Most countries in Africa have enjoyed sustained economic growth over the past 15 years, with growth rates often exceeding 5% per year. At the Chamber’s webinar on 5 May, a panel of experts shared their insights into the latest developments, the potential impact of the African Continental Free Trade Area (AfCFTA) agreement, as well as the challenges and opportunities that their countries are facing.
Skander Negasi, CEO of Trade and Fairs Consulting & Trade and Fairs East Africa, kicked off the event with a presentation introducing the business environment in Africa. He explained that the continent was home to half of the world’s fastest-growing economies in terms of GDP growth. Africa is also poised to keep its position as the world’s youngest continent: by 2030, 57% of the population will be under 25, creating an environment with a young workforce and large consumer market ripe for investment, as well as potential to grow as a manufacturing base.
“Manufacturing in Asia is getting expensive,” Negasi said. “So a lot of industries are moving to Eastern and Central Africa, where production can be cheaper.”
Africa’s economic activities will be catalyzed by AfCFTA, which came into force this year. The agreement aims to boost continental trade from 16% to 60%, strengthen industrialization and logistics, and bring African countries into a unified customs bloc. Governments are actively upgrading their infrastructure in anticipation of this growth.
“Africa is not sitting there and sleeping,” Negasi said. “There are major projects in every corner of the continent right now – new telecommunication lines, electricity systems, roads, airports and ports, major dams, IT hubs, free trade zones and many more.”
In the panel discussion that followed, Getachew Regassa, Secretary General of the Addis Ababa Chamber of Commerce & Sectoral Associations, told members that Ethiopia was undergoing a complete economic reform, with the private sector spearheading growth.
“In the past we had some problems adopting a more liberal economic system,” Regassa said. “But now, the current government has revised our investment laws and declared that the private sector will be the prime mover of our economy. Public-private partnerships for projects big and small are encouraged, and foreign investors are welcomed.”
The reforms have liberalized the telecoms sector, and the country is in the process of establishing its first stock market, he added. Other areas of interest include the digital economy, financial sector, mining and manufacturing.
Ethiopia has traditionally enjoyed close economic relations with China. “Close to US$2 billion is now invested in Ethiopia, mainly from Chinese companies,” Regassa said. “Around 60% of our imports come from Asia, of which 32% is from China, and 20% of our exports go to China.”
Hong Kong is also in the loop. Over the past five years Ethiopia has imported a total of US$130 million from Hong Kong and exported US$80 million.
Regassa is confident about Africa’s potential. “Africa’s middle class will grow by 43% by 2030, which means there will be a high demand for goods and services. Consumer spending is expected to reach US$6.7 trillion by 2030.”
Under AfCFTA, participating countries will eliminate all tariffs on 90% of their products within the next 10 years. The agreement is expected to enhance cooperation among member states.
“With Africa so geographically and economically diverse, some countries are naturally better at manufacturing, while some others are dominant in agriculture,” Regassa explained. “The AfCFTA will allow countries to play to their strengths, and consolidate their efforts and grow together.”
Dr Erick Rutto, Vice President of the Kenya National Chamber of Commerce and Industry, noted that Kenya was the largest economy in East Africa and fifth largest in the continent, and had sustained GDP growth of 5-6.5% in the past five years.
The country has emerged as Africa’s top technology and innovation hub – dubbed the “Silicon Savannah” – with the capital Nairobi serving as the regional headquarters of international companies including Huawei, Microsoft, Google, IBM, General Electric and Coca-Cola.
“Kenya is one of the only four countries and the only developing country in the world hosting a major United Nations office, with the UN’s Africa headquarters located in Nairobi,” Dr Rutto added.
Dr Rutto said the country’s strengths included its strategic location on the east banks of the world’s largest freshwater lake, Lake Victoria, its labour force with the highest rate of literacy in Africa, a fully liberalized and mature private sector, and political stability.
He encouraged members to look into promising sectors such as ICT, healthcare, affordable housing and agritech. “This is the time to enter. If you are late, in the next five to 10 years the opportunities will be taken,” he said.
Jude Chime, Executive Director of Trade of the Abuja Chamber of Commerce and Industry, said Nigeria accounts for about half of West Africa’s population, with approximately 202 million people. “We are growing at the rate of one city per year, and by 2050 our population will reach more than 400 million.”
Nigeria is home to a vibrant entrepreneur scene, with SMEs driving the country’s growth.
“Around 80% of manufacturing activities in Nigeria are driven by SMEs, and the government is doing a lot of work to encourage the growth of SMEs through export expansion grants and manufacturing grants,” Chime said.
Nigeria is the largest oil exporter in Africa and has the largest natural gas reserves on the continent. In addition, the government is making efforts to diversify its economy, so there are opportunities in priority sectors such as mining, agriculture, energy and transportation infrastructure, as well as telecoms.
Thanks to Trade and Fairs Consulting & Trade and Fairs East Africa (official representative of Messe Frankfurt) for co-organizing this webinar.