Private sector financing is instrumental in accelerating infrastructure and logistics investment needed to boost intra-African trade, experts have said.
This was highlighted during a discussion on ‘Infrastructure and Trade Corridors across Africa’ at the just-concluded Regional Conference on Special Economic Zones (SEZ), in Djibouti on April 22.
ALSO READ: Tariff crisis an opportunity for boosting intra-African trade, says AfCFTA’s Mene
The two-day conference brought together experts, including policymakers, economists, and the private sectors leaders to discuss on the future of SEZ in Africa as the continent seeks industrial jobs for youth, improved regional value chains and resilient supply systems.
Angus Miller, Horn of Africa Regional Advisor at Trademark Africa, said that the time for grant financing for Africa is long behind, and the task at hand is to seize the opportunities to bring in private sector finance.
He pointed out that the time to cross the border within the East African Community has reduced on an average of 70 per cent, leading to an annual saving of around $63 million.
ALSO READ: One-stop border posts save EAC over $63m annually
Miller attributed this to investments in infrastructure of around $90 million in speeder roads, systems and processes to speed up delivery of trade which enable the reduction of clearance time from 11 days to three and a half days.
However, he said that innovative blended finance is what should move trade across Africa forward, highlighting that countries need to leverage such arrangements in the management of SEZs and other parts of trade infrastructure and technology.
He added that it is equally important to have efforts geared towards learning port management from experiences across the globe to improve efficiency.
Demitta Gyang, Director of Customs Administration, AfCFTA Secretariat, reiterated the need for infrastructure development, noting that Africa has one of the highest transportation costs in the world.
She said that AfCFTA adopted the corridor outreach to trade facilities after understanding the bottlenecks, state of infrastructure, and flow of goods from the point of entry to the destination.
According to her, three things are required to enhance the movement of goods across the continent, including hard and soft infrastructure, systems and people.
ALSO READ: Bugesera special economic zone targets to create $1.2bn in industrial value
Denis Muganga, Private Sector Investment, Northern Corridor Transit and Transport Coordination Authority, said that developing SEZs should be integrated within the overall national development actions.
He emphasised that it is important to have a government agency that coordinates both investments and public-private partnerships to pave the way for attracting investors and assigning them to specific priority investment sectors determined by the government.
Muganga highlighted Rwanda’s case where the government established the Rwanda Development Board to lead all activities related to investment facilitation and promotion.
He called on African countries to "put away their national interests and focus on development of regional cross-border infrastructure projects to enhance the competitiveness and sustain socioeconomic development for the whole continent.”
In 2023, the Rwandan government announced plans to expand the size of Kigali Special Economic Zone by more than double in a move that was aimed at further addressing some of the domestic private sector constraints including the availability of industrial and commercial land, limited transport linkages as well as availability and the cost of energy.
This will also be buoyed by the new Industrial Policy approved in 2024 which seeks to propel Rwanda to attain an upper middle-income status by 2035, by accelerating industrial sector growth and maintain double digit annual growth in exports.
The country has two special economic zones –Kigali Special Economic Zone and Bugesera Special Economic Zone – and eight industrial parks in Rwamagana, Muhanga, Nyagatare, Musanze, Huye, Nyabihu, Rusizi, and Rubavu districts.