Afreximbank

Copper, Cobalt, iron, bauxite, Gold, diamond, lithium, oil, gas, … But also cocoa, coffee, wood, corn, cotton, … 90% of Africa’s exports are raw materials for in the raw state. However, the continent imports up to 72-80% of the consumables distributed in its markets. To reverse this trend, industrialization has been defined as the royal road, especially after the operation of the African Continental Free Trade Area (Zlecaf), against the backdrop of a spiral of crises. The African Export-Import Bank (Afreximbank) chooses to deepen the topic at its 29th annual meeting to be held from June 15 to 18 in Cairo under the theme: “Realizing the potential of Zlecaf during the post of Covid -19 – Using the power of youth”. The mind set dominating the large mass of trade financing returning to the forefront after two years of distance: ending speeches and chaining concrete actions. “We can no longer accept that after 60 years of independence, Africa remains financially and economically fragmented. We can no longer continue to embrace the benefits of an integrated continent, but little can be done to achieve it. ”said Bénédict Oramah, President of Afreximbank.

“We must start building modern infrastructure”

“I also have an African dream”, said Egyptian President Abdel Fattah al-Sissi who officially opened the meeting on Thursday after the first day of discussions. “This continent enjoys the largest demographic and the highest percentage of young people in the world. How can we meet their expectations if we can’t get to Ethiopia by road? If we want to change this continent, we have to start with building modern infrastructure. The challenge is to have a very good infrastructure “, he insisted. Equipped with a notebook and pen and taking notes during the speakers ’interventions, the tenant of the el-Orouba palace gave his own example to illustrate the priority of infrastructures on a trajectory of change. He, who is continuing construction in the new administrative capital of Cairo, is equipped with modern infrastructure and for which he had to calculate the total cost from the beginning, i.e., more than 470 billion dollars.

The issue of infrastructure in Africa has been the subject of several studies in recent years. And the challenge is largely financial. The Global Infrastructure Hub estimates the gap will be filled at approximately $ 1,000 billion for just ten countries, including Egypt, Morocco and Côte d’Ivoire. And the private sector appears to be the “ideal” partner to support the States. In Al-Sissi it is the need to address the security challenge to facilitate the development of advanced infrastructure: “In my country, for example, there are dangers looming. And it has an impact on cost. Personally, I say that for any adequate change, one needs peace and security. Otherwise, those will not come. investors, including the national private sector ”.

The trade deficit, a “disease” that must be treated

Since the creation of the African Continental Free Trade Area (Zlecaf) on January 1, 2021, the continent’s leaders have been looking for ways to speed up the machine. While a return to growth is looming after the health crisis, the war in Ukraine has further weakened the commercial bases of an Africa that is heavily dependent on Russian and Ukrainian cereals and fertilizers. This increases the stake in agriculture. For the Egyptian president – who believes the situation could be more comfortable if intra -African trade is more fluid – states must spawn bold and innovative initiatives for the production of resources. “I am in the process of putting in place a policy to change land not suitable for agriculture into agricultural land. It also includes the necessary infrastructure, ”he said Abdel Fattah al-Sissi, whose country is highly dependent on Russian and Ukrainian wheat, needs to act to guarantee large stocks for its population. According to other countries on the continent this path should be taken, especially those with cultivated and unexploited land.

At this stage, Africa’s needs for agricultural inputs are estimated at approximately 50 billion dollars and could rise to 100 billion if the situation continues, while fertilizer needs are estimated at approximately 85 billion dollars. “These figures show that the disease, I mean the disease that is the origin of inflation and unemployment is in the trade deficit”, said Tarek Amer, Governor of the Central Bank of Egypt. “If we are not honest with ourselves, why attend such meetings? We need to have a trade surplus, not deficits. Countries need to develop economic and commercial power to create a real Zlecaf ”his hammer.

According to Amani Asfour, President of the African Business Council and Founding President of the African Congress of Women Entrepreneurs, this “market power” coming from something: “We need to take the time to master the processing systems. Raw marble is sold to China and returned as a finished product. It must change and this change requires infrastructure, industry, intellectual property. .. ”.

Young people and their businesses are at the heart of the system

At this level the role of the youth is underlined. “We need to do more to achieve our ambitions with a focus on the development of today’s industry, youth and small businesses”believes Wamkele Mene, secretary general of Zlecaf.

Recalling the example of African entrepreneurship figures such as Aliko Dangote – the continent’s first fortune teller – who began his adventure in the prosperity of his life before becoming a juggernaut of commerce and industry -, President Benedict Oramah underlined the need to give space and the way in this youth. “The youth will be the catalyst in realizing the continent’s agenda. […] They have an important role to play. This is why Afreximbank will support small businesses to enable them to participate in Zlecaf. ”he says.

“The most important resource is human resources. Those who can’t do it “explained Hippolyte Fofack, chief economist and director of international cooperation at Afreximabank. “The question that arises now, he continued, is how to support this youth to make Africa the engine of global growth, make Africa the laboratory of the manufacturing industry. As the world moves towards deglobalisation, Africa has created a huge market – the Zlecaf – which is another opportunity because by following this area of ​​free trade, the issues of competitiveness and productivity will be addressed and the economies of scale will allow companies to increase their profit margins.

Diversify financing solutions

After studies of all kinds, the same question remains: where and how to find “fuel” to start the “car” of development? Funding therefore remains the central point. To cope with the collateral damage caused by the crisis, the continent has a financing need of 425 billion dollars which could rise to 600 to 700 billion dollars according to the projections of the International Monetary Fund (IMF). For African leaders, the mobilization of these funds specifically involved the issuance of special drawing rights. “We need to have these DTS”said Vera Songwe, Secretary General of the United Nations Economic Commission for Africa (UNECA), who also recommended that States cooperate more with financial institutions on the continent such as Afreximbank, which would help them obtain financing. financing at lower rates.

The other solution proposed by Rosa Whitaker is to focus on natural resources. “We must examine the management of natural resources and use the financial proceeds to find new sources of financing”his defense.

When will there be more “powerful banks” in Africa?

However, at this business meeting, some experts believe that safety will come from the financial strength of the continent’s banks. “Big banks will help us meet the financial challenge. It is necessary that, like China, we establish big banks in Africa, strong and powerful, to finance projects. It will prevent us from knocking on other doors.defense of Nigerian businessman Arnold Ekpe, former managing director of Ecobank Group.

Therefore, it is an equation with several variables given to the large mass of trade financing and in which different avenues are opened through shared reflections, the negotiations conducted and the deals that finished should make it possible to start solving it.