Arusha: Public Enterprises Minister Malusi Gigaba has called for a new "ethic of international collaboration" to tackle Africa's material infrastructure backlogs, which remain an impediment to intra-African trade and investment. Addressing the Solomon Mahlangu Freedom College in Mazimbu, Tanzania, on Monday, Gigaba argued that the aspiration should be to raise intraregional trade levels to at least the 40%- to 50%-type levels of Asia, and ultimately to the 80% levels being achieved in the European Union.
A recent World Bank study showed that trade within Southern Africa remained worryingly low at between 10% and 12%, while regional intra-industry trade in parts and components was all but absent, lowering prospects for competitiveness-bolstering manufacturing synergies.
Gigaba said that African economic integration was an important strategic priority for South Africa, as the country was at a structural disadvantage in building its industrial base owing to its remoteness from major global markets.
"However, in relation to the African market, South Africa has a locational advantage - by failing to foster high levels of economic cooperation and integration in Africa, we are effectively imposing limits on the growth of the South African economy."
He saw infrastructure as the main enabler of trade and economic integration and the key stepping stone to regional integration. "For example, just through providing access to our electricity grid, we will enable neighbouring countries to invest in energy generation at a far larger scale than they would do in isolation. This will provide business with the confidence requisite to make further investments in these countries."
However, the scale of the logistics, telecoms, water and power infrastructure asset deficit in Africa was "immense", with recent studies suggesting that the water infrastructure backlog alone required $10-billion worth of investment yearly to close, while energy required $42.6-billion a year over the next ten years.
To address the infrastructure gap in South Africa and Africa partnerships would be required with "players that have greater quantities of resources at their disposal".
"We need to build partnerships with both established economies and the emerging giants on the economic stage in Brics [Brazil, Russia, India and China]."
Africa should collaborate on the creation of a new model of development in a bid to transmission from being a global supplier of raw commodities to that of value-added products.
"When seeking trade globally, Africans must cease engaging in an ugly beauty pageant about who is better than the other; but we must sell our collective strengths," Gigaba said, adding that the production of value-added goods would also support the aspiration to materially increase intra-African trade.
Currently envisaged was a new 'grand' tripartite free trade area (T-FTA), which, once concluded, could span from Cape to Cairo and include 27 countries.
The T-FTA negotiations, which were launched earlier this year, included members from the East African Community, the Common Market of Eastern and Southern Africa and the Southern African Development Community, and it was anticipated that the enlarged bloc could be established during 2013.
If successfully concluded, the T-FTA would comprise a market of 533-million people, with a combined GDP of $833-billion, or a GDP per capita of $1 500. That equated to 58% of Africa's GDP and 57% of the continent's population. It could also incorporate economies that are collectively expected to expand at 5.8% in 2011.