There is much to be gained from producing products at home and investing in our raw materials. - Press Photo
CAIRO – 21 June 2018: The 10th African Union (AU) Private Sector Forum, held in Cairo from May 9-11, sent a key message to the private and public sector players: Deepening regional and continental integration is key to realizing the aspirations of the African Union for a prosperous, globally competitive Africa. Following up with the forum, Egypt Today looks at the key recommendations, the best routes for Africa’s economic transformation and key challenges facing the continent.
A young Africa “The Africa we live in today is young and dynamic, promising diverse avenues of growth and shared prosperity. In addition, our continent is poised to harvest the dividends of years of structural and economic reforms, which have made the continent the second fastest growing region in the world. Indeed, the conditions in our continent are now ripe for a pan-African economic renaissance; this provided that we succeed in exploiting major economic growth and employment drivers such as industrialization, infrastructure development, transport and connectivity, information and communication technologies and renewable energies,” Head of the African Union Division at the Egyptian Ministry of Foreign Affairs Mohamed Kadah tells Egypt Today.
In this context, the AU Private Sector Forum has an important role to play in reducing the infrastructure gap through joint investment projects and the facilitation of cross-border investments. The forum also has the ability to strengthen cross-border cooperation in production, meaning that states would be able to produce products for less that the price in the global market; this would leave Africa more competitive in the face of its counterparts.
Building on this, Secretary-General of the Arab Union for Industrial Exports Development (AUIED) Abdelmoniem Mohamed Mahmoud, tells Egypt Today that “African countries need to cooperate together and have Africa-to-Africa exportation and importation to ensure that Africa is self-sufficient and then afterwards, we [African countries] can start exporting abroad. This would have short-term and long-term benefits. In the short run, it would decrease unemployment and increase revenue; and in the long term, it would support sustainable development.”
For many of those who attended the conference, as well as policymakers and key figures in the business world, the idea is that Africa is rich in raw materials and that cooperation is critical for manufacturing our own products. Heba Nassar, a professor of economics at Cairo University tells Egypt Today, “There is much to be gained from producing products at home and investing in our raw materials. This way, we [Africa] can benefit from the revenue of value added.” For Nassar, Africans have neglected Africa and allowed its resources to be taken for too little for too long. “We have neglected Africa and we have let people take its money, we need to link together and have clusters in our industries and networks to ensure that we utilise raw materials to the best of our ability. This will allow us to gain a lot economically, and develop in a sustainable way,” she adds.
Kadah, an expert in African affairs, agrees that industrialization is an important takeaway from this forum, suggesting that heavy investment in industrialization is the way to go. “The classic economic development model based on resources-extraction should come to an end. Instead, Africa’s new economic development strategy should be based on industrialization, especially in competitive advantage sectors such as food processing, textiles, building materials, pharmaceuticals, petrochemicals and renewable energy. No doubt, industrial investment in value-added and assembly-line activities hold huge potential for employment, economic development and prosperity,” Kadah explains.
It is time, according to the recommendations of the forum, to start producing and capitalizing on expertise. There is a need for African countries to cooperate more with each other to increase business and competitiveness on a global level, says Al-Gabaly.
Still, Head of Africa Unit at the Investment Promotion Sector the General Authority for Investment & Free Zones (GAFI) Mahmoud Abdel Rehem explains to Egypt Today that although production is important for the development of Africa, the law banning the export of raw materials to other countries or to countries outside the African continent, which exists in two countries and was widely supported during the forum, would not be practical. He adds that the revenue generated from such sales is essential to many countries, and so many countries would be able to abide by the ban. “It would be difficult for African states, as they are not ready to produce everything and some countries rely on the sale of their raw materials. Côte d’Ivoire, for example, will not stop selling cocoa to France, as they heavily rely on it. However, a small part can be set to the national production, meaning that instead of exporting 100 percent of raw material, we can export less and use the rest to produce products at home. This is good, as it will also increase the sectors and employment opportunities,” suggests the Head of Africa Unit.
For Abdel Rehem, the development of the African Union would be better supported if there were a publication, both in print and online, to ensure that different countries are able to benefit from their varied expertise and capitalize on lessons learned. “This should be a magazine, maybe quarterly, and should be published for the rest of the world,” he says.
Asked about the possibility of relying solely on raw material from Egypt, Nermin Helmy, the cluster development adviser at the United Nations Industrial Development Organization, says that “In handicrafts for example, raw materials are not plentiful and are not so available; there is a problem now. The devaluation of the Egyptian pound has led to a rise in all the prices and people stopped buying certain high-quality materials because of this. This means that even those who bought it would produce things at a more expensive rate; this decreased our competitiveness on the global market. Designers and producers started to rely on the local raw material, which is problematic.” She adds that it is not always possible to rely on local raw material for best quality, but it may be best to ensure low pricing.
To ensure sustainable development and competitive production cycles, Helmy suggests the importance of both organic and made clusters. “There are two kinds of clusters: organic clusters, which are usually in underdeveloped areas and ensure good access to services—for example they can buy a lot of raw material to be cheaper and divide it together, and the second is created clusters. This is something that we work on to exchange knowledge and talent, as well as to produce a cycle of collaboration whereby producers and designers can become better and developed. This creates sustainable development and can be applied to the rest of Africa, both within countries and between countries. Instead of each person or organisation working on their own, they can all work together and be able to do more and develop more.”
The Commissioner concludes saying “This forum presents an opportunity to private sector actors and policy makers to promote ‘Made in Africa’ and forge sustainable partnerships with a view to enhance trade and investment to realize sustainable and inclusive growth of our continent. Made in Africa goods will largely contribute to boosting Africa’s manufacturing sector, as well as creating more jobs.”
10th African Union (AU) Private Sector Forum
The 10th African Union (AU) Private Sector Forum, held in Cairo from May 9-11, sent a key message to the private and public sector players: Deepening regional and continental integration is key to realizing the aspirations of the African Union for a prosperous, globally competitive Africa.
With the theme ‘Made in Africa: Towards realizing Africa's Structural Transformation for the achievement of Agenda 2063,’ the forum was attended by some 200 delegates from numerous African countries. The different discussions focused on the best ways to reduce poverty through investment and job creation, developed policies for recommendations and deliberated the important role that the private sector will play in Africa’s transformation during upcoming years as well as its ability to achieve sustainable development.
“The forum is a key instrument of interface and partnership between the African Union policy makers and the private sector,” African Union’s Commissioner of Economic Affairs Victor Harrison tells Egypt Today. Through the discussion of ideas, advocacy, sharing market information and skills, capitalizing on expertise and connecting businesses to policymakers, the forum acts as a vehicle to empower the African private sector, he elaborates.
During the forum, plenary sessions, start-up pitching sessions and business sharing sessions were held, allowing entrepreneurs to demonstrate their technologies and explore possible partners within Africa. “The important role of the private sector in growth, development, and in poverty reduction no longer needs to be proved,” says Harrison. A strong link has been consistently argued for through a multitude of academic and on-the-ground research, all of which suggest that the development of the private sector, job creation, economic growth and poverty reduction, all key objectives of the African Union, are connected and intertwined.