I wish to thank the Africa Economic Zones Organisation for inviting me to speak to you at your fifth Annual Meeting.
You are meeting at a time of great challenges with the COVID-19 pandemic. The pandemic has claimed too many lives and slowed down global growth, trade, and investments.
The African Development Bank has been very responsive in supporting countries to address the pandemic in Africa. The bank launched a $10bn crisis response facility to support countries’ immediate needs for liquidity.
The bank also launched a $3bn fight COVID-19 social bond on the global capital markets, the largest United States dollar-denominated social bond ever in world history.
This is all part of our mission to ensure that Africa develops faster and improves the quality of life of its people.
Africa has had impressive economic growth over the past decade, including six of the 10 fastest growing economies in the world. While the pandemic has set us back now, with a decade of growth lost, I am confident that Africa will bounce back.
The same fundamentals that drove growth are still there. At the core of this must be the growth of the private sector and the deployment of supportive environments for their operations.
Globally, special economic zones have powered the economic growth of several countries. Their numbers have exploded from less than 200 in the 1980s to 5,000 today.
Collectively, they have contributed exports worth $3.5tn, roughly 20 per cent of global trade in goods.
In Africa, special economic zones are operating in 38 countries, accounting for an annual trade turnover of $680m.
The special economic zones have not been as successful in Africa compared to Asia and other parts of the world, for several reasons.
First, is the more limited infrastructure, with Africa’s infrastructure financing gap estimated to be $64-108bn annually.
Second, is the weaker institutional environment and coordination challenges.
Third, is the limited access to financing to develop well-integrated value chains.
Fourth, the primary focus of the special economic zones on exports alone has weakened the linkages with the wider local economy, with a very limited transfer of skills, technology, and market access. Essentially, they often create islands of wealth in the midst of wider poverty.
The African Development Bank is investing heavily in closing the infrastructure gap. This includes energy, roads, ports, information and communication technology, and transport corridors.
The bank is also supporting the Africa Exchange Linkage project, to integrate stock exchanges across Africa. This will create an integrated capital market with capitalisation in excess of $1tn, representing 90 per cent of Africa’s total equity market. This will increase liquidity and enable seamless trading platforms across the continent.
The goal of our efforts is to support the integration of Africa’s markets.
The African Continental Free Trade Area, which will become operational in January 2021, now provides a market with 1.3 billion people and a combined gross domestic product of $3.4tn. It will be the largest free trade zone in the world.
So, the times have changed, and opportunities have changed for the private sector and for the Africa Economic Zones Organisation.
While special economic zones have been primarily focused on exports, they now need to sharply focus on the regional markets in Africa.
Special economic zones should allow Africa to now develop its manufacturing capacity, competitive regional value chains, for exports into the African Continental Free Trade Area, and to expand their integration into global value chains.
Today, let me highlight one important opportunity: agriculture.
Agriculture, food, and agribusiness is the sector with the largest potential wealth impact for Africa.
The size of the food and agriculture market is estimated to rise to over a trillion dollars by 2030.
Tapping into this massive market requires a structural approach to develop better-integrated food and agriculture value chains.
That’s why the African Development Bank is supporting the development of Special Agro-industrial Processing Zones.
These zones will focus on agro-industrialisation, by investing massively in integrated infrastructure, in areas of high potential agricultural value chains; including processing, marketing, and logistics.
The SAPZs will help to unlock vast economic and trade opportunities from value-added agriculture in Africa.
Five SAPZs are already in implementation, including Ethiopia’s integrated agro-industrial parks, Togo’s Agro-food processing zones, and in Senegal and Guinea.
Several more are planned.
Regional SAPZs will also consolidate integrated infrastructure and agricultural processing and food manufacturing companies around regional transport corridors.
This will allow for economies of scale by taking advantage of regional infrastructure, transport, and logistics, for lowering costs and enhancing competitiveness.
The African Development Bank will continue to help accelerate private sector investments into Africa.
The bank-supported Africa Investment Forum has helped to attract $78.1bn of investment interests into Africa, in just two years.
One of these investments is the $26bn Mozambique Liquefied Natural Gas project, which will make Mozambique the world’s third-largest exporter of liquefied natural gas.
Our financing for the Boke mine, rail, and port in Guinea will improve Guinea’s position in global markets and move it towards processing bauxites into aluminum.
Our $600m co-financing for Ghana’s Cocoa Board will allow it to add greater value to its cocoa and attract better prices for its farmers, globally.
That’s the Africa we need and Africa we want one that is beaming with investments.
One that is processing and adding value to all of what it produces. One that has competitive industrial manufacturing capacities, able to create wealth, prosperity, and quality jobs for its people.
As you meet today, think Africa, think a new Africa!
You all as members of the Africa Economic Zones Organisation will play a very important role in making the new Africa happen.
The African Development Bank commits to specifically work with you to expand your investments, and specially to help develop the Special Agro-industrial Processing Zones across Africa.
Working together we will help Africa to grow back, better, bolder, and with greater prosperity.
I wish you all a very successful Forum!
Thank you all.
* Remarks by AfDB’s President, Akinwumi Adesina at the fifth Annual Meeting of the Africa Economic Zones Organisation on December 3, 2020
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