Sunday Tribune

Why Ramaphosa’s West African tour is important

LEONARD MBULLE-NZIEGE

PRESIDENT Cyril Ramaphosa embarked on a tour this week of the West African quartet of Nigeria, Ghana, Côte d’ivoire and Senegal, the four largest economies in the Economic Community of West African States (Ecowas).

According to the Quantec database, in 2020, they were also South Africa’s leading trade partners in that regional economic bloc as South Africa generated R6.5 billion and R5.6bn from trade with Nigeria and Ghana, respectively, while trade with Côte d’ivoire and Senegal amounted to R1.7bn and R1.4bn, respectively.

Before the onset of Covid-19, Côte d’ivoire and Senegal posted impressive economic growth figures. Côte d’ivoire averaged a 5.9% growth rate during the 2016-2020 time frame. Despite registering 2% growth in 2020, the Ivorian economy is already experiencing a rebound, with government estimates projecting growth at 7.65% from 2021 to 2025.

Senegal recorded an annual average growth rate of 5% growth from 2014 to 2019 before plummeting to 1.5% in 2020. However, Senegal will also see a quick economic revival with growth estimated at 3.7% this year, and 5.5% in 2022. In 2023, growth is expected to reach 13.7%, when production commences at the $4.2bn (about R66.4bn) Sangomar offshore oil and $10bn Grande Tortue Ahyemim offshore gas projects.

Despite the positive growth trajectory experienced by Côte d’ivoire and Senegal, South Africa has played a negligible role in their respective trade and investment dynamics. By virtue of colonial ties, France has been the most prominent bilateral commercial partner in these two countries.

In Côte d’ivoire, more than 700 French companies operate in the country. A French consortium led by Bouygues is currently building the $1.6bn Abidjan Metro, while in Senegal another French consortium spearheaded by Eiffage is constructing the $1.3bn Transport Express Régional, Senegal’s first high-speed rail network.

Nevertheless, over the past 10 to 15 years, new economic partners such as China, India, Morocco, Turkey, Qatar and the United Arab Emirates have strengthened economic co-operation with these two countries. Senegal’s ultra-modern Blaise Diagne International Airport was built by Turkey-based Summa while the 50 000seat Stade Olympique is being constructed by the same firm.

In Côte d’ivoire, the China Harbour and Engineering Company is building the $1.07bn second terminal at the Abidjan Port, among several Chinese-funded projects.

While South Africa has missed out on these business opportunities and others that these two countries offer, there are several high-growth potential sectors which the South African government will encourage the business community to invest in during the course of Ramaphosa’s trip.

Before COP26, several African countries had initiated plans to promote the use of renewable energy. Côte d’ivoire has set a target of adding 1 492 megawatts to its renewable energy mix between 2022 and 2030. The energy produced will emanate from biomass, hydro and solar sources, and by 2030 Côte d’ivoire hopes that 42% of its electricity grid output will be derived from renewable energy. Senegal has also set an ambitious target of raising its proportion of renewable energy production from 22% to 30% by 2025.

Senegalese President Macky Sall has set the objective to provide universal access to electricity by 2025.

The agriculture sector is the largest contributor to gross domestic product and employment in Côte d’ivoire and Senegal, and in a bid to valorise this activity Côte d’ivoire and Senegal have committed to promoting agro-transformation in their respective economic development agendas, the Plan National de Development.

Côte d’ivoire, which is the world’s largest producer of cocoa as well as the third-largest producer of cashew nuts, has already initiated investment programmes that will increase the local transformation of these products.

Ivorian President Alassane Ouattara has encouraged investors to support the development of commercial crops such as cotton, rubber and sugar. In addition to promoting the local transformation of fruits, ground nuts and livestock, fishing and rice production have also been earmarked for promotion by the Senegalese government.

Another area of interest is the pharmaceutical industry. The onset of Covid-19 occasioned the disruption of medical supply access due to border closures. In this regard, presidents Sall and Ouattara have taken preliminary steps towards bolstering their local pharmaceutical industries.

At the 2021 Forum on Chinaafrica Co-operation, Sall declared that ensuring health-care access through the production of drugs and vaccines should be the number one priority of China-africa relations in future.

The digital economy ecosystem is still fairly underdeveloped across Francophone Africa, and in June, Senegal inaugurated its first data centre, which cost €70m (R1.25bn) and will be run by Chinese firm Huawei. While South Africa’s MTN built a data centre in the Ivorian economic capital of Abidjan in 2014, the decision in October by the Us-based Raxio Group and French investment firm Meridiam to invest $50m in another data centre in Abidjan demonstrates a further window of opportunity for South African firms to exploit in these economies.

Itumeleng Mokoena, an economist with Pretoria-based Trade and Industrial Policy Strategies, believes Ramaphosa’s economic diplomacy initiative is positive and will help to consolidate South Africa’s position in these markets as well as create new opportunities for South African businesses. Other domains, such as construction, finance, manufacturing, mining, telecommunications and transport, could be of interest to potential South African investors and several factors could serve as sources of encouragement.

This includes the recent enactment of the African Continental Free Trade Agreement (AFCTA), the requisite experience South African firms have in the above domains, attractive business climates as well as the creation of jobs for South Africans in the event that such investments materialise. Mokoena also suggests the visit could open up South Africa as an investment destination for entrepreneurs in those two countries. |

AFRICA

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2021-12-05T08:00:00.0000000Z

2021-12-05T08:00:00.0000000Z

https://sundaytribune.pressreader.com/article/282080575123002

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