African countries should tap the agriculture, food and agri-business sector whose size is expected to rise to more than US$1 trillion by 2030.
The agriculture, food and agri-business sector, according to African Development Bank president Akinwumi Adesina, have the largest potential wealth impact for Africa.
He was speaking during the 5th Annual Meeting of the Africa Economic Zones Organisations (AEZO) on Thursday this week.
“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,” he said.
Adesina said Africa has had an impressive economic growth over the past decade, including six of the 10 fastest growing economies in the world.
“While the (COVID-19) pandemic has set us back now, with a decade of growth lost, I am confident that Africa will bounce back.
“The same fundamentals that drove growth are still there. At the core of this must be the growth of the private sector, and the deployment of supportive environments for their operations,” he said.
Globally, Special Economic Zones, Adesina said, have powered the economic growth of several countries.
“Their numbers have exploded from less than 200 in the 1980s to 5,000 today. Collectively, they have contributed exports worth US$3.5 trillion, roughly 20 percent of global trade in goods.
“In Africa, special economic zones are operating in 38 countries, accounting for annual trade turnover of US$680 million.”
He, however, lamented how the Special Economic Zones have not been as successful in Africa compared to Asia and other parts of the world.
“First, is the more limited infrastructure, with Africa’s infrastructure financing gap estimated to be US$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.”
He said primary focus of the Special Economic Zones on exports alone had weakened the linkages with the wider local economy, with very limited transfer of skills, technology and market access.
He said he AfDB was investing heavily in closing the infrastructure gap including 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 US$1 trillion, representing 90 percent of Africa’s total equity market.
“This will increase liquidity and enable seamless trading platforms across the continent. The goal of our efforts is to support the integration of Africa’s markets.”
Adesina said the African Continental Free Trade Area would provide a market with 1.3 billion people and a combined GDP of US$3.4 trillion.
The AfCFTA becomes operational next year and will be the largest free trade zone in the world.
He said the zones should allow Africa to now develop its manufacturing capacity, competitive regional value chains, for exports into the AfCFTA, and to expand their integration into global value chains
“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.
“That’s why the African Development Bank is supporting the development of Special Agro-industrial Processing Zones (SAPZs).
“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 are expected to 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.
Regional SAPZs will also consolidate integrated infrastructure and agricultural processing and food manufacturing companies around regional transport corridors.
“This will allow for economies of scale by taking advantage of regional infrastructure, transport and logistics, for lowering costs and enhancing competitiveness,” he said.
Adesina said the meeting was being held at a time of great challenge with the COVID-19 pandemic which has claimed too many lives and slowed down global growth, trade and investments.
The AfDB has been very responsive in supporting countries to address the pandemic in Africa.
The Bank launched a US$10 billion crisis response facility to support countries’ immediate needs for liquidity.
It also launched a US$3 billion fight COVID-19 social bond on the global capital markets, the largest US Dollar denominated social bond ever in world history.