Consolidating Africa into larger markets would help the continent take full advantage of trade opportunities between emerging economies, said the World Bank VP for Africa Obiageli Ezekwesili.
Speaking to Engineering News Online in an exclusive interview, Ezekwesili said that emerging market trade represented trillions of dollars in opportunity, but warned that Africa could not afford to walk into such a relationship in an adhoc, or perfunctory manner.
She emphasised that the continent needed to strategically align policies, institutions and investment allocation to ensure greater growth through the diversification of economic sectors, while ultimately creating sustainable job opportunities and reducing poverty.
The World Bank’s latest strategy for the region focuses on the structural diversification of African economies, with an emphasis on developing the necessary skills to drive diversification and growth of different sectors and putting the infrastructure in place to support growth from new sources, outside, and in addition to, the mineral resources and extractive markets.
About $8-billion a year, or 50% to 55% of the bank’s African portfolio is allocated to investment in infrastructure development in the region.
Ezekwesili said that in many African countries natural resources still constitute up to 80% of their fiscal revenue, exposing them to volatility and the often lacking management of this sector.
She noted that there was a case to be made for the effective management of the minerals and extractive sector. “Beneficiation of minerals is important, but there are also other opportunities that need to be looked at such as effectively linking the minerals and extractive sector to other economic activity.
“Further, a lot of ancillary activities related to the mining and petroleum industries in Africa are being done offshore. Governments need to start putting the necessary policies in place to see these activities start being domesticated.”
Ezekwesili said that African governments needed knowledge-driven policies to reap the benefits from the continent’s abundant resources, which would also assist the private sector to take advantage of opportunities provided by the correct policy framework.
“The global demand for natural resources and the search for new markets are driving trade between emerging economies. Africa needs to grab hold of these opportunities, backed by sound macro and micro economic policies that would support the complimentary existence of the continent’s extractive sectors, but also other sectors that hold the potential for the participation of all African citizens in different economic activities such as agriculture, services and telecommunications,” added Ezekwesili.
Africa’s biggest free trade bloc was launched at the weekend, with the aim of enhancing cooperation between 26 countries. The Southern African Development Community, East African Community and the Common Market for Eastern and Southern Africa will now work as a joint bloc, creating a $875-billion market.
The free trade area would seek to accelerate regional integration efforts to ensure that countries in Africa trade with each other on better terms.