Infrastructure and Regional Integration-Agro-industry Nexus ECA Infrastructure and Regional Integration-Agro-industry Nexus Dr. Stephen Karingi Director, Capacity Development Division 26 April 2017 Victoria Falls, Zimbabwe Global Expert Meeting on Agriculture and Agro-industries Development towards Sustainable and Resilient Food Systems

Infrastructure Development, Regional Integration & Agro-Industrialization Nexus: a Conceptual Framework ECA Infrastructure assets (e.g: energy, water) as inputs for agro-industry sector (agro-manufacturers) Infrastructure services (transportation incl. shipping, ICTs) needed by agro-industries Direct Efficiency gains from economies of scale and scope (e.g. connectivity within and outside local market such as improved regional integration) Better access and efficient use of technology Promotion of FDI inflows – attractiveness Improved education and health of workers Indirect Infrastructure Development Agro-industrialization Regional integration Agro-industrial development stimulates infrastructure investment to fulfil infrastructure demand by agro-industry Agro-industrial development also strengthens regional integration through (a) improved intra-trade, (b) sustained linkages among production and consumption centers at regional level, and (c) stimulated investment in regional infrastructure to fulfill the demand of increased intra-trade in agricultural commodities and products UNECA.ORG

Regional Integration State: Africa Regional Integration Index ECA 3 Why? Measuring where Africa stands on regional integration gives an assessment of what is happening across the continent and is an important way of highlighting where the gaps are. It is a dynamic, evolving way to track integration by giving everyone access to verified, quality information to start a dialogue and take forward the next steps to integrate Africa. Structure? Global Expert Meeting on Agriculture and Agro-industries Development   UNECA.ORG

Regional integration: RECs achievement ECA 4 REC Trade integration Regional infrastructure Productive integration Free movement of people Financial and macro-economic integration Average CEN-SAD 0.353 0.251 0.247 0.479 0.524 0.3708 COMESA 0.57 0.439 0.452 0.268 0.343 0.4148 EAC 0.78 0.496 0.553 0.715 0.156 0.54 ECCAS 0.526 0.451 0.293 0.4 0.599 0.4538 ECOWAS 0.442 0.426 0.265 0.8 0.611 0.5088 IGAD 0.505 0.63 0.434 0.454 0.221 0.4488 SADC 0.508 0.502 0.35 0.53 0.397 0.4574 UMA 0.631 0.491 0.481 0.493 0.199 0.459 Average of eight RECs 0.461 0.384 0.517 0.381 0.4566 Global Expert Meeting on Agriculture and Agro-industries Development   UNECA.ORG

Regional integration state: Intra-trade perspectives 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000 I Intra-African trade of manufactured and other products over time Labour intensive and resource intensive manufactures Low skill and technology Medium High Other products Share of Africa’s imports from Africa vs. from rest of the world – 2012

Indeed, very serious challenges remain to harness Africa’s agribusiness potential locally to global The costs of trading across borders within Africa remain high on average with transport costs faring 100% higher on the average compared to levels observed in the developing world Africa’s international infrastructure networks, such as the Trans-African Highway network continue to have missing links resulting in broken regional supply chains and costly value chain channels to fix Flight connectivity is centered around a limited number of continental hubs Lack of energy security is another constantly mentioned nightmare in industry surveys. Quality of electricity or energy security is another top concern, second only to access to finance in similar surveys to assess the binding constrains to agro-industry growth in Africa over 2010-2016 Several internal administrative obstacles to free trade persist in the form of tariffs and non- tariff barriers (NTBs), and also non-core NTBs: illegal roadblocks, fees and bribes encourage informal cross-border trade involving higher costs and risks for traders and consumers The agricultural supply and marketing system itself is excessively fragmented, underequipped, underfinanced and poorly organized to cope with a dynamic urban food demand Level of Gross expenditures in R&D is still very low to make a difference (less than 1 % of GDP) Title of the presentation goes here | Sub-Title goes here UNECA.ORG ECA

Infrastructure and processing capacity development at scale matter Côte D’Ivoire – a dormant agri business nation Source: ERA, UNECA (2016) As a result of a weak continent wide infrastructure set up and high barriers to trade to connect the regions, very little is processed locally from readily rich agriculture portfolios for intra-African outlets : Cote d’ivoire is a good case in point but not alone for the missed industrialization boat despite its relatively good national infrastructure network to suggest going at scale with regionally pooled infrastructure investment if African agribusiness and agro industrialization are to thrive and make a difference. UNECA.ORG ECA

Regional Integration and agro-industrializing: efforts and key issues ECA 1. Accelerating the implementation of BIAT, TFTA & CFTA Initiatives aimed at fostering intra-trade through providing for enabling environment, in terms of regulatory and standards frameworks. Though endorsed (BIAT & TFTA), a strong political will is urgently needed for implementation Initiatives cater for providing adequate opportunities for small economies to benefit of facilitated trade environment. FTAs provides for duty-free trade of agricultural products 2. Fast track the implementation of PIDA Initiative aimed at accelerating the implementation of prioritized sub-regional and regional infrastructure projects in Africa in transport, energy, trans-boundary water and ICT accelerate the facilitation of intra-Africa energy trade, essential for powering agro- industry Set up an adequate institutional framework for the development of major integrative power projects Development of supportive initiatives and strategies is critical just as their implementation and coordination at national, sub-regional and regional levels.

Regional Integration and agro-industrializing: efforts and key issues ECA 3. Value chain maximization and regional integration - Pursuing regional integration provides a room for the promotion of RAVCs allowing for: Economies of scale for agro- industrialists upon access larger markets and diversification Production and manufacturing according to comparative advantage Increasing cost efficiency and competitiveness Enhance capacity to access GVCs Need to promote appropriate technologies & innovations along the VCs, Support market development for commodities and processed goods via VCs Share of intra-regional trade vs. share of regional value added in the intra-regional trade, by main region, 2011, % Source: WTO, International Trade Statistics (2012) and ECA computations

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