Integrate Africa for 'bigger cake to share' - Mo Ibrahim

Brian Benza
Staff Writer | Tuesday May 14, 2013 00:00

 

Speaking at a business seminar in Gaborone yesterday, philanthropist and international business leader, Mohammed 'Mo' Ibrahim said if regional economic integration is not implemented with promptness, small market sizes and unnecessary tariff and non-tariff trade barriers will continue to hamper growth for African private companies and government businesses.

With 54 states in Africa, integration has thus far been achieved to the level of economic blocs such as SADC or ECOWAS, but the idea of a 'One Africa' economic and political union still remains a pipe dream, more than 50 years after conception.' Many countries in Africa are too small. With our 54 countries here, we are still smaller than China and India. We are all agreed that regional integration is the only solution to creating a bigger and efficient market for ourselves but unfortunately the process has been too slow. Currently, it is very difficult to trade among ourselves because of the fragmentation of the continent. I had to use my British passport to come here to Botswana. If I had used my Sudanese passport, it would have been a difficult and longer process,' said the Sudanese born mobile communications entrepreneur and billionaire.

About 12 Sub-Saharan Africa (SSA) states have populations of about two million or less while 19 have a Gross Domestic Product (GDP) of less than $5 billion (P41 billion), six of which have a GDP of less than $1 billion (P8.2 billion). Not only are most SSA economies small and less developed, 15 are landlocked, an important contributory factor to high trade transaction costs, and more generally to the high costs of doing business in Africa.According to the United Nations, there are eight regional economic communities, which form the 'pillars' of the African economic community. The   East African Community (EAC), which launched its common market in 2010, is the most advanced of the regional blocs.

COMESA launched its customs union in June 2009 while SADC and the Economic Community of West African States (ECOWAS) have made progress in building their Free Trade Areas (FTA) although upgrading to other levels of integration to have one common market, customs union, monetary union and eventually political union has proved challenging. The Economic Community of Central African States (ECCAS) launched its FTA in 2004, but is facing enormous challenges in its practical application. Botswana is currently a member of SACU and SADC.

'I have met a lot of African business people that are not keen on opening up borders to businesses from neighbouring or other African countries in fear of competition. This shouldn't be the case. An open Africa will mean a bigger cake to share. This is how the Europeans are doing it. Sometimes it doesn't really matter whether we are united as people or politically we just need a bigger common market,' said Ibrahim, who was responding to a delegate who had posed a question on how Botswana companies can enlarge their market size.

A report published last week at the World Economic forum (WEF) in Cape Town identifies closer regional integration as an important driver for enhancing competitiveness of African countries. Jointly produced by the African Development Bank, the World Bank and the World Economic Forum, the report says that regional integration is a key vehicle for helping Africa to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanising population.

The report maps out the key policy challenges in establishing closer regional integration, which include closing the competitiveness gap, facilitating trade and building better infrastructure. 'Africa's growth needs to be seen in the wider international context, where encouraging gains in economic growth belie an underlying weakness in its long-term competitiveness. Regional integration is key to addressing this weakness through the delivery of wider social and economic benefits and should be prioritised by Africa's leaders as they look to ensure that Africa delivers on its promise,' said Jennifer Blanke, chief economist of World Economic Forum in a press release.