In most advanced economies in 2012 economic forecasts have been less reliable than the weather forecast. And as they fight indebtedness, western governments have far less stimulus today than they did in 2009, giving them much less room to manoeuvre.
But while global gross domestic product (GDP) growth is a screen shot of a sick Europe and a lacklustre North America, African and Asian economies are still enjoying a sustained period of upward growth.
Despite the negative global economic outlook, and the impact the eurozone crisis could have on economies around the world, Africa remains one of the few bright spots on the gloomy global economic horizon.
Africa’s growth is not only a result of raw material exports: “85% of this growth has been impacted by the growth of employment and local business,” Lionel Zinsou, a Benin-born banker, said at the Africa CEO Forum opinion plenary session.
This growth is being driven by a plethora of sectors, and contrary to the general perception that the continent is almost entirely resource dependent, only a third of its economy is driven by raw materials.
According to Michael Lalor of Ernst and Young Africa business centre, “the diversification of who we are trading with is another key factor.” Speakers in Geneva have repeated the need to strengthen intra-Africa trade.
Annual growth in intra-Africa trade has quadrupled in the past decade from 27% in 2003 to 145% in 2011. The most significant increase was in 2008 with 133% growth, up from 35% in 2007.
Although the future of intra-Africa trade looks promising, as East and Southern Africa push the development of for trade corridors, former Sudanese telecoms CEO-turned philanthropist Mo Ibrahim remains sceptical about the current state of affairs.
“Without regional integration, development is not possible,” said Ibrahim. For now intra-Africa trade, remains “scandalously low”, he said.
“Indeed, if China had been made up of 54 countries, it would probably not have seen the boom it is experiencing as one country,” Ibrahim said.
Among other suggestions for the consolidation of cooperation at government level to advance intra-Africa trade, Ibrahim wants business leaders to activate the integration button.
But to achieve successful integration it all boils down to the quality of infrastructure. “Infrastructure is Africa’s biggest stumbling block to development,” said Kaberuka,
“It is where big development is needed. To repeat [late Ethiopian Prime Minister] Meles Zenawi’s statement, Africa cannot afford to remain a night watchman,” he said.
World Trade Organisation’s deputy director-general, Valentine Rugwabiza, expressed similar sentiments when she spoke to The Africa Report ahead of the forum:
“If African exports have done so well with intra-African trade still so low, what will happen if we were to start gaining the economies of scale with pooled markets and getting rid of barriers to trade that exist between African countries?”
“To develop intra-African trade, African governments should focus on soft infrastructure by tackling customs and excise bottlenecks in the area of land transport,” she reiterated at the Africa CEO Forum.