative and interactive sessions with the prime movers of infrastructure sector across various spheres like government, policy-makers, industry leaders, academia and future investors, to explore new potential areas in trade cooperation, integrated regional value chains, sustainable and green investments, as well as prospects and challenges for financial assistance and access to finance to the infrastructure players.

19th November 2020

12.00 - 13.30

New Africa Business Development Forum

Session 1 – African Continental Free Trade Area: What difference will it make?

The launch of the African Continental Free Trade Area follows years of negotiations and preparations and, more recently, it faced months of delays due to the global coronavirus pandemic. Despite these burdens, the Africa’s free trade became a reality on 1 January 2021 aiming at making easier to do business across the continent.

The agreement envisions to create one of the world’s biggest free-trade areas, opening up a market of more than 1.2 billion people, with a combined GDP of more than $3 trillion. This would create business opportunities and jobs across Africa, while reducing the cost of some goods in the shops and markets. Moreover, AFCFTA includes a single set of rules to be adopted by each member with the objective to accelerate intra-African trade and boost Africa’s trading position in the global market.

However, yet the ambitious liberalization agenda, some concerns have been also raised by African economies based on the fear that the agreement may serve a few countries and corporations in Africa at the expense of small economies and MSMEs and the limited production and productivity capacities of the smaller states. Moreover, despite the entry into force of the agreement, some critical elements remain yet to be further developed or accomplished, such as the pending ratification of 34 out of 55 Member States who are in the African Union, or the drafting of an annex outlining the applicable Rules of Origin legislation, which is key to secure a just and rules-based continental free trade area.

At the same time, the continent faces several challenges, such as low levels of trade specialisations, small economies, fragmented markets, and lack of industrial capacity. The need to overcome certain key challenges together with the opportunities ahead the new AFCFTA will bring to Africa will determine if the agreement becomes a transformative player to spur Intra-African trade and continent’s modernisation, or it fails to advance the necessary reforms to allow Africa to increase its competitivity in the international economy.

Key points for discussion:

  • What difference will the AFCFTA make in the post COVID-19 era for people and businesses?
  • To what extent COVID-19 pandemic has affected the initial implementation of the AFCFTA at the national and regional level?
  • What opportunities the AFCFTA will bring to small enterprises and SMES, and in particular, to youth and women’s empowerment and their access to the labour market?
  • How could small economies fully benefit from the agreement?
  • Which are the main challenges to the full implementation of a comprehensive intra-African free trade area? And the opportunities ahead?

Speakers to be confirmed

Session 2 – Improving regional value chains

The closure of economies around the world due to the pandemic is seen as increasing the need for intra-regional trade and integrating African economies in more connected and integrated regional value chains, which have been heavily dependent on imports from China, Europe, US and elsewhere.

African countries need therefore to look carefully at how they create and capture value from their engagement with each other and the wider world. The traditional export-led growth model may be running out of steam for some countries, although China’s rising wage may yet still allow some low wage manufacturers in Africa to increase market share. African entrepreneurs have historically depended on imports from China and India because it has been very expensive to import goods from neighbouring nations so, therefore, smaller firms simply could not engage in intra-African trade. In this context, COVID-19 has demonstrated more than ever that Africa is overly reliant on the export of primary commodities, as well as on global supply chains, at a moment when the global supply chains were disrupted, which led to Africa’s suffering.

The recent entry in force of the African Continental Free Trade Agreement (AFCFTA), which envisions to create one of the world’s biggest free-trade areas, opening up a market of more than 1.2 billion people, with a combined GDP of more than $3 trillion, creates a significant momentum for the consolidation of integrated regional value chains that aim to be more sustainable, green, digital and more services-led while it spurs the post-COVID-19 recovery.

Supply chains in many African nations are still not very good, the continent would need $90 to $130 billion of investment in infrastructure per annum to get the region to where it needs to be, nevertheless, only USD 50 billion is nowadays available. At the same time, building reliable and sustainable regional energy, transport and digital systems for people and businesses and industries will support the development of low-carbon and climate resilient value chains and competitive and resource efficient business and industrial environments that contribute to the sustainable development of the African Continental Free Trae Area. Developing strategic value chains, innovation ecosystems and green transformation remains key to underpin Africa’s sustainable economic growth and the creation of decent employment opportunities for the continent’s increasing youth population.

Key points for discussion:

  • How can regional supply chains be improved to be more sustainable in the long-term?
  • How could the development of an integrated regional industrial base be promoted?
  • To what extent targeting regional synergies in value-added production and enhancement of industrial competitiveness could help boost connectivity and competitivity?
  • What prospects and challenges to develop sustainable business and industrial environments?
  • Which sectors are key to untap Africa’s business and industrial modernization? How can the AFCFTA advance transformative industrialisation and enhance value-added cooperation through regional value chains?

Speakers to be confirmed

Session 3 – Green investments and financial cooperation in Africa

Public and private investments are essential to stimulate business entrepreneurship and sustainable economic growth and diversification. It is critical that African countries develop their capital markets to raise additional capital required. There is a positive course for Africans and African businesses to chart by 2050, yet many opportunities will be up also to Europe and the Mediterranean region to capitalise on the opportunity.

The European Green Deal is the EU’s new growth strategy until 2050 that puts environment and climate change at the heart of the EU domestic and external agenda. The EU Green Deal has a strong external dimension which will be key to underpin future financial aid and external cooperation to other regions; and Africa’s vast renewable energy, natural and biodiversity potential makes the continent a key partner in the future to develop and implement sustainable solutions as its economy grows in line with 2030 Agenda and the Paris Agreement.

EU’s vast array of political tools and financial resources can contribute to create sustainable synergies with Africa that help mobilise the continent towards the sustainable path, including but not limited to, policy and regulatory cooperation, green investments, budget support, green budgeting and procurement, diplomatic support, or financial engagement with the private sector. In this context, EU financial instruments could play a key role together with EU development finance institutions to help improve investors’ confidence in the region by increasing the mobilisation of European and non-European capital, as well as by spurring green and climate neutral investments in the region towards the decarbonization of key sectors and enhancing resource efficiency and waste reduction in value chains.

For instance, budgetary guarantees such as the Neighbourhood, Development and International Cooperation Instrument (NDICI), includes a target to spend 25 % of its 2021-2027 budget on external financial aid supporting climate objectives; while the External Action Guarantee could provide up to 60 billion euros in guarantee operations to boost sustainable and green investments in the continent over the same period.

At the same time, African Fintech could become a key additional player to boost beneficial trade and investment in the region and to advance in the economic and human development of the continent. Giving greater access to funding and financial inclusion through digital means is essential to advance the development of the private sector in Africa and untap region’s potential.

Key points for discussion:

  • The session will be dedicated to:
    • What structural challenges are nowadays hindering investors’ confidence in Africa?
    • Which policy reforms and integrated actions could be developed to improve investors’ climate and business environment in the region?
    • How the development of FinTech could help boost Africa’s economic potential and sustainable growth?
    • What role for EU financial aid and cooperation to boost green and sustainable development in Africa? To what extent domestic investors could benefit from these financial mechanisms?
    • How could banking institutions help advancing digital financial revolution in Africa? And mobilising green finance towards key sectors such as transport, energy use or industry?
Salvador Illa

Ministry of Health, Government of Spain (Special Guest Speaker)

Enric Mayolas

Consulting Director, World Health Management (Moderator)

Gonzalo Fanjul

Policy Director, Institut Salut Global

Chakib Abouzaid

Secretary General, General Arab Insurance Federation

Speakers to be confirmed

Panel 1 – Investors Talk Panel

Speakers to be confirmed

Panel 2 – Financing Talk Panel

Speakers to be confirmed

In collaboration with:

European Regional Development Fund              A way to make Europe