African and European leaders must join forces to create a better framework in which companies can operate, and to promote a more business-friendly approach to development policy in Africa. This week, the Second EU-Africa Business Forum will be meeting in Accra, Ghana, ahead of the African Union summit next month to address three main drivers for change – trade, interconnectivity and entrepreneurship. The key outcome of the Forum will be a set of recommendations and concrete proposals for action from the African and European private sector which will be presented to the leaders of the AU.
This is a moment of truth for Africa. The demand for raw materials to support the boom in the world economy, largely driven by China and India, is creating unique opportunities and new challenges. However, we need to ensure this increase in economic activity benefits all. The AU and the EU are committed to creating the necessary environment to leverage these opportunities and to implement the necessary reforms that will allow all Africans to share in the benefits of globalisation.
In 2006, Africa as a whole exhibited real GDP growth of 5.5 percent and the outlook for 2007 and 2008 is equally positive. Many countries have made significant progress in the areas of governance, macroeconomic management, the regulatory environment and political and economic integration. But more still needs to be done to encourage private investors.
The EU and Africa are major trading partners – the EU absorbs approximately one third of Africa’s total exports.
The EU and its Member States is also the biggest single aid donor to Sub-Saharan Africa, providing over €24 billion of aid in 2006. But we all recognise the ineffectiveness of development assistance alone, without economic and political reforms, to generate growth and prosperity.
If we are serious about tackling poverty in Africa, there needs to be a paradigm shift in the way we approach development. We need to move away from the concept of donor aid that comes pre-packaged with imported skills to the concept of driving development. Africa needs to be in a position to move from being guided receivers to being initiators and implementers of programmes and projects.
If well managed, trade and business are both powerful agents for change, rather than threats. Both can speed up the process of African integration into the global economy and thus enable African countries to meet the hopes and aspirations of all its citizens. The European Union’s commitment to providing better market access for products originating from Africa through instruments such as the Economic Partnership Agreements (EPAs), which are development-oriented free trade agreements between the EU and the ACP countries, form an integral part of this. So does the private sector.
It is uniquely placed to help integrate the African economy, and provide the pivotal jobs and investment needed to alleviate poverty and stimulate economic growth. In the coming decade, it can and must be a major catalyst for the development of Africa, empowering local communities and stimulating growth and prosperity. One example of the role the private sector can play in this process is the recent decision of a major African telecoms firm to create a regional network that covers all East African Community countries and several Central African countries. As a result, its customers will not be charged for incoming calls or for roaming. This example shows that building a service or a business at the regional level, as opposed to the national level, can directly create economic opportunities for Africa’s citizens.
Africa’s chronic shortage of skills is crippling growth and leaving millions of Africans stranded at the margins of the global economy. Infrastructure development and the exploitation of natural resources are two areas where the problem is particularly acute. Encouraging the development of skills, should therefore be a major focus of public-private partnerships, whether through comprehensive skills transfer programmes in Africa or by encouraging the return of skilled workers that have been lost during the brain-drain to the West.
The recent creation of the EU-Africa Infrastructure Trust Fund, endowed at an initial stage with about €90 million and which can leverage EU public and private funding by a ratio of one to four or five, is a concrete step for improving regional integration and connectivity in Africa.
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