The African Export-Import Bank (Afreximbank) has reiterated its earlier warnings against dependence on foreign aids, grants and commodities by African economies.
According to the continent’s largest trade bank, adherence to the warning is not only necessary, but prerequisite to moving Africa’s large population out of poverty.
Afreximbank, President, Dr. Benedict Oramah, who made the remark in Sharm el Sheikh, Egypt, during a panel discussion at the Africa 2017 Forum, said the countries should, instead, implement the diversification of their economies and engage in production and trade in higher value goods, similar to what the Asian nations did.
Meanwhile, the Executive Vice President for Business Development and Corporate Banking at Afreximbank, Amr Kamel, has blamed limited knowledge about trade opportunities among African countries as the biggest impediments to intra-African trade.
Speaking at the same event, Kamel said that contrary to the popular view that lack of infrastructure was the biggest challenge to intra-African trade, major opportunities are held back mainly by lack of information flow in one African country to other.
Citing a recent study co-sponsored by Afreximbank, he said that some African countries were importing certain products at high cost outside Africa, while the same products were available at much lower costs in nearby African countries.
Kamel said that the fact that Africa was able to support the current level of overall trade with its existing infrastructure meant that infrastructure was not necessarily the issue but rather the challenge was how to make more of that trade intra-African.
Asserting importance to his warnings, Oramah said that if Africa fails to move in the right direction, the countries would fall deeper and deeper in to poverty.
“There is no record of any country having achieved development on the basis of aid and grant. In the alternative, African countries should wean themselves from that mindset and should make sure that their development projects were bankable in order to attract the necessary capital,” he said.
He stressed the need for the continent to come together under the Continental Free Trade Area (FCTA), saying that the evidence was that continents that traded within themselves developed faster, lamenting that African markets are too fragmented .
Oramah advised that the continent must leverage on its strengths, which included its large and youthful population, huge resource-base, and the availability of abundant labour that could be tapped by focusing on labour intensive industries and engaging in light manufacturing.
Highlighting the importance of intra-African trade in driving economic integration, he announced that Afreximbank was introducing a payment platform that would support such trade by enabling cross-border payments in local currencies.
He noted that globalisation, which brought about free movement of capital but did not allow the free movement of labour, also favoured bilateralism over multilateralism that had placed Africa at a disadvantage, with smaller economies likely to always come out the losers in negotiations.