African free trade, China’s ‘Silk Road’ big window for continent
WEDNESDAY MARCH 28 2018
African Heads of States and Governments pose during African Union Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018. Kenya is well positioned to greatly benefit from the AfCFTA. PHOTO | AFP
African governments need transformative policies to improve the readiness of their economies to reap benefits from China’s investment initiatives.The window of opportunity for Kenya is to become a vibrant industrial and logistics hub for Sino-African trade, investment and exchange.
By PETER WARUTERE
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The emerging global trade and investment architecture presents a window of opportunity for African countries to transform their economies, achieve rapid growth and create jobs for their burgeoning youth population.
This will be shaped by the new African Continental Free Trade Area (AfCFTA) and China’s Belt and Road Initiative (BRI).
The pan-African free trade zone envisages free movement of goods, services and people.
Eliminating trade and investment barriers could expand trade and exchange opportunities for Africa’s 1.2 billion people and substantially increase its $2.5 trillion (Sh250 trillion) output.
China, being Africa’s largest trading partner, is a key factor and beneficiary of the continent’s development.
A million of its citizens and 800 corporations work in Africa.
While deepening trade and investment among themselves, African countries need to embrace the one belt and one road initiative, under which China plans to invest trillions of dollars for a new ‘Silk Road’ linking it to Europe and Africa.
The BRI, said to be Chinese President Xi Jinping’s most ambitious foreign policy initiative, involves massive infrastructure investments across Europe and upgrading of maritime routes connecting China with Asia and Africa.
The potential benefits are enormous. African governments need transformative policies to improve the readiness of their economies to actively participate in the AfCFTA and reap benefits from China’s trade and investment initiative.
That involves a lot of policy and operational changes, the most important one being for Africa to change from a principal exporter of cheap raw commodities to a significant exporter of manufactured goods and value-added services.
Kenya is well positioned to greatly benefit from the AfCFTA and the development of the Indian Ocean maritime route connecting China with the East African coastline.
The gateway to eastern Africa, Kenya should invest heavily in upgrading its infrastructure and industrial capacity.
The window of opportunity for it is to become a vibrant industrial and logistics hub for Sino-African trade, investment and exchange.
The challenge for Kenya would be to explore synergies between President Uhuru Kenyatta’s ‘Big Four’ development strategy and the opportunities for deepening trade and investment emerging from the AfCFTA and BRI investment programmes.
But these initiatives would only make sense for Kenya if the manufacturing sector upgrades its capacity and efficiency to increase the volume, quality and competitiveness of manufactured products in the export market.
Kenya also needs to upgrade its technical skills in order to increase the efficiency of labour engaged in manufacturing so as to reduce importation of specialised skills.
Moreover, the government needs to fast-track the development of the ambitious industrial programmes it has launched to support industrial development.
These include leather and textiles manufacturing parks, which are expected to increase jobs and income opportunities for the youth and expand the sector’s contribution to the growth and diversity of the economy.
Another great opportunity for Kenya is in knowledge and innovation.
It should deepen its global leadership in technology to upgrade its education and training facilities to produce high-quality science, engineering and technology graduates to meet the regional demand for technical skills by initiating radical reforms in the education system.
Kenya, like many of the African countries, has missed great opportunities for growth and transformation
This time, it should maximise benefits from the AfCFTA and BRI.
Mr Warutere is a director of Mashariki Communications Ltd. firstname.lastname@example.org