ADDED IMPETUS
THE WORLD recently witnessed the signing of the biggest free trade area by heads of African governments in Kigali. Signed in March this year, the African Continental Free Trade Area (AfCFTA) is the largest such free trade area when one considers the number of countries involved.
The African continent currently consists of 55 countries, with 55-odd currencies (some have chosen to adopt the US dollar), 55 regulatory frameworks and, in simple terms, 55 different sets of red tape. This scenario means doing business on the African continent can be challenging, both for foreign and domestic investors. There is thus a general consensus among economists and scholars alike that when it comes to force, the Trade Area will yield major economic benefits for the continent, its citizens and businesses alike.
But what does it mean for African businesses and international investors? What opportunities does it offer our industry?
The Trade Area gives the infrastructure-build programme an added impetus. Talkmore Chidede, a researcher at the Cape-based Trade Law Centre (Trac), contends that “the AfCFTA’s objective to boost intra-African trade cannot be achieved without adequate trade-related infrastructure”.
This is notable considering that the African continent has a serious infrastructure deficit. A 2009 World Bank Report titled “Africa’s Infrastructure: A time for Transformation” estimated that $93 billion (R1.2 trillion) was needed annually for the continent to address this deficit.
More recently, Kalilou Traoré, the Economic Community of West African States’ (Ecowas) Commissioner for Industry and Private Sector Promotion, put this estimate at $100bn. African governments, the private sector, the AU and its partners will have to embark on a serious and deliberate programme to build the necessary economic infrastructure to facilitate economic integration.
The construction industry should play a leading role in harnessing the development of this much-needed infrastructure.
The rapid development of infrastructure, especially regional mega projects in the continent is urgent and critical. Infrastructure is a catalyst for economic growth, competitiveness and integration. An example is efficient port and transport infrastructure that facilitate and ease movement of goods and people between different economies. Modern and world-class infrastructure will expedite the economic integration as envisaged by the Free Trade Area, ensuring that the barriers of trade are removed both on paper and physically.
With this understanding, the AU, in partnership with the UN Economic Commission for Africa, African Development Bank and the Nepad Planning and Co-ordinating Agency, among other significant role-players, has developed a focused programme to attend to the infrastructure challenge – the Programme for Infrastructure Development in Africa (Pida). The programme is “a continental initiative to help address the infrastructure deficit that severely hampers Africa’s competitiveness in the world market”.
One of Pida’s overall strategic objectives is to “enable Africa to finally build ‘the’ common market”. It asserts that by improving access to integrated regional and continental infrastructure networks, countries “will meet the forecast demand for infrastructure services and boost competitiveness by increasing efficiencies, accelerating growth, facilitating integration into the world economy, improving living standards, and unleashing intra-African trade”.
The AfCFTA provides a single rule book for doing business and investing in Africa, a rules-based framework for doing business on the continent.
Institutions
The construction and associated industries should continuously and as a matter of urgency engage the various governments and multilateral institutions that have the responsibility of providing the necessary infrastructure. This should be done with a view to understanding the priorities and development needs, especially the scale, impact and bankability. This will guide both our production capacity allocation and investment decisions.
In this context, Pida identified four key infrastructure priority areas that require urgent attention, and these are: transport, energy, ICT and trans-boundary water sectors. These sectors are the backbone of industrial development and offer significant potential for economic growth.
Three of the priorities offer abundant opportunities for industry players such as PPC. However, these will not materialise if the industry is not proactive and strategically geared to leverage off these opportunities.
With the implementation of the various infrastructure projects, it is likely that demand for our products and services will increase. The industry cannot afford to be found wanting when this happens. It is thus my contention that, informed by solid and credible market intelligence, the industry should make the necessary investments before demand spikes. It is imperative that we start forming the necessary critical partnerships now to ensure that, when the time comes, we are well positioned to deliver world-class quality infrastructure.
The investments such as those PPC has made in various African countries, specifically in South Africa, Rwanda, the DRC, Ethiopia, Zimbabwe and Botswana will go a long way towards bolstering cement production – a product that is critical and