Why Pan-African investment corridors are needed?

Zawya

2 days ago

The world is changing – and so fast that it is not waiting for Africa. In the past decade, leading economies in the West quietly shifted their global focus from the ideals of economic integration and soft power diplomacy to policies anchored on technological sovereignty, national security, and internal economic resilience.
The transition from the post-Cold War 'peace dividend' to a 'defence dividend' mindset signals a more fragmented, competitive and militarised global economy. These developments represent both a risk and opportunity for Africa.
The unfolding changes present great investment opportunities for Africa, such as emerging and old powers restructuring supply chains, looking out for new markets and sources of critical minerals and input.
The continent's abundant resources, growing markets, and youthful population position it as a promising region for long-term investors.
Multinational companies keen to reduce dependence on single-source suppliers in Asia and Europe will find Africa as an additional and strategic option.
The continent will remain a central pole in the emerging multipolar world as the global race for critical minerals such as lithium, cobalt and rare earths gains pace to power new technologies and energy value chains.
Despite optimism, Africa stands at a critical crossroads. Major power reorientation intersects with ongoing economic fragilities, budget cuts, increased debt challenges and political uncertainties.
Read: Will Africa's financial stability fund rise to the debt challenge?African economies already behind in the digital divide risk further marginalisation as major powers accelerate economic nationalism and seek to hoard strategic technologies.
The European Union's Green Deal Industrial Plan favours its own industries through provision of predictable regulatory framework and grant subsidies to facilitate green transition.
On the other hand, the United States of America's Inflation Reduction Act aims to bring home critical supply chains to outcompete external actors. Africa is ill prepared to prop up its own domestic industries, to navigate the raising barriers for exports from the continent.
The militarisation of the global economy is likely to motivate capital away from start-ups and Small and Medium Sized Enterprises that were power solutions for Africa to security related initiatives. It is a wakeup call for Africa.
Time is ripe for the continent to accelerate its brilliant plans developed over decades. The plans include the Lagos Plan of Action, The New Economic Partnership for African Development (Nepad) and the African Union Agenda 2063 to drive economic development.
The African Continental Free Trade Area promises to create one of the world's largest markets of over 1.4 billion people. Africa must rethink its development models away from aid dependency to catalysing productivity and domestic revenue mobilisation.
The continent must strengthen regional economic blocks as strategic building nodes for the continental free trade area. An intentional and deliberate investment in the youthful demographics to gain access to science, technology, engineering and mathematics (STEM) education, local innovation hubs and participate in research and development.
Read: Future of business in Africa will be shaped by partnershipsAfrica's future growth is closely tied to its ability to integrate markets by leveraging the regional economic communities such as Economic Community of West African States (Ecowas), Southern African Development Community (SADC), East African Community (EAC) and Common Market for Eastern and Southern Africa (Comesa).
The African Union (AU) should create pan-African investment corridors rather than the current individual nation-state approaches. The region should articulate a continental doctrine for security engagement based on a pan-African security strategy to resist fragmented bilateral defence deals.
As global investors reallocate capital to the environmental, social and governance (ESG) aligned portfolios, Africa offers compelling opportunity in its renewable assets. Africa's wakeup call is an invitation to investors both local and international who are willing and ready to take a long-term view to build partnerships, as well as align with the continent's ambitions to tap into demographic growth, resource abundance, digital transformation and regional integration. For this to work, Africa must initiate a multipolar balancing act that leverages competition for maximum benefit.
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