International Africa Development Forum spotlights continent’s challenges and opportunities

The International Africa Development Forum (FIAD), now in its seventh iteration, has become a valued platform for African perspectives, facilitating open discussions about the continent’s challenges and opportunities.

These were part of the remarks by H.E Wamkele Mene, the Secretary-General of the African Continental Free Trade Area (AfCFTA) at the opening ceremony of the 2024 International Africa Development Forum held under the patronage of His Majesty King Mohammed VI, leader of the Kingdom of Morocco.

He commended the Attijariwafa Bank Group, the Africa Development Club, and the pan-African investment fund Al Mad for organizing the significant forum.

“The International Africa Development Forum (FIAD), now in its seventh iteration, has become a valued platform for African perspectives, facilitating open discussions about the continent’s challenges and opportunities. This forum is catalyzing business opportunities between companies from Africa and partner countries, fostering South-South cooperation, and equipping our African nations to effectively respond to the challenges of the 21st century.

The theme for this year’s forum, “Here, we invest,” is crucial, resonating with the continent’s aspirations to attract investments that spur economic growth and sustainable development. This focus is especially timely given the operationalization of the AfCFTA in January 2021. Investment is vital for developing the infrastructure and logistics required for smooth cross-border trade, aligning with the AfCFTA’s goal of market integration. Investment in manufacturing and industrial sectors is essential for building regional value chains, leading to the production of goods that meet continental and international standards and fostering intra-African trade,” H.E Mene said.

Attracting investment can significantly enhance the competitiveness of African businesses. With better access to capital, technology, and expertise, African firms can improve their productivity and quality, making them more competitive in the AfCFTA market.

He said African countries need investments to transform value chains, industrialize, and promote economic and social inclusion. The potential of Africa’s value chains lies in boosting productivity, deepening economic integration, and enhancing resilience to economic shocks. However, in 2019, regional value chain participation was only 2.7%, significantly lower than in other regions, such as Asia, where it stands at 47%. African countries primarily export raw materials and engage in low-skill tasks, limiting their benefits from trade.

The AfCFTA aims to change this by promoting industrial development, diversification, and regional value chain enhancement. To achieve these goals, it is implementing the AfCFTA Private Sector Engagement Strategy, which focuses on key sectors such as agriculture and agro-processing, automotive, pharmaceuticals, and transport and logistics. These sectors promote intra-African trade and joint production of goods and services, with high-potential value chains aimed at transforming raw materials like cocoa beans into finished products within Africa.

For example, in the agro-processing sector, the AfCFTA is developing key value chains in fish, coffee, poultry, and animal feed. In collaboration with Mastercard Foundation and TradeMark Africa, it has initiated a Fisheries Programme to empower women and youth, supporting regional value chains and trade facilitation. This program aims to boost fish production and trade across several African countries, potentially creating 242,000 jobs. Efforts are also ongoing in Angola with the development of food parks, in Ethiopia with the establishment of a modern food reserve system to reduce post-harvest losses, in Ghana with support for value-added processing of cocoa for export, and in Botswana with the development of meat value chains. These initiatives collectively aim to enhance food security, reduce losses, and increase value-added exports across the continent.

Vaccine manufacturing is another priority, with a target of achieving 60% self-sufficiency by 2040. This initiative aims to address the continent’s heavy reliance on imported vaccines, which became evident during the COVID-19 pandemic. In this regard, the AfCFTA introduced a continental strategy for vaccine manufacturing, working with Africa CDC and AUDA-NEPAD to implement the Framework for Action.

Africa’s automotive industry, backed by a US$1 billion fund from Afreximbank, is poised to leverage the continent’s rich mineral resources to become a global leader in electric vehicles. The African Minerals Development Centre (AMDC) has identified significant opportunities in the battery and electric vehicle value chains. By utilizing resources such as cobalt from the Democratic Republic of Congo, this initiative aims to establish regional value chains for green minerals, attract substantial investments, and drive economic growth across the continent.

Investment in transport infrastructure is also critical to support industrialization and economic growth. According to the African Development Bank, Africa needs an estimated $170 billion annually in infrastructure investment, with a current funding gap of around $68-$108 billion.

Overall, the AfCFTA provides a framework to enhance Africa’s integration into regional and global value chains, fostering economic development and resilience with significant potential for import substitution, economic growth, and job creation. By 2025, the AfCFTA aims to increase intra-African trade by 52%, which could create millions of jobs and significantly boost the continent’s GDP. It is crucial to promote policies that facilitate and reinforce integration into these value chains to advance modern manufacturing within regional, continental, and global contexts.

With the AfCFTA, Africa is championing inclusivity. The recently adopted Protocol on Women and Youth in Trade, a historic first, underscores commitment to this goal and marks a new era in African trade governance. This protocol supports small and medium enterprises (SMEs), informal traders, and young entrepreneurs by addressing their unique challenges and systematically removing barriers that hinder their participation in cross-border trade. By empowering women and youth, stakeholders can foster sustainable and inclusive societies that drive economic growth and development across the continent.

In line with this commitment, the AfCFTA Conference on Women in Trade was held in December 2023 in Dar es Salaam, Tanzania, under the patronage of President Samia Suluhu Hassan. At this conference, it was recommended that African governments allocate about 40% of their procurement to local sources, focusing on women and youth. Additionally, recommendations were made to improve access to information, finance, capacity building, digital tools, and trade facilitation measures for these vulnerable groups.

The AfCFTA has also initiated collaborative programs like the AfCFTA Youth Symposium. By partnering with trade organizations and development agencies, it aims to actively integrate women and youth into Africa’s trade framework. The AfCFTA Youth Symposium has now been recognized by the Assembly of AU Heads of State and Government as an annual event hosted by the Secretariat.

Digitization and digital trade are crucial for enhancing inclusivity and breaking down barriers to intra-African trade. By providing easier access to markets and information, digital tools empower SMEs, informal traders, and young entrepreneurs to participate more effectively in trade. Digital platforms reduce transaction costs, offer market intelligence, and facilitate cross-border payments, making it easier for smaller businesses to engage in international trade. Africa’s youth are rapidly embracing the digital economy. A robust data governance framework and strategy will support their aspirations and ensure sustainable growth in the digital sector.

Recognizing the significance of digital trade, the African Union’s Agenda 2063 underscores the need to build digital economies for continental integration and sustainable development. Similarly, the AU’s Digital Transformation Strategy for Africa (2020-2030) highlights that integrating Africa into a single digital market will create economies of scale and growth opportunities.

The recently adopted AfCFTA Protocol on Digital Trade is a key step in this direction. The Protocol aims to foster digital transformation, benefiting SMEs and promoting financial inclusion. It also focuses on digitizing trade documents and customs processes, which streamline operations and reduce bureaucratic hurdles. By overcoming traditional barriers, digital trade enables seamless transactions across borders, facilitating the integration of African markets. The AfCFTA Secretariat is integrating lessons from successful international practices, such as those from the Korean Customs Service, into the digitization processes to enhance these efforts.

In the 21st century, Africa stands at a pivotal moment, rich in human and natural resources yet facing the paradox of underutilized potential.

“It’s time to harness this potential by fostering investments, creating jobs, and cultivating shared values for our people. To succeed, we must ensure that “Africa trusts Africa.” This trust is essential for our growth. By embracing an “enterprising Africa,” we emphasize taking control of our destiny—supporting local businesses, investing in infrastructure, and nurturing young entrepreneurs.

“A sustainable future requires a resilient entrepreneurial culture, particularly among youth and women, who represent a significant portion of Africa’s population. With African youth aged 15 to 24 expected to double to around 450 million by 2055, we face immense opportunities and challenges in job creation and entrepreneurship,” HE Mene said

The AfCFTA offers a unique platform to realize this vision. By removing trade barriers and enhancing cooperation, stakeholders can build interconnected business corridors across the continent. These corridors will facilitate the movement of goods and services, while also promoting cultural exchange and unity.

Achieving this vision requires focusing on infrastructure development, supporting SMEs and startups, embracing digital technologies, investing in education and skills development, and fostering public-private partnerships. There is a need to prioritize industrialization and the use of African products and raw materials, with a particular focus on women, youth, and rural enterprises.

“Together, we can create a future where Africa is a hub of innovation, prosperity, and sustainable development. We must take bold steps to ensure Africa’s wealth benefits all its people, transforming our continent into a beacon of hope and progress on the global stage.

“By working together, we can build an “enterprising Africa” that trusts itself and controls its destiny. Let us commit to this vision and work tirelessly to make it a reality. As Africans, we have the responsibility to advance Africa towards prosperity, supported by development partners worldwide,” he added.