President Uhuru Kenyatta today said intra-Africa trade is the only way the continent can cushion itself against external economic shocks.
The President, who spoke on the benefits of the Africa Continental Free Trade Area (AfCFTA) at the ongoing Commonwealth Heads of Government Meeting, said the agreement is designed to increase Africa’s participation in global trade and reduce the dependency of the continent on aid and external borrowing.
Kenya’s parliament is expected to ratify the AfCFTA within the next few weeks.
“Intra-Africa trade will increase efficiency and competitiveness of Africa’s industrial products through harnessing economies of scale of a large continental market of about one billion people,” said the President.
The President spoke when he led discussions on ‘Developing Intra-Africa Trade’ during an Africa Leaders Roundtable business forum at the Guildhall, London.
He said the new trade agreement paves the way for an increased rate of diversification and transformation of Africa’s economy as well as its ability to supply its needs using its own resources.
The AfCTA was signed in Kigali last month by 44 African countries and Kenya is expected to be one of the first countries to ratify the treaty.
The agreement is designed to increase economic growth, boost employment opportunities and reduce food deficits that affect most African nations.
The President also said that the promotion of intra-Africa trade should be accompanied by efforts to make African nations increase the share of foreign direct investments they attract instead of relying on official donor assistance.
“Only one out of every 40 dollars of foreign direct investment since the 1990s has gone to subsaharan Africa, which is dwarfed by the one out of every 8 dollars that went to Latin America and the Caribbean, or the more impressive one out of every 4 dollars invested in Asian countries,” said the President.
The President noted that there have been increasing levels of investor interest in African countries in the last decade with a notable expansion in the level of FDI inflows.
“FDI inflows will undoubtedly contribute to the technological development, industrial diversification, and economic growth of host countries,” said the President.
The President informed the forum that the state of infrastructure in Africa is a big constraint to the continent’s economic development.
“There should be specific investments targeted at infrastructural development. Africa requires investments to be channeled in expanding and upgrading transportation and other trade-related infrastructure,” said the President.
President Kenyatta said many countries in Africa including Kenya have taken deliberate measures to improve their business environment and have made impressive gains in the last few years.
“Kenya has improved in the Ease of Doing Business index from position 136 in 2013 to 80 in 2017,” said the President.
He called for the forging of partnerships through sharing of knowledge, experience, expertise and financial support for the greater prosperity of Africa.
The forum was also attended by Industry, Trade and Cooperatives Cabinet Secretary Adan Mohamed.
The President is in London for the CHOGM, held biennially, which he is using to market Kenya as a preferred investment destination.
On Tuesday, the President rang in business at the London Stock Exchange before addressing investors on the opportunities existing in Kenya.
The President then addressed a business forum bringing together UK investors, Kenya companies and government officials.
Yesterday afternoon, the President gave a lecture at Chatham House where he spoke on the need for unity in serving the interest of citizens in the face of challenges facing modern democracies.
The President will later today participate in a summit on Malaria.