Nearly half of sub-Saharan Africa’s Gross Domestic
Product (GDP) will be at stake when
Zambia next week kicks off a swarm of presidential elections around the
continent, with at least 10 countries expected to have voted this year when the
dust settles, including Africa’s two most populous nations.
Nigeria and Ethiopia’s general elections will add to ballots
in Sudan, Cote d’Ivoire, Tanzania and Togo, while troubled South Sudan, Central
African Republic and Burkina Faso will also attempt a vote.
Excluding another five countries that have parliamentary
votes, these voters account for 47% of the region’s 960 million-strong
population. With a gross GDP of $750 billion, this means that were they a
single country, they would have a per capita income of about $1,728, or nearly
five dollars a day for every citizen to theoretically live on.
None of them currently come within a dollar of this figure,
which is inside the African Development’s Bank middle class entry ticket of two
dollars a day.
The size of the economic and population numbers at stake are
a powerful call for the region to speed up its unity agenda, according to the
AfDB, which has released its integration-themed annual report which shows just
how much of a difference breaking down continental walls would make.
But because few elections in Africa radically change a
country’s economic or political course and lift voters, the alternative is push
for regional integration that will carry the majority of Africans with it. The
lender’s data shows that for every billion dollars sunk into infrastructure, an
average of 60,000 jobs are created, even more for some cross-border projects.
We culled some significant facts and numbers from the report
that make a case for regional economic integration, the benefits of which
include wider access to capital markets and the pooling of resources for major
projects in industries such as energy and transport:
1. Intra-African
trade has in absolute terms increased fourfold over the last decade to reach
$130 billion, despite in relative terms remaining at 12%. Between 2003-2012
intra-African greenfield Foreign Direct Investment nearly tripled, to reach 21%
of all greenfield inflows into the continent. South Africa, Kenya and Nigeria
lead, highlighting the importance of ongoing Tripartite Free Trade Area (FTA) negotiations
which would further unlock regional markets for African firms.
2. Cross border banking and financial services are the
dominant sector in intra-African FDI, accounting for about 50% of greenfield
projects between 2003 and 2014. Four large banking groups are present in at
least 18 countries—Nigeria’s UBA, South Africa’s Stanbic, Morocco’s BMCE and
Ecobank, the latter in 32 countries. This trend has been influenced by among
other factors financial liberalisation and favourable regulation.
3. Stock markets in Africa have grown from 5 in 1990, to the
29 that currently represent 38 nations. Yet the total market capitalisation of
stock exchanges in Africa has remained low, accounting for less than 2% of the
world’s total. One bourse, the Johannesburg Stock Exchange (JSE), represents
65% of the total African market capitalisation. This is changing, in large part
due to the establishment of regional stock exchanges and cross-listings.
4. Close to 25% of Africa’s 54 countries, or 16, are
landlocked, more than in any other region, which means higher costs and risks
of doing business. When conflict is taken into account, it could actually be
argued that they are “double landlocked”.
5. On average, Africa experiences more migration per year,
than many other parts of the world. The popular perception, reinforced by
reports of sinking migrant ships, is that they are moving to the West. But the
report notes that in sub-Saharan Africa, the majority of people—65%— usually
migrate within their immediate sub-region. Also, while conflict and related
issues were big push factors in the past, climate change issues and the youth
“bulge” have newly emerged. An estimated 31 million, or 2.5-3% of the
continent’s population, are documented international migrants.
6. Due to the absence of pro-integration migration regimes,
Africa has some of the world’s most onerous visa restrictions. On average,
Africans need visas to visit 60% of African countries. Only Comoros,
Madagascar, Mozambique, Rwanda and Seychelles offer visa-free access or
visa-on-arrival to citizens of all African countries.
The DR Congo, Equatorial Guinea, Sao Tome and Principe and
Sudan require all African entrants to apply for a visa before arrival. And 16
African countries are currently developing restrictive migration policies, even
as alarmed economists show that opening up movement can significantly increase
world GDP, by up to 100%.
7. In 2010, remittances from the African diaspora amounted
to $40 billion, or 2.6% of regional GDP. In several fragile states remittances
may exceed 50% of their GDP, yet it is estimated that at least $15 billion a
year is lost to high fees, burdensome documentary requirements and lack of
competition in the money transfer market. It for example costs as much $32 to
send $200 between Burkina Faso and Ghana.
8. South African firms in 2010 accounted for about a fourth
of all intra-African exports, but only 10% of imports; a major imbalance in
part due to its protective nature. Indeed the country accounts for more than 90% of imports in
sub-Saharan African countries for over 1,000 country/product combinations
(export opportunities). The only region on the continent that it is not a major
supplier to is North Africa.
9. Regional integration in Africa is not too recent a
process; the Lagos Plan of Action was adopted by regional heads of state in
1980, with the Abuja Treaty of 1991 giving it “teeth”. Regional Economic
Communities (RECs), of which there are eight, were then identified as the
building blocks, with an eventual view to establishing an African Economic
Community. A protocol of on relations between the AEC and RECs entered into
force in 1998. The problem has been that while Africa knows what to do about
integration, it is not explicit on how to do it.
10. Of the eight economic blocs, the East African Community
(EAC) has made the most progress towards an economic union. It started with a
customs union in 2009, a common market a year later leading to a fully
functioning Free Trade Area. In 2013 its five member countries adopted a
protocol that envisions a monetary union in ten years. Comesa, SADC and Ecowas
have FTAs, though not fully running, while the rest have plans on paper,
excluding IGAD which has no such ambition. (Three EAC states - Kenya, Uganda,
Rwanda - also have a single tourist visa, and Rwanda and Uganda now operate
single customs/immigrations points at their land borders).
11. One of the main challenges to Africa’s regional
integration has been the reluctance of member states to cede their sovereignty
to the secretariats of RECs and the African Union. In contrast, the member
states of the European Union cede their national sovereignty on all trade
matters to their secretariat, which represents them at the World Trade
Organisation. However, the Comesa-EAC-SADC tripartite has moved towards
adopting such a general structure.
12. Though there are benefits to be had, the issue of
overlapping membership has also been a major stumbling block. There are 17
regional integration agreements in Africa, and of Africa’s 54 countries, only
Algeria, Cape Verde and Mozambique are party to only one agreement. Cote
d’Ivoire holds the “record”, as a member of five regional organisations.
13. A regional approach to infrastructure development is the
best way to deliver on the continent’s economic goals, the bank says. Among the
benefits are delivering economies of scale, enabling market efficiency and
supporting the mobility of among other factors capital and skill. The
strongly-backed Programme for Infrastructure Development in Africa (PIDA) has
taken up the continental challenge. Data show that between 2003 and 2012
African countries increased investments as a share of its GDP to about 22%.
14. The regional infrastructure financing need has been
estimated at $360 billion, which would sustain an average economic growth rate
of 6% between 2012 and 2040, when PIDA’s long-term infrastructure plan winds
down. PIDA categorises some 433 projects with a cost of $68 billon as priority,
with the main headache being their innovative financing.
15. Commitments for infrastructural development reached $89
billion in 2012, with the largest share (47%) committed by African governments.
Chinese investors have surpassed traditional investors and now account for 15%
of pledges. The Asian country’s investment investment in African infrastructure
grew more than five-fold between 2006 and 2012, mainly in energy.
16. For every $1 billion invested in infrastructure, between
26,000 and 110,000 direct and indirect jobs can be created, with this being
highest in the roads sector, and lowest in the capital-intensive power sector.
-Mail and Guardian Africa
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