Regional investment initiatives have been in place in Africa for some time and provide valuable lessons for the AfCFTA.
The landmark African Continental Free Trade Area (AfCFTA) aims to enhance the prosperity of Africans through greater intra-African links. Business By eliminating tariff and non-tariff barriers. However there is a question of producing the goods and services that will be traded.
To increase production one would need injection Local and foreign investment in African industries. An increased focus on investment is a logical next step in the AfCFTA implementation process.
In February, a draft Etiquette AfCFTA was presented to the African Union Heads of State Summit on Investments. The protocol is part of the second phase of free trade area negotiations. It aims to facilitate and protect intra-African investment and improve the attractiveness of the single market for foreign direct investment.
Among other things, the draft protocol provides for a Pan-African Investment Agency to help coordinate investment promotion by AfCFTA member states. To ensure its success, lessons from previous efforts must be examined.
There is recognition of the role of regional value chains in a free trade area linked to the goal of growing African industries. AfCFTA Secretariat is Identified Prioritizing some key value chains for their export potential. These include automotive, textile and apparel, pharmaceuticals and cocoa.
Given that regional value chains may require cross-border investments, an integrated approach is ideal
These regional networks are one of the solutions to the anticipated competition among AfCFTA member states in developing specific sectors. Conflict The trade-off between national industrial policies and AfCFTA aspirations is already proving a challenge for the negotiations.
Given that regional value chains may require cross-border investments, a coordinated approach is Ideal, Such regional investment promotion activities are often carried out by investment agencies, and have existed in Africa for some time. Some initiatives were launched by regional blocs and national governments; Others by international organizations. They have taken the form of policies, networks, forums or de facto agencies.
Common Market for Eastern and Southern Africa (COMESA) launched COMESA Regional Investment Agency in 2006. Apart from promoting the sector, the agency aimed to strengthen the capacity of national investment promotion agencies in their jurisdiction. However, it has faced some challenges, including lack of political credibility and resources.
At the national level, the Nigerian Investment Promotion Commission launched the National Investment Certification Program for states in 2016. To ensure investment readiness of the country’s states, the project provided capacity building to help the states certify their investment promotion structures. One challenge was the different levels of capacity within states, as well as their differentiated investment promotion mechanisms. been there recent Tries to start the program again.
Key challenges facing existing investment initiatives are measuring sustainability and impact
A third initiative is the Africa Investment Promotion Agency Network (AfrIPANet), launched in 2001 by the United Nations Industrial Development Organization (UNIDO). AfriIPANet was Design As a ‘a common platform to discuss and design investment promotion strategies’ and recorded some achievements. Although AfriIPANet appears to have stalled, UNIDO continues to support African investment promotion agencies through its Invest-in-ACP. Initiative A cloud-based, digital platform.
economic community of west african states created A regional investment policy framework in 2007, but it is difficult to assess how much has been achieved. is a business and investment platform of the East African Community, and Africa Investment of the African Development Bank Forum, Which is organized every year.
The major challenges facing all these initiatives are their sustainability and the difficulty in measuring their impact. Mobilizing the resources to keep them effective becomes more complex over time, especially when they are tied to specific donor projects with limited funding cycles.
Apart from the varying capabilities of investment promotion agencies, there is also the challenge of varying political will across blocks to implement the necessary reforms. The proposed Pan-African Investment Agency would be set within the same tangled ecosystem with bureaucratic hurdles, insufficient political will and lack of funds.
Pan-African Investment Agency will face bureaucratic hurdles and insufficient political will and funding
It should be set up to co-operate with existing regional and national investment promotion agencies to maximize the agency’s potential, avoid duplication and leverage resources more efficiently. A monitoring and evaluation framework will be needed to track progress and identify areas for improvement.
A graded approach should also be considered, where an Investment Promotion Unit is created within the AfCFTA Secretariat ahead of a full agency. This can improve agility and allow for an iterative approach to coordinating investment promotion efforts.
Digital platforms are important for streamlining access to investment information and promoting transparency. By developing a digital platform, the Pan-African Investment Agency can centralize data and facilitate information sharing among stakeholders. It may also enable international cooperation between national investment promotion agencies by designating focal points in each AfCFTA member state.
Coordinating investment promotion among the 54 member countries of the AfCFTA will not be easy. But doing so is critical to resolving conflicts between continental aspirations for a free trade deal and the national policies and realities of member states. The accumulated knowledge from initiatives within and outside the continent should be examined to improve the chances of success.
Teniola Tayo, ISS Advisor and Principal Advisor, Alonet Advisors