Leveraging AfCFTA and human capital for sustainable growth

The African Continental Free Trade Agreement (AfCFTA) and human capital are at the forefront of discussions at the African Development Bank (AfDB) annual meetings in Nairobi. In a recent interview, CNBC Africa's Aby Agina spoke with Jaswinder Bedi, the Chairman of the Kenya Private Sector Alliance (KEPSA), about the initiatives that African countries can take to develop sustainable financing mechanisms. Bedi highlighted the opportunities presented by the AfCFTA, emphasizing Kenya's active participation in regional trade initiatives. He mentioned that Kenya has already utilized the Guided Trade Initiatives under the AfCFTA, exporting products like tea and batteries to Ghana. He noted that the phase-down process of tariff elimination is well underway, with 82% of the book already agreed upon. By 2030, certain products like tea will have no duty when exported to countries like South Africa, opening up significant export markets for African countries. Bedi emphasized the vast potential of the African continent, with its 1.5 billion people and $3.5 trillion economy, highlighting the importance of leveraging human capital for sustainable growth. As one in four people on the planet will be African by 2050, and 40% of the world's working-age population by 2040 will be African, investing in human capital is crucial for driving development. Bedi also discussed the challenges faced by African countries in funding infrastructure development and value addition. He stressed the need to invest in building critical infrastructure such as roads, rails, and ports to enhance connectivity within the continent. Bedi cited examples of ongoing infrastructure projects in Africa, such as the road network connecting Addis Ababa to Mombasa and the Lamu Port in Kenya. He highlighted the importance of foreign investments and public-private partnerships in funding these infrastructure projects. The conversation then shifted to the issue of access to capital and the role of the private sector in driving Africa's growth. Bedi echoed the sentiments expressed by the Africa Development Bank and President Ruto about the need for a fairer financial system that provides cheaper financing for African countries. He urged for a change in the financial architecture to address the high risk perception of investing in Africa, despite the continent offering high returns on investment. Bedi noted the mismatch between the cost and lend of finance in Africa, resulting in high interest rates and short-term lending. He emphasized the importance of collapsing this spread to make financing more affordable for development projects, especially large-ticket items that require long-term investment. In conclusion, Bedi reiterated the significance of leveraging the AfCFTA and human capital for sustainable growth in Africa, emphasizing the need for strategic investments in infrastructure and financial mechanisms that support the continent's development goals.