With the success of regional communities such as COMESA and the potential that could be unleashed by the AfCFTA, great opportunities for trade and investment are emerging in Africa. By Heba Salama*, CEO of the COMESA Regional Investment Agency.
At the Regional Investment Agency (RIA) for the Common Market for Eastern and Southern Africa (COMESA RIA), we are fully committed to drive investment into and across the COMESA region, and Africa as a whole. This reflects our vision to create an internationally competitive, prosperous regional economic community while also supporting the integration of the continent as a whole.
As economies inside COMESA are liberalising and diversifying, investment opportunities are multiplying while risks are diminishing. COMESA has been experiencing real and sustainable growth averaging 5% in the past five years. This offers investors the stability they require to commit to long-term plans and access COMESA’s half a billion consumers, with an average population growth rate of 2.2% annually.
The African Continental Free Trade Agreement (AfCFTA) offers further opportunity to scale up investment opportunities as the continent seeks to create a single market for our goods and services and facilitate the free movement of people while also expanding intra-Africa trade.
As we seek greater integration, it is important that the investment promotion agencies learn from each other and institute best practice, especially to encourage greater investments between neighbouring countries and the different regional economic communities (RECs). Getting national champions to take advantage of the opportunities arising throughout the continent and to invest or co-invest in these is one of the objectives of the Africa 2018 Forum that we will be co-organising in December in Sharm El Sheikh alongside the Ministry of Investment and International Cooperation of Egypt.
Interestingly, when we analysed FDI flows from COMESA countries over a 15 year period (2003-18), the majority of flows were intra-African and in general regional. Companies will expand first into neighbouring countries before going farther beyond their bordering countries. And investors will be selective, looking at markets that have size, such as Nigeria, or where doing business is perceived as sound.
As we analysed investment flows, we noticed some interesting trends. The top three sectors that attracted the most FDI over that period were service-related industries: financial services, communications and professional and business services. This is not necessarily indicative of future investment flows. In the next decade we expect other sectors to close the gap. Investments in manufacturing and in infrastructure will continue to grow and we anticipate a constant stream of investments in commodities.
The private sector will play a pivotal role in creating the foundations for the success of the AfCFTA. COMESA also recognises that if the agreement’s potential is to be fully realised then support must be given to policymakers to tackle systemic and structural issues, and this will require a pro-active dialogue between the private sector and government.
This is another driver of the Africa 2018 Forum, which has become the biggest B2B and B2G gathering in Africa today. The public and private sectors must mobilise and combine their resources to address some of these constraints and also share ideas and collaborate on projects and opportunities. The Forum is being designed to boost intra-African investments and to provide a platform for candid discussions between business leaders and Africa’s leadership to create a more conducive environment.
COMESA’s 21-member bloc stands ready to work in partnership with the public and private sector to achieve greater economic integration for the continent in order to help create a more prosperous, equitable, sustainable future for all Africans. NA
*Heba Salama will be speaking at the Africa 2018 Forum taking place in Sharm El Sheikh, Egypt, on 8-9 December www.businessforafricaforum.com