Africa is charting a new path towards a single continental market – and it’s going to be an economic revolution.
Nigeria’s President Muhammadu Buhari recently drew the world’s attention to the anticipated single market during a visit to Ankara where he said, “In Africa, we are on the threshold of finalizing negotiations to establish the first ever single market for trade in goods and services on our continent, in the Continental Free Trade Area for Africa.”
What is the Continental Free Trade Area (CFTA) for Africa and how will a single market unleash Africa’s economic might?
According to the African Union, the CFTA will create a single market, which enables the free movement of goods and services, businesspersons and investments within 54 African countries with 1.2 billion people and a combined GDP of over $3.5 trillion. The agenda is extended to broaden intra-African trade, and accelerate regional and continental integration processes.
Africa has the least percentage (18%) of intraregional trade, lagging far behind the 70% in Europe, 55% in North America, 45% in Asia, and 35% in Latin America. The implications are nothing short of jeopardy. However, analysts state that Africa is marching forward, citing the CFTA, among other developments, as a remarkable indication.
An estimate by the United Nations Economic Commission for Africa notes, “The CFTA could increase trade between African countries by as much as $35 billion, an increase of more than 50% from current levels.”
The CFTA will also make Africa the world’s largest free-trade area.
Economic development is impossible without trade. It is a missed opportunity that African states do not trade enough with themselves.
As much as the CFTA will disrupt demand and supply barriers, a single market will help align trade policies, regulations and institutions of all African countries to promote continental trade that will benefit businesses, consumers and governments. This will lead to structural transformation, industrial development, diversification, productivity boost, and new wealth that will give Africa a competitive edge.
“The single market for Africa policy can push regional trade levels from up from 15% to 25% within a decade and this will in turn significantly increase and strengthen the continent’s annual economic growth, create wealth more inclusively and reduce poverty,” says Oby Ezekwesili, the former Vice President of Africa at the World Bank.
Africa’s aviation sector contributes around $72.5 billion in GDP and creates more than 6.8 million jobs. This is despite the challenges that abound in Africa’s 54 countries, dealing with 54 different civil aviation authorities and 54 sets of rules relating to travel, trade and tourism.
Never mind the ease of doing business, it can be a nightmare trying to travel to another African country with all the red tape. Imagine the massive gains if all 54 sets of rules were collapsed into one, dealing with only one regulatory framework and being able to move goods and services in one market.
“Regulation, or more accurately, de-regulation, has the opportunity to turbo-charge African aviation, through improved market access across the continent,” says Segun Demuren, Managing Director and CEO of EAN Aviation.
“The immediate impact in just 12 out of 54 key markets across Africa would provide a potential 5 million extra passengers a year with the opportunity to travel and trade and create an additional 155,000 jobs and potentially increase the GDP of those 12 countries by an additional $1.3 billion. That’s just a quarter of the countries; imagine the impact across the continent,” adds Demuren.
One of the key problems hindering intra-African trade is the tariff barrier. It makes trade extremely difficult and raises the price of imported goods as well as transaction costs.
To jump-start Africa’s economic potential, a tariff reduction or total elimination of custom duties levied on imported goods from within the continent is required.
“The CFTA will create a more stable trade regime, continental market access, huge increase in investment rate, and trade liberalization – all which are strong catalysts for economic prosperity and sustainable development,” says Benedict Peters, Founder and CEO of Aiteo Group.
Cryptocurrency for Africans
George Gordon is on a quest to revolutionize the financial system. The director of Africa Master Blockchain Company talks digital currencies, blind risks and board games.
What is this new African cryptocurrency you are offering?
Where the majority of current digital currencies are based on speculative models, AfriUnion Coin (AUC) and the AfriNational Tokens (ANT)are designed for a transactional purpose allowing international payments, remittances, foreign direct investment as well as day-to-day transactions at local retail stores and other outlets. While the option for speculative trade is available with AUC, the focus is not around that.
Each African country will have a specially-designed ANT which will allow users to pay for goods and services and bills easily through completely digital means without requiring any bank account. AUC and ANT will be fully interchangeable to one another and there will be no fees for the user.
It’s the natural next step for digital finance from mobile banking which most Africans are accustomed to. The ability to freely have the power to send and receive money locally and internationally will allow the freedom of choice and spending power many Africans don’t have currently.
What is your own investment philosophy?
I am a gambler! I believe in taking risks and putting things on the line. That being said, blind risk or whimsical guesses don’t get you very far. Always acquire enough information to understand to a reasonable level what the thing you are planning on investing is or how it works and then trust your instinct and gut feel.
What advice would you give entrepreneurs wanting to invest in blockchain?
First, do some research in terms of what the blockchain technology is being applied for or created in terms of its application to an industry or project. Thereafter, check the white paper for the design of the platform as well as its functionality and applicability to what it is trying to achieve. If it aligns with your personal investment rules, then go for it,however, remember that blockchain is continuously evolving and thus you need to explore outside the usual and standard.
First cash-less, now card-less. What is the future of online banking?
If we are looking into what is currently science fiction, I would say the future is digital contact lenses that will be able to connect you to all your social media accounts, internet, news as well as make payments by just looking at QR codes or specialized barcodes to approve and accept payments.
Now, realistically we are not far off from such innovation and technology, but for the time being, I think the next step is scanning of QR codes at retailers and having the transaction automated from your wallet to the retailers digitally.
What is your most prized investment and why?
My mind. I believe that the work I have put into developing my mind, and continue to do so every day, is the number one investment that I have ever done. It allows me to look at things in a unique perspective as well as provides me with the tools to push boundaries and create new opportunities.
Money, success, fame? Which is most important to you?
I would have to say success… because it is most likely going to bring the other two as well, right? But success in the form of starting something and letting it grow and succeed and knowing that something new exists because of your efforts.
What do you spend your money on mostly?
Board games. I love board games and believe it’s a fantastic way to expand your mind as well as have fun with friends.
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Offering The American Dream
Gar Lippincott and Daniel Ryan of Atlantic American Partners were in South Africa recently looking for high-net-worth individuals wanting to invest in the US.
It’s a warm spring day in September, and Gar Lippincott and Daniel Ryan have just arrived in South Africa. It is Lippincott’s first time in the country, and he is jet-lagged.
A little over two months ago, he was booked to fly here from the United States (US) but was turned back at immigration.
“At Atlanta airport, the lady looked at Daniel’s visa and let him through and she looked at my visa and she said ‘I am afraid you can’t get on the plane because you have to have a blank page on your passport’. I said ‘I have three blank pages’ and she said ‘no, it’s supposed to be the one that says visa on it’. She said it’s the rules in South Africa so I had to sadly go back home… now when I was coming, I was told that’s not an issue anymore so I am happy they have made traveling into the country easier,” says Lippincott.
With a brand-new passport, he’s here with Ryan looking for people who want to invest in the US in exchange for a green card.
Lippincott, the Managing Partner of Atlantic American Partners, says he has always been keen on South Africa for its growth opportunities and prospects.
“From what I understand, the things that are causing short-term decline in the economy in South Africa are set up to provide long-term growth and hopefully people will understand this,” he says. Ryan, the company’s Managing Director of Emerging Markets – Africa, agrees: “I lived in Malawi for 12 years and South Africa is still considered the shining one throughout the continent. Even with all the problems, everyone still wants to come here because of the opportunities.”
According to an AfrAsia Bank report, South Africa comes second to Mauritius in boasting the highest number of high-net-worth individuals.
These are the kind of people Ryan and Lippincott target through their work at Atlantic American Partners. The company has real estate investors and professional private equity fund managers that manage money for banks, insurance companies, and pension funds. In addition, they help people get US green cards and ultimately US citizenship through the US government’s EB-5 Immigrant Investor Visa Program.
“Basically we look for people who want to move to the United States and we help them do so legally by investing and the nice thing is, with our program, they are also able to get a nice return on investment,” he says.
According to Lippincott, for a $500,000 investment that creates 10 jobs for American workers, you could get a green card in about two years and be a US citizen in about six or seven years. “Twenty seven countries have an investor visa program but with most of them, it’s essentially a fee you pay, or you need to be actively engaged in the day-to-day operation of a business. For example, you invest $1.5 million in Australia, but you need to hire employees and generate a certain amount of revenue. One of the biggest advantages with our program is you actually invest the $500,000 into a fund. We act as a trustee of that money and within five to seven years, they get that money back with a bit of return on investment and you are a permanent citizen in the US.”
Atlantic American Partners invests the money in real estate developments like hotels, apartments and student accommodation.
“What’s nice about the program is it doesn’t only cover the investor; it covers the spouse and children under 21. Our biggest family was a Hungarian family with seven children so they got nine green cards for $500,000,” says Lippincott.
The company says it has had positive response in South Africa. “Two months ago, we were here and we had scheduled six presentations for 100 people and we ended up speaking to 450 people. Most were business people, people worried about the economy, people worried about the political future of South Africa and people concerned about the education future of their children,” says Ryan.
According to Lippincott, despite the news of the clampdown on immigration, the US economy is booming and will perish without immigration. In the era of Donald Trump and his anti-immigrant views, that’s heartening news indeed.
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