Event Report: Towards TICAD8 - Advancing Africa's Economic Integration in the Post-Crisis Era

Global uncertainties such as the COVID-19 pandemic, as well as food shortages and soaring inflation amid the Russia-Ukraine crisis are among the challenges that may come to derail Africa's growth and economic integration. Ahead of the Eighth Tokyo International Conference on African Development (TICAD8), which will be hosted in Tunisia on August 27 and 28, 2022, key stakeholders in the continent's development arena met in South Africa on June 21 to discuss how to advance Africa's economic integration to achieve resilient and inclusive socio-economic development. The focus of the convention is how to promote the implementation of the African Continental Free Trade Area (AfCFTA). The symposium, which was held in a hybrid format, was co-organized by Japan International Cooperation Agency (JICA), the African Development Bank (AfDB), African Union Development Agency (AUDA-NEPAD), and United Nations Development Programme (UNDP).

His Excellency Mr. Norio Maruyama, Ambassador of Japan to South Africa, opened the conference by stressing that TICAD focuses on the sustainable and comprehensive development of Africa, with ownership and partnership being key elements to build human security. Maruyama pointed out that Japan has been an active partner in Africa throughout the decades, both in official development assistance and private sector investment. Maruyama ended his opening remarks by introducing the three key pillars of the upcoming TICAD8 conference - economy, social challenges, and peace and stability - while also noting the potential for Japan to work with Africa in such areas as energy transition to achieve carbon neutrality.

Following Maruyama's remarks, Dr.Towela Nyirenda Jere, Head of Economic Integration at AUDA-NEPAD, noted that AfCFTA, which aims to create a single continental market covering 1.2 billion people, has the potential of becoming the world's largest economic market with a combined gross domestic product (GDP) of US$2.5 trillion. When fully implemented, Jere said it could lift as many as 38 million people out of poverty, however, to achieve that requires the opening up of market opportunities through the construction of "very sustainable quality and resilient infrastructure" that can support to ease the movement of people, goods, services, and capital within the continent.

Building Resilience and the Important Role of SMEs

Africa is vulnerable to global shocks because of its structural weaknesses in economic management, both at the country and continental level, said Dr. Ayodele Odusola, Resident Representative of the UNDP and Head of the Africa Finance Sector Hub. This presents threats to the ongoing "triple development challenges" of poverty, income inequality and joblessness.

To become more resilient, Odusola said that Africa must "break away from a dependency syndrome", noting how the continent has been importing food items that can instead be self-sustainably produced within Africa and then exported to the rest of the world.

Odusola also said that Africa should work towards breaking out of a cycle of "being a specialist of primary exporters of primary commodities" such as in agriculture, metals, or oil and gas, when adding value will create wealth and jobs. He pointed out that African agribusiness can generate up to US$3.7 trillion, which is nearly triple the current GDP of the continent.

Odusola added that it was important to address risks in the investment climate in Africa to make the continent a more attractive investment destination. Among other things, there is a need to stop illicit financial flows of an estimated US$86 billion annually.

Anchoring this point, Jere highlighted the significant role of small-and-medium enterprises (SMEs). She noted how Africa must consider policies that will allow SME to thrive, including enabling them to produce goods and services that are needed. Jere said that creating a resilient start-up ecosystem, including resolving issues in areas such as digitalization, and access to markets and financing, can help create sustainable trade. "It is imperative and incumbent upon us to make sure that we do not lose the momentum" to reap the full benefits of the AfCFTA," Jere said.

Odusola echoed the remarks, noting that SMEs are "the engine room of growth and development" for Africa sharing that the UNDP has facilitated a supply development program throughout the continent to connect SMEs with big companies. But there are headwinds in how 70 percent of SMEs close down before they reach their third anniversary, he said, adding that the UNDP has in response developed a "Youth Entrepreneurship Action Hub" to build the capacity of small-scale entrepreneurs, while connecting them to financial institutions and providing market access.

Dr. George Kararach, Lead Economist of the AfDB, added that it was also important to think about infrastructure for a post-pandemic world, in which he saw e-commerce as a growth market. But to secure e-commerce, building up resilient Information and Communications Technology (ICT) infrastructure and data access - on top of secure energy sources - will be critical.

Building Integration, and Capacity

The panelists also discussed how to build integration across different institutions, as well as to build human capital. Odusola said it was important to create a "synergy where one-plus-one is greater than two", and to "ensure that whatever we do, we put people at the center, the beginning and the end of the entire process".

Mr. Toshiyuki Nakamura, Senior Vice President of JICA, said that the emphasis on human security, meaning that "no one is left behind", is at the core of the agency's efforts. Nakamura added that building resilience requires the long-term commitment of stakeholders, noting how JICA's efforts in providing financial and technical cooperation to medical institutions in Kenya and Ghana -- including through training in Japan -- have led to a continental network under the Africa Centers for Disease Control and Prevention that could manage COVID-19. AUDA-NEPAD, with JICA, worked to support Home Grown Solutions so that African companies produce masks and other essential supplies.

Another initiative that has proven to be effective amid food shortages caused by the Russia-Ukraine conflict was the Coalition for African Rice Development (CARD), which focuses on doubling the rice production in Africa, Nakamura added.

Kararach stressed the need to build robust institutions, while also noting that investors will be more attracted by the "correct incentives" as opposed to "very rigid regimes". But he also noted that crises can be turned into opportunities, citing how the African Development Bank put together a US$10 billion COVID-19 response facility that has the potential to produce vaccines which can be exported worldwide.

Kararach added that it was critical to uplift the African community by creating more jobs, citing data that shows that nearly two in three youth in South Africa are unemployed. To this end, he said that "integration is not just about goods and services, because you can have cultural integration and a lot of our people live across borders and they speak the same language". Kararach expressed his hopes that Africa "should have a voice at the table clearly" in the post-crisis era.

In the closing session of this conference, JICA and AUDA-NEPAD launched the 3rd Edition of the One-Stop Border Post (OSBP) Sourcebook (external link), key resource that elaborates the OSBP concept and provides guidelines on OSBP operations. Through the event, the panelists shared a view that TICAD 8 will be a critical opportunity to discuss how to further advance Africa's regional economic integration. During the TICAD, public and private stakeholders will address Africa's development and the discussion of this event would pave the way toward TICAD8.