Yemisi Izuora
The Africa Development Bank has said that the African Continent would require an annual $64-108 billion spend to close its infrastructure gap.
President of the Bank, Akinwumi Adesina while addressing the 5th annual meeting of the Africa Economic Zones Organisation, AEZO, said the Bank has been very responsive in supporting countries to address the COVID-19 pandemic in Africa.
Adesina said the Bank launched a $10 billion crisis response facility to support countries’ immediate needs for liquidity.
The Bank also launched a $3 billion fight COVID-19 social bond on the global capital markets, the largest US Dollar denominated social bond ever in world history.
This he explained is all part of its mission to ensure that Africa develops faster and improves the quality of life of its people.
Adesina stated that Africa has had impressive economic growth over the past one decade, including 6 of the ten fastest growing economies in the world, adding “While the pandemic has set us back now, with a decade of growth lost, I am confident that Africa will bounce back. ”
He observed that the same fundamentals that drove growth are still there and at the core of this must be the growth of the private sector, and the deployment of supportive environments for their operations.
Globally, Special Economic Zones have powered the economic growth of several countries, he said pointing that their numbers have exploded from less than 200 in the 1980s to 5,000 today.
“Collectively, they have contributed exports worth $3.5 trillion, roughly 20% of global trade in goods. In Africa, special economic zones are operating in 38 countries, accounting for annual trade turnover of $680 million.” he said.
According to him, The Special Economic Zones have not been as successful in Africa compared to Asia and other parts of the world, for several reasons.
“First, is the more limited infrastructure, with Africa’s infrastructure financing gap estimated to be $64-108 billion annually. Second, is the weaker institutional environment and coordination challenges. Third, is the limited access to financing to develop well-integrated value chains.
“Fourth, the primary focus of the Special Economic Zones on exports alone has weakened the linkages with the wider local economy, with very limited transfer of skills, technology and market access. Essentially, they often create islands of wealth in the midst of wider poverty.” Adesina said.
The African Development Bank is investing heavily in closing the infrastructure gap. This includes energy, roads, ports, ICT and transport corridors.
The Bank is also supporting the Africa Exchange Linkage project, to integrate stock exchanges across Africa. This will create an integrated capital market with capitalization in excess of $1 trillion, representing 90% of Africa’s total equity market. This will increase liquidity and enable seamless trading platforms across the continent.
The goal of of its efforts is to support the integration of Africa’s markets.
The African Continental Free Trade Area, which will become operational in January 2021, now provides a market with 1.3 billion people and a combined GDP of $3.4 trillion. It will be the largest free trade zone in the world.
“So, the times have changed, and opportunities have changed for the private sector and for the Africa Economic Zones Organization.
“While Special Economic Zones have been primarily focused on exports, they now need to sharply focus on the regional markets in Africa.
“Special Economic Zones should allow Africa to now develop its manufacturing capacity, competitive regional value chains, for exports into the African Continental Free Trade Area, and to expand their integration into global value chains.
“Today, let me highlight one important opportunity: agriculture.
“Agriculture, food and agribusiness is the sector with the largest potential wealth impact for Africa. ” he said.
Speaking further, the president noted that the size of the food and agriculture market is estimated to rise to over a trillion dollars by 2030.
Tapping into this massive market requires a structural approach to develop better integrated food and agriculture value chains.
That’s why the African Development Bank is supporting the development of Special Agro-industrial Processing Zones (SAPZs), he added.
These zones will focus on agro-industrialization, by investing massively in integrated infrastructure, in areas of high potential agricultural value chains; including processing, marketing and logistics.
The SAPZs will help to unlock vast economic and trade opportunities from value- added agriculture in Africa.
Five SAPZs are already in implementation, including Ethiopia’s integrated agro-industrial parks, Togo’s Agro-food processing zones, and in Senegal and Guinea, while several more are planned.
Regional SAPZs will also consolidate integrated infrastructure and agricultural processing and food manufacturing companies around regional transport corridors.
Adesina said this will allow for economies of scale by taking advantage of regional infrastructure, transport and logistics, for lowering costs and enhancing competitiveness.
He assured that the Bank will continue to help accelerate private sector investments into Africa.
The Bank-supported Africa Investment Forum has helped to attract $78.1 billion of investment interests into Africa, in just two years.
One of these investments is the $26 billion Mozambique Liquefied Natural Gas project, which will make Mozambique the world’s third largest exporter of liquefied natural gas.
“Our financing for the Boke Mine, Rail and Port in Guinea, will improve Guinea’s position in global markets and move it towards processing bauxites into aluminum.
“Our $600 million co-financing for Ghana’s Cocoa Board will allow it to add greater value to its cocoa and attract better prices for its farmers, globally.
“That’s the Africa we need and the Africa we want: one that is beaming with investments.
“One that is processing and adding value to all of what it produces. One that has competitive industrial manufacturing capacities, able to create wealth, prosperity and quality jobs for its people.” he said.
He advised them that as they meet they should think Africa, think a new Africa!
“You all as members of the Africa Economic Zones Organization will play a very important role in making the new Africa happen.
“The African Development Bank commits to specifically work with you to expand your investments, and specially to help develop the Special Agro-industrial Processing Zones (SAPZs) across Africa.
“Working together we will help Africa to grow back, better, bolder and with greater prosperity.” he advised.