Afreximbank advises Africa to produce higher value-added goods to check vicious cycle of low income

For Africa to break from the vicious cycle of low income, low savings and low investment, it must move away from commodity dependence into production of higher value-added goods, Dr Benedict Oramah, Afreximbank President, has said.

A statement issued on Thursday by Mr Obi Emekekwue, the bank’s Director and Global Head, Communications and Events Management Department quoted Oramah as giving the advice at the “Africa Leaders Speak” Forum at Harvard University’s Kennedy School in Cambridge, U.S.

Oramah said that accumulating capital along the value chain and increasing trade amongst African economies would give the continent a comparative advantage and enable it retain more value within Africa.

“The African Diaspora, with GDP estimated at over $500 billion, must be seen as a market for exports and for sourcing human and financial capital,” he said.

The bank President reaffirmed Afreximbank’s commitment to fostering intra-African trade, promoting the industrialisation of the continent and attracting more resources to complement existing trade finance flows into Africa.

He told the forum, which featured former African Heads of States, that industrialisation and African Diaspora investment were key to raising Africa’s capital stock.

Oramah said that Africa’s low levels of capital accumulation was largely as a result of African economies not capturing a good share of the value chain of agricultural commodities and natural resources.

“For instance in the global cocoa sector, which generates $120 billion annually, African farmers, who deliver 77 per cent of the cocoa supply, retain only 3 per cent to 8 per cent of the value, while a few foreign traders and chocolate manufacturers earned between 32 per cent and 50 per cent of the global cocoa value chain.

“Similarly, in the oil sector, Africa receives only 3 per cent of the $3 trillion from the petroleum products market although it accounts for 10 per cent of crude oil reserves.

“In other sectors like the gold, Africa accounts for 50 per cent of the world’s deposits, but receives only 4 per cent of the over $300 billion global gold earnings,” Oramah said.

He said that Afreximbank had the Market Asymmetry index to measure the distribution of revenues to various actors in the commodity value chain.

Other speakers at the forum included former Nigerian President Olusegun Obasanjo, who delivered a work on: “Agriculture and Agribusiness in Africa’s Development and the link between Security and Continental Integration.”

Former Tanzanian President Jakaya Kikwete spoke on: “The Role of Education and Technology”; while Carlos Alberto Whanon de Carvalho Veiga, former Prime Minister of Cape Verde, discussed: “The Role of the Private Sector in Trade and Industry.”

The event was organised by the Center for African Studies, Harvard University, U.S.

The African Export-Import Bank (Afreximbank) is the foremost pan-African multilateral financial institution devoted to financing and promoting intra-and extra-African trade.

The bank is headquartered in Cairo.