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The private sector has a crucial role to play in ensuring that regional integration works for Africa because, although trade agreements are signed by governments, it is the private sector that understands the constraints that companies face and is able to take advantage of the opportunities created by such regional trade agreements and initiatives. For Africa's regional integration goals to be realized, African governments must therefore create more space for the private sector to play an active role in the integration process, rather than letting it play the role of a pbadive participant. In the 1980s and 1990s, many African countries took steps to build the capacity of the private sector, including business environment reform, including the protection of property rights, the easing of labor regulations and other structural adjustments. However, the experience of the last three decades has shown that, while these reforms may be necessary, they are not sufficient to promote the entrepreneurial spirit, unleash the dynamism of the private sector and build capacity. of production in the region.
The African private sector faces several challenges. These include high and growing informality, small business size, weak business linkages, low export competitiveness and low innovation capacity. These difficulties are aggravated by the fact that regional integration initiatives aimed at promoting trade tend to focus on processes such as the removal of trade barriers, without giving equal attention to the creation of productive capacities and development of the private sector, which would effectively address the resulting weaknesses. . We must certainly move away from this linear and process-oriented approach to focus more on development.
Regional trade in Africa remains weak. In the last decade, only about 12% of Africa's total trade has taken place on the continent. One of the main reasons for the continent's weak regional trade performance is the lack of a vibrant private sector that is dynamic enough to seize existing opportunities in the trading system. However, there is hope that moves us now; the implementation of the AFRICAN CONTINENTAL FREE TRADE AREA. This free trade area is widely regarded as the breakthrough that Africa needs to succeed in the field of INTRA-TRADE. Ghana has been confirmed to host the AfCFTA Secretariat at the end of 12th EXTRAORDINARY SUMMIT held in Niamey, Niger. I will share my professional views on what this means for the Ghanaian economy, I hope in my next opinion, but certainly, ALECATA will serve as a stepping stone for trade between Member States. 39; Africa.
However, in this context, this policy document identifies some key points, which are detailed below;
• African governments should create more space for the private sector to play an active role in the process of regional integration and development.
• For regional integration to work for Africa, there is a need to improve infrastructure, improve access to credit, facilitate cross-border trade, develop skills of the workforce, strengthen consultation mechanisms with the private sector and maintain peace and security.
Resource-rich African countries, such as Ghana, Chad, Libya, Botswana and Nigeria, have established sovereign wealth funds. These resources could be mobilized to finance regional and continental infrastructure projects. Regional development finance institutions, such as the African Development Bank or the ECOWAS Investment and Development Bank, also have an important role to play in financing infrastructure development, which would certainly improve the development of infrastructure. Operating environment and competitive business and would make funding more accessible and less accessible. expensive. This is another vital area that needs to be creatively addressed in the capacity of African businesses; Access to financial resources, according to studies, is one of the main obstacles to the development of the private sector in Africa.
Private companies in Africa are struggling to access affordable and long-term financing for their businesses. Only about 23 percent of African firms have access to loans or credit lines, compared to 46 percent of non-African developing countries. It has been established that even these 23% obtain loans at interest rates of up to 21% and 26%, which is higher than their counterparts in other parts of the world, such as the United States, Europe and the United States. central and western and parts of Asia. High interest rates are often badociated with forbidden warranty requirements. This lack of access to finance is particularly serious for small and medium-sized enterprises (SMEs) as banks tend to target large firms. Meeting the financing needs of SMEs is not a priority for national financial institutions. African governments could work closely with the private sector to improve the financial infrastructure on the continent.
The second part will follow, hopefully, next week!
Selasi Koffi Ackom
A nkrumahist
[email protected]
Warning: "The views / contents expressed in this article only imply that the responsibility of the authors) and do not necessarily reflect those of modern Ghana. Modern Ghana can not be held responsible for inaccurate or incorrect statements contained in this article. "
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