Mobilising Africa’s potential
Tusekile Kibonde, Chairperson of the SSA Working Group and Resident Underwriter for Tanzania at ATI, introduces this new edition of Berne Union’s Sub-Saharan Africa Working Group which highlights the opportunities emerging for Africa.
An exploration of post-pandemic Africa was the overarching theme of the previous Berne Union BUlletin issue dedicated to Sub-Saharan Africa. Our contributors gave an insight into Sub-Saharan Africa’s post-pandemic path, observed through the lens of the energy sector, CPRI market, and other topics which shed light on the region post-pandemic.
It was already predictable then that the coming years would bring many obstacles. For example, we see now that central banks across Sub-Saharan Africa will likely have to remain focused on reining in price growth, with economists raising their inflation forecasts for many of the region’s key economies.
Also, understandably, when looking at the region, we see that with the expiry of DSSI at the end of 2021 as well as low uptake of the Common Framework, discussions around sustainable lending and debt restructuring will remain of high importance for all creditors with business focus in Africa.
Despite these challenges, we wanted to use this issue to highlight the many positive opportunities emerging for Africa at this turning point. For example, the growth of blended finance as a tool to crowd-in public/private lenders and insurers for projects in higher-risk markets. Private insurers recognise the benefits of these risk-enhancing structures which open doors for opportunities to collaborate with ECAs and multilateral insurers which will ultimately boost overall capacity for economic development. Berne Union members also play a pivotal role in supply chain challenges in the region.
Opportunities are aplenty. Africa is growing and continuously needs investments in infrastructure. By various estimates, the continent’s infrastructure financing needs will be as much as $170 billion a year by 2025, with an estimated gap of around $100 billion annually. Poor physical infrastructure remains a significant challenge for many developing countries, particularly on the African continent.
This month’s issue explores how digitalisation can be a game changer for Africa’s global and regional trade. It is an opportunity to boost economic growth and industrialisation, alleviate poverty and improve people’s lives. The use of digital technology and services will contribute to the African Union Agenda 2063.
Now, more than ever, Africa is looking to digital solutions to increase productivity and drive development. ATI notes that the COVID-19 pandemic sharply accelerated African digital innovation, adoption, creation of regulatory policies and demand for more digital infrastructure across the continent. As countries move into this direction, it is also noted that digitalisation brings new risks (such as cybersecurity and business continuity) and challenges to macroeconomic policymaking including monetary policy transmission and changes to the tax base. The African Continental Free Trade Area (AfCFTA) presents an opportunity for African countries to establish common positions on e-commerce and harmonisation of digital economy regulations as well as to address these challenges.
The World Bank estimates that the economy of Sub Sahara Africa is set to expand by 3.6% in 2022, only slightly down from 4% in 2021. If we were to define an overarching theme for this issue of Sub-Saharan BUlletin it would be ‘mobilising Africa’s potential’.