Olatunji: Overcoming major obstacles will enable the intra-African market to reach its full potential.
The Managing Director of Access Bank Ghana, Olumide Olatunji, has revealed that the continent must address the challenges that hinder its growth to fully realize the potential of intra-African trade.
Olatunji stated this in the CNBC Africa Report tagged ‘Unleashing the Power of Intra-African Trade: A Path to Prosperity for West Africa’ seen by Nairametrics.
Key challenges
According to him, these challenges include inadequate infrastructure, such as roads, railways, and ports, which makes the transportation of goods costly and inefficient; and non-tariff barriers, such as complex customs procedures.
Others include regulatory hurdles that discourage trade and limited access to finance, particularly for SMEs, which, while being the backbone of our economies, face an annual trade finance gap of approximately $81 billion.
Private and public sectors
Olatunji noted that overcoming these challenges requires concerted action in both the private and public sectors.
“While governments must invest in infrastructure development, streamline trade procedures, and harmonise regional regulations to facilitate cross-border trade and promote regional value chains, the private sector also has a key role to play in driving intra-African trade,” he said.
He noted that as African businesses continue to expand their reach across the continent, the role of trade finance is expected to grow even more significantly.
Trade finance
By providing the right funding at fair costs, trade finance empowers businesses to optimize their bottom line, contributing to the sustainable development of Africa’s burgeoning economies.
“The benefits of trade finance extend beyond access to capital. Access Bank’s trade finance solutions also help businesses manage payment and supply risks, ensuring seamless transactions and protecting against potential disruptions. This reduces the burden on businesses and allows them to focus on their core operations.
As we move forward, it is essential to foster a spirit of regional cooperation and collaboration. We must recognize that our destinies are intertwined and that our success is linked to the success of our neighbours.
By working together, we can create a prosperous and interconnected West Africa where trade catalyzes economic growth, social development, and shared prosperity,” he said.
Olatunji said the expansion of African countries’ involvement in international trade and global value chains holds the promise of triggering a profound ripple effect, transforming economies, and alleviating poverty across the continent.
Rapid population growth
He noted, however, that the continent’s prosperity isn’t solely reliant on international value chains.
“In West Africa, our rapid population growth, rising incomes, and burgeoning middle class make us a dynamic consumer market.
Our region is home to a wealth of natural resources, from fertile agricultural land to abundant mineral deposits, and a diverse range of industries, from manufacturing and technology to creative arts and tourism.
Now is the time to harness this potential and unleash the power of intra-African trade.
By strengthening our economic ties and exchanging goods and services within our region, we can create jobs, boost economic growth, and improve the lives of millions of people,” he said.
Olatunji said enhancing intra-African trade presents a multitude of benefits for the region, adding that by reducing her reliance on external markets, “we fortify our resilience against global economic upheavals.”.
According to him, it fosters the evolution of regional value chains, catalyzing heightened productivity and innovation.
This, in turn, fuels economic growth and bolsters regional integration, nurturing a shared sense of unity and cooperation.
He noted that the African Continental Free Trade Agreement (AfCFTA), operational since January 2021, offers a glimpse into the potential transformational impact of a single continental market.
“The United Nations Economic Commission for Africa estimates that the AfCFTA could raise intra-Africa trade to as much as $50 billion to $70 billion by 2040, while the World Bank predicts that it could increase real income by as much as 9% by 2035, lifting 50 million people out of extreme poverty,” he noted.
