On the sidelines of this year’s Africa CEO Forum in Abidjan, Standard Chartered Bank held a high-level event looking at the challenges and opportunities posed by Africa’s economic integration.
The dinner, held on Tuesday 6th of June, was attended by CEOs and captains of industry from a wide variety of sectors including telecoms, mining, logistics and development agencies who all have a shared interest in advancing the integration of Africa’s fragmented markets.
John Mokom, Standard Chartered Bank’s Côte d’Ivoire CEO, set the scene by laying out the challenges ahead. “Some of the barriers to the flow of capital include FX risk, regulatory issues, dollar shortages and infrastructure problems,” he said. “But those challenges, as immense as they are, create significant opportunities for most of the people we see here for us to move from 300 billion-dollar companies in Africa to 3,000, which was the theme of this year’s CEO forum”.
The CEO praised regions, like the West African Economic and Monetary Union (WAEMU), which allow the free movement of capital and people across eight countries. But he argued that there is still a long way to go to unshackle intra-African trade and help businesses expand in regions with different currencies.
“If we have a client that is based in Ghana, and they want to do business in Côte d’Ivoire, they will face currency and regulation issues. As much as the African Continental Free Trade Area (AfCFTA) is working on those issues concerning tariffs, we still see some level of protectionism within the free trade agenda on the continent and I think that it hinders the full effectiveness of AfCFTA as an engine of economic growth”.
Indeed, one of the main problems identified by the more than 25 executives at the exclusive dinner was policymakers dragging their feet. From the cement producer in Cameroon who couldn’t import key materials from neighbouring Nigeria due to elevated taxes; to the mobile-money provider in the WAEMU region who is hesitant to set up shop outside the monetary union, regulatory barriers are one of the biggest growth impediments for African businesses.
Alongside regulatory issues, Brice Lodugnon, Africa50 Infrastructure Fund Director, said that there was also the challenge of making businesses aware of what they can import from neighboring countries as opposed to non African markets. The lack of visibility and market-information often prevents companies from even looking at other African markets when data over suppliers in Europe and China are so easily accessible.
“What sorts of goods does it make sense for each region to produce?” he said. “And then what goods can we export to other regions? The intent to promote intra Africa trade is here with the AfCFTA, but it is taking time”.
Mr Mokom from Standard Chartered picked up on this point and said that the bank had just completed a study with PwC Singapore, looking at the future high-growth corridors of global trade.
“One of the key findings is that Africa, the Middle East and Asia will contribute around 44% of global trade by 2030. One of the key levers to accelerate is digital supply chain finance solutions. By not just making trade faster, simpler, more transparent, more competitive but also making sure that we can increase the participation of SMEs by giving them access to information through the digital platforms”.
Onike Nicol-Houra, Lead Investment Relations Specialist at the Africa Investment Forum, said that businesses are currently operating in a world of heightened risks with an outlook of “vulnerability, complexity and ambiguity”. However, despite the challenges, there are examples of successful projects and businesses that cross a diverse and complex set of markets. She pointed to the $15 billion Lagos-Abidjan highway and said that it is a “stepping stone to higher heights”.
She said: “We need to see the AfCFTA as a springboard, using some of these regional integration projects that we have”.
The Chairman of the Board of Directors of Standard Chartered Bank Côte d’Ivoire, Mathieu Mandeng, wrapped up the dinner by giving his closing remarks.
“At Standard Chartered, we say that we are here for good because we believe in sustainable, social and economic development,” he said. “We have been supporting developing countries by leveraging our network and expertise to boost trade and prosperity”.
