Africa's largest trading block is gaining momentum. In the latest 'Africa 2016' investment forum held in Egypt, it has received an encouraging response from investors. Foreign investors have suggested for more reforms and policy changes to attract investments.
Established in 2015, the trading block of Africa, comprising 26 countries with a huge consumer base of 620 million, is offering a lot of potential to overseas investors. The combined gross domestic product (GDP) of trading block is nearing to a whopping $1.2 trillion.
Over 1,500 business delegates from public and private companies across Egypt have expressed keen interest in doing business with Africa. Government officials and heads from global organizations have actively participated in discussions on trade and investments in the said country. Several heads of state and governments from Ethiopia, Equatorial Guinea, Gabon, Nigeria, Sudan and Togo have also made presentations about investment opportunities, according to IPS (Inter Press Service).
Despite several meetings, discussions and forums, no major action plan was implemented by Africa so far, observes an investor. The trade volume among African nations is still below 10 percent of the continent's foreign trade. This is mainly because of tariff barriers. Africa needs to implement reforms and develop infrastructure facilities to attract overseas investment.
For instance, Ghana has placed trade ban on Nigeria owing to unfair trade practices between both the nations. Ghana has imposed ban on imports of crude oil, cement, pharmaceuticals from Nigeria and other nations as well, as reported by Ventures Africa. Nigeria is suffering from falling value of its currency Naira. Industry observers suggest that African countries need to create cohesive atmosphere within the continent to attract foreign capital.
Africa needs to strengthen financial system to facilitate re-exporting capitals. Governments of several African countries should focus on restoring peace by ending armed conflicts in several places. Currently, Africa is still the most corrupt region in the world, according to the studies carried out by World Bank, UN Development Programme and Transparency International.
Recently, a pan-African road show was organized in Dubai. A delegation from Annual Investment Meeting (AIM) 2016 had organized the event. Africa is fastest growing foreign direct investment (FDI) market in the world. The FDI inflow into African continent grew 19 times from $3 billion 1990s to $57 billion in 2013, according to WAM (Emirates News Agency).
However, no official confirmation or details about possible investment deals approved at 'Africa 2016' not available. An Egyptian diplomat on a condition of anonymity said "They (the private business sector) are ready to invest. Africa is the continent of the future, this is clear. However, there are huge hurdles that have been scaring the big business pundits."
Some delegates at 'Africa 2016' expressed their views that African nations need to put in more efforts to create business conducive atmosphere for investors. Legislative measures are needed to be implemented for encouraging business activity. There are problems such as corruption, bureaucracy and lack of reforms.
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