Mapping a Way Forward with African Businesses in a Globalized World

By inergency On Mar 19, 2024

[ad_1]

Africa is home to approximately 1.4 billion people, about 16 percent of the world’s population, yet its continental share in global trade remains below 3 percent according to the World Trade Organization (WTO). This suboptimal proportion of world trade is compounded by Africa’s limited intra-continental trade. During the 26th Africa Business Conference (ABC) held at Harvard Business School (HBS) on the 17^th of February 20, 2024, industry experts, policymakers, students, faculty members, and entrepreneurs converged to interrogate these concerns and explore opportunities for improving intra-African trade.

This conference explored Africa’s next chapter under the theme: “Africa Forward: Competing in a Global Era.” This year’s conference welcomed over 1100 guests and 80 speakers from 20 countries to the HBS campus, featuring over 25 diverse panels and keynote sessions discussing key sectors ranging from technology to agribusiness, trade, and investments, financial services to private equity, and energy to healthcare. At the heart of the conference were conversations on the African Continental Free Trade Area (AfCFTA) and global trade policies as they relate to Africa.

Under the session theme “Mapping the Way Forward: African Businesses in a Globalized World,” industry leaders, policymakers, and entrepreneurs delved into pressing issues hindering Africa’s trade potential and explored pathways to unlock opportunities. The panel was moderated by Enitan Okediji from the Belfer Center’s Africa Futures Project and featured a rich blend of perspectives from both academia and practitioners (bios included below):

Dr. Dennis Matanda, Professor, Chief Executive, Morgenthau Stirling, Inc., an Advisory Board Member of the Institutional Investor Network;
Prof. Ebehi Iyoha, an Assistant Professor in the Entrepreneurial Management Unit at HBS
Sigh Diagne, an Advisor to the Vice President of Finance and Chief Financial Officer of the African Development Bank;
Tola Onayemi, Chief Executive Officer at Norebase.

The panel discussed the current trade landscape on the African continent; the potential for Africa to trade better globally with particular attention to the United States and China; how companies in Africa can explore opportunities in the US and Chinese markets; and the role of financing in spurring trade across the continent.

Key Takeaways:

Develop critical infrastructure

The degree of success and economic development that results from the African Continental Free Trade Area (AfCFTA) will depend on collective commitment from governments, as well as active participation from individual businesses and the private sector across various countries in Africa.

The AfCFTA creates the framework for enhancing trade between African countries. However, there is a need to develop the associated critical infrastructure required for actual trade to thrive. For example, investing in key logistics infrastructure like super highways between trading states, the development of a centralized digital payment system, or the design of a harmonized data sharing mechanism will create economic prosperity and help translate trade from paper to borders.

African countries Ialso have to prioritize digital trade and online economic activities, as much, if not more than we prioritize physical trade. Digital trade holds a higher potential to upgrade the quality of life among Africa’s citizens, as well as raise generations out of poverty. The recent adoption of the Digital Trade Protocol of the AfCFTA is a testament to Africa’s commitment to using digital trade to its advantage.

African governments also have to recognize that trade has to be strategically negotiated and that each country has to focus its trade preferences on specialized areas where it has a competitive trade advantage while they could import trade and services from countries that have advantages in other sectors. To this end, African governments might need to consider deprioritizing less competitive sectors like the automobile industry.

Rethink AGOA’s approach and extend the timeline

The panelists debated the African Growth and Opportunity Act (AGOA) – which is scheduled to expire in 2025 – including discussing the design and success rate so far of this initiative. It was recommended that AGOA should have a more bilateral approach in the design to integrate considerations from Africa and possibly align its expiration date to that of the African Union’s Agenda 2063. This recommendation is grounded in the recognition that putting together a robust trade agreement is often met with complexities that require more time. Additionally, it was emphasized that trade policies like AGOA are designed more as preference programs, facilitating market access for individuals as opposed to being measured against government-to-government agreements. The panelists also stressed the importance for African countries to develop comprehensive trade strategies by recognizing trade as a diplomatic tool similar to the strategic application of AGOA by the United States.

Trade services over goods

There is untapped potential in the trade of services such as developing training datasets for machine learning algorithms and other labor-intensive tasks that form the foundation for large language models for African nations and companies. The panel emphasized that Africa needs to focus on trade in services, not just on goods. Developing comprehensive trade strategies and viewing trade as a diplomatic tool can enhance Africa’s position in the global trade arena.

The power of the diaspora in facilitating trade

Additionally, recognizing the power of the diaspora community in driving economic growth and prioritizing long-term planning and investments can maximize the benefits of preferential trade programs like AGOA and trade agreements like the AfCFTA. For instance, the African diaspora can leverage their expertise and networks to enhance trade relations by referring technical experts from within the African continent to provide services needed to the United States when necessary, such as domestic business intelligence firms for market research, consumer insights, or data collection. Drawing parallels with the successful outsourcing of tech services amongst the Indian diaspora, Africans must position themselves as trade facilitators wherever they find themselves, actively promoting and supporting trade activities alongside other efforts to reduce trade barriers.

The role of financial institutions

Financial institutions like the African Development Bank (AfDB) play a key role in facilitating trade deals and providing competitive financing solutions. Adapting to changing global dynamics and strengthening governance within member countries are essential for navigating evolving trade landscapes effectively.

In conclusion, this panel dissected the current obstacles and explored prospects in Africa’s trade landscape, spanning both intra-Africa and global trade spheres. While acknowledging the hurdles, they also shed light on promising opportunities. With strategic approaches and collaborative efforts, the continent can pave a path toward a more prosperous future in the global trade arena.

BIOS OF PANELISTS

Dennis Matanda, Ph.D.

Chief Executive, Morgenthau Stirling, Inc

Adjunct Professor of American Politics and International Business

Dennis is the Chief Executive of a Washington, DC-based public affairs firm that leverages data-driven insights & strategies to promote U.S. direct investment abroad to Africa. He was one of the first African Staff Directors of the U.S. House of Representatives Subcommittee on Africa, Global Health, and Global Human Rights. Before that, he served as an Advisor on Strategic Communication to the Chief Executive of the Trade & Development Bank and International Advisor on the African Continental Free Trade Area (AfCFTA) to the United Nations Economic Commission for Africa in Ethiopia, Sierra Leone, and the Gambia.

Ebehi Iyoha

Assistant Professor in the Entrepreneurial Management Unit

Harvard Business School

Ebehi Iyoha is an Assistant Professor in the Entrepreneurial Management Unit at Harvard Business School. Her research interests lie at the intersection of industrial organization and international trade. She uses a combination of structural and reduced-form methods to examine the economic significance of interfirm networks and how they impact firm performance through productivity and trade.

Sijh Diagne

Advisor to the Vice President of Finance and Chief Financial Officer

African Development Bank

Sijh Diagne currently serves as an Advisor to the Vice President of Finance and Chief Financial Officer of the African Development Bank, the largest Development Finance Institution in Africa. In his current capacity, he helps coordinate and advise on the Finance contributions to the formulation, review, and implementation of the Bank’s strategic plans and initiatives. Before his current role, Sijh served as the Senior Advisor to the Minister of Economy, Planning, and International Cooperation of Senegal. He obtained his Bachelor’s degree with honors from Northwestern University and an MBA from Harvard Business School

Tola Onayemi

Chief Executive Officer, Norebase.

Tola Onayemi is the Chief Executive Officer at Norebase. He has diverse work experience that spans various roles and industries. In 2015, Tola worked as a Visiting Lecturer at the Faculty of Law, University of Uyo. Subsequently, he became a Reform Leader at the Presidential Enabling Business Environment Council (PEBEC). Tola also served as a Technical Adviser in the Economic team of the Vice President of Nigeria, providing policy advisory assistance on Industry, Trade, and Investment. He was the Assistant Chief Negotiator for Nigeria and Head of Trade Remedies at the Nigerian Office for Trade Negotiations. He also led technical negotiations for the African Continental Free Trade Area (AFCFTA) Agreement and provided economic policy advice to the Nigerian government

PICTURES

[Photo credit: Minx Media]

From left to right: Tola Onayemi, Chief Executive Officer at Norebase; Prof. Ebehi Iyoha, an Assistant Professor in the Entrepreneurial Management Unit at Harvard Business School; Sigh Diagne, an Advisor to the Vice President of Finance and Chief Financial Officer of the African Development Bank; Enitan Okediji, CID Africa Program Lead and Research Associate, Africa Futures Project; Mubashir Ekungba, Panel Director and MBA 2025 at Harvard’s Business School; and Dr. Dennis Matanda, Professor, Chief Executive, Morgenthau Stirling, Inc.

A cross-section of the audience/participants

A cross-section of the panelists

[ad_2]