DailySun
Despite ongoing initiatives to bolster regional trade, African countries continue to engage more with the global market rather than with each other. To rectify this imbalance, strategic investments in cross-border value chains across essential sectors on the continent are necessary, asserts Joy Kategekwa, the director of the regional integration coordination office at the African Development Bank.
“Regional value chains provide a way to democratize participation in intra-African trade. We are transitioning from a model where every product must be produced within one jurisdiction to one that emphasizes trading components,” she explains in an interview with African Business during the African Economic Conference in Gaborone, Botswana.
Kategekwa emphasizes that companies operating in multiple jurisdictions can avail themselves of financial incentives for their initiatives.
“With the AfCFTA, we are indicating that if you add value on the continent using products sourced from Africa, these will be regarded as locally made and will qualify for preferential tariff treatment. This sends a powerful market signal to producers: create it, and we will buy it,” she adds.
“Essentially, this encapsulates the promise of the AfCFTA, which ultimately concerns job creation, income growth, structural economic transformation, and a new chapter for Africa,” she further explains.
According to Kategekwa, agriculture emerges as the most promising sector for developing regional value chains.
“The WTO’s list of net food-importing countries reveals a significant number of African states, presenting a contradiction,” she notes. “The Bank is heavily involved in creating special agricultural processing zones.”
She also points to the pharmaceutical sector as another area with immense potential, especially in light of recent pandemics like Covid-19 and Mpox, which have highlighted Africa’s need to strengthen its own vaccine development capabilities.
“The Bank is investing heavily in the African pharmaceutical manufacturing initiative based in Kigali, Rwanda, aimed at enhancing Africa’s ability to produce essential pharmaceutical products,” she states.
While the Bank can help lay the groundwork, Kategekwa insists that the private sector is key to promoting cross-border value chains.
“The state does not engage in trade. These opportunities are meant for the private sector. The private sector drives industrialization, creates jobs, and fosters innovation. We must view the private sector as the catalyst for Africa’s growth,” she asserts.
Need for Policy Enhancements
However, Kategekwa highlights that for investments in multi-country value chains to thrive, policymakers must ease restrictions on the movement of people.
Travel within Africa remains notoriously difficult, marked by high costs and complex visa regulations that discourage cross-border travel. The urgency for reforms in this area cannot be overstated, she claims.
“The requirement for most Africans to obtain visas to enter other African countries stands as one of the greatest contradictions to the continent’s aspirations for regional integration,” she stated during the launch of the ninth edition of the Africa Visa Openness Index, in partnership with the African Union.
“Consider tourism; each country hopes to capitalize on tourism revenue given Africa’s rich array of historical attractions. However, visa restrictions prevent Africans from contributing to each other’s tourism income.”
Ethiopian Airlines Expands Cross-Border Network
Samson Arega, group vice president of customer experience at Ethiopian Airlines, recognizes that cross-border integration offers a substantial opportunity for the aviation industry.
“The AfCFTA has the potential to dramatically increase air travel by boosting demand for passenger and cargo services. Enhanced mobility will foster economic growth, create jobs, and improve regional integration,” Arega tells African Business.
However, he acknowledges that the airline faces obstacles such as restrictive bilateral air transport agreements, insufficient infrastructure, and protectionist policies. The absence of harmonized aviation policies across different jurisdictions is also a significant barrier to the industry’s growth, he adds.
Nonetheless, Arega notes that Ethiopian Airlines has established joint ventures with other African airlines to broaden its reach and leverage economies of scale—reflecting the cross-border collaboration that Kategekwa advocates.
“Our partnerships with airlines like Asky Airlines, Zambia Airways, and Malawi Airlines illustrate our pan-African vision. These collaborations not only expand our network but also elevate aviation standards across the continent through the sharing of our operational expertise. This strategy enhances regional connectivity, supports local economies, and aligns with the AfCFTA’s objectives by facilitating trade and mobility,” he concludes.
