Mokate Ramafoko argues that the construction industry has a key role to play in the economic integration of the continent, which is envisaged by the African Continental Free Trade Area.

In March, the world witnessed the signing of the agreement for the African Continental Free Trade Area (AfCFTA) in Kigali, the Rwandan capital. The AfCFTA will be the largest free trade area when one considers the number of countries involved.

The African continent consists of 54 countries, with 54-odd currencies (some have chosen to adopt the US dollar), 54 regulatory frameworks and, in simple terms, 54 different sets of red tape. This scenario means doing business on the African continent can be challenging for both foreign and domestic investors. There is thus consensus among economists and scholars that, when it comes into force, the free trade area will yield major economic benefits for the continent, its citizens and businesses.

But what does it mean for African businesses and international investors? What opportunities does it provide for industry?

The free trade area gives the infrastructure build programme added impetus. A researcher at the Cape Town-based Trade Law Centre, Talkmore Chidede, contends that “the AfCFTA’s objective to boost intra-African trade cannot be achieved without adequate trade-related infrastructure”.

This observation 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 was needed yearly for the continent to address this deficit. More recently, Kalilou Traoré, the Economic Community of West African States’ commissioner for industry and private- sector promotion, estimated this requirement at $100-billion. African governments, the private sector, and the African Union (AU) and its partners will have to implement 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 megaprojects, is urgent and critical. Infrastructure is a catalyst for economic growth, competitiveness and integration. An example is efficient port and transport infrastructure that facilitates easy movement of goods and people between economies. Modern infrastructure will expedite economic integration, as envisaged by the free trade area, by ensuring that barriers to trade are removed, both on paper and physically.

Against this background, the AU, in partnership with the United Nations Economic Commission for Africa, the African Development Bank and the New Partnership for Africa’s Development, among other significant role-players, has developed a focused programme to deal with 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 world markets.

One of Pida’s 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 construction and associated industries should continually, and as a matter of urgency, engage the various governments and multi- lateral institutions that are responsible for providing 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 production capacity allocation and investment decisions.

In this context, Pida has identified four key infrastructure areas that require urgent attention, and these are the transport, energy, information and communication technology, and trans-boundary water sectors. These sectors are the backbone of industrial development and offer significant potential for economic growth and development.

Three of the priorities offer abundant opportunities for industry players such as cement manufacturers. 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 to establish the necessary critical partnerships now to ensure that, when the time comes, we will be well positioned to deliver world-class infrastructure.

Investments such as those made by cement supplier PPC in various African countries, specifically South Africa, Rwanda, the Democratic Republic of Congo, Ethiopia, Zimbabwe and Botswana, will go a long way towards bolstering the production of cement, a product that is critical to any large infrastructure project.

Many of Africa’s 54 countries are small, with populations of fewer than 20-million people and economies of less than $10-billion. Their infrastructure systems, like their borders, are reflections of the continent’s colonial past, with roads, ports and railway lines that were built for resource extraction and political control, rather than to bind territories together economically or socially. Most of the countries would battle to build this critical infrastructure on their own and require partners that are driven by the same objectives.

A proactive approach involving delivery- focused partnerships will be a game changer, as it will bring together small and big economies to deliver mega regional infrastructure projects. The essential benefit of regional infrastructure is the formation of large, competitive markets instead of the current collection of small, isolated and inefficient ones. Undoubtedly, the industry will benefit during the construction phase, as large, competitive markets come into being as a result of integrated economic development.

Perhaps the most obvious example is logistics ports that will facilitate the easy movement of goods across the continent, leading to a reduction in logistics costs. Initiatives such as the North–South Corridor and the Southern Africa Development Community (SADC) Infrastructure Master Plan present massive opportunities for public–private partnerships (PPPs).

There is recognition that PPP arrangements assist governments in closing material financial, managerial and technical gaps, while supporting regional integration. For example, there is a $100-billion funding gap for the SADC Infrastructure Plan. The North–South Corridor project, conceived as the area between Durban and Dar es Salaam, is ambitious and costly in equal measure. It comprises 157 projects and includes 59 road projects, 38 rail projects and six bridge projects.

The AfCFTA provides a single rules-based framework for investing and doing business on the continent. It is precisely what the continent needs at this moment. The harmonisation of trade and investment rules, overcoming the constraints associated with small economies, achieving economies of scale and integrating African economies are the ultimate objectives of the AfCFTA.

But this will, and can only be, realised if all critical sectors of the economy are mobilised, engaged and focused in a single- minded manner.

Ramafoko is MD: international operations at PPC