GrowthCore with Mohamed Samir: It’s a good thing intra-Africa trade is low

Africa rarely trades with itself. A continent of more than 1 billion people; Africa is a big market that manufacturers on the region could exploit and do well, even without expanding to other regions. More than 80 percent of goods produced in Africa are exported. While many see this a big challenge, Mohamed Samir, President – India, Middle East and Africa (IMEA) for Procter & Gamble (P&G) welcomes it with a smile.

“Actually I’m happy its low,” he says, referring to intra-Africa trade as he sat with The Nerve Africa in Kigali, Rwanda’s capital city. Samir is not happy about the challenge but he is enthusiastic about the opportunities it presents.

The Egyptian who joined P&G in 1989 opined that despite the poor rate at which Africa trades with itself, the continent is still rising, with growth up to 5.6 percent a year in 2013, making it the world’s fastest-growing region. Although growth has slowed to as low as 3 percent in 2016, the African Development Bank (AfDB) expects it to rebound in 2017. The World Bank also expects that most African countries will reach “middle income” status by 2025 if the continent continues to record strong growth. “Imagine what will happen if intra-Africa trade rises to 60, 70 or 80 percent,” Samir enthuses. However, he expects businesses to be serious about exploiting the opportunities ahead and also urges the government to ensure an enabling environment, as well as, introduce policies that foster trade.

Samir

Samir thinks innovation will help Africa achieve its trade goals quicker. According to him, companies on the continent can leverage on technology to make sure products reach all the places they are meant for faster and in a good way. Poor infrastructure has always been a barrier to trade. It raises the cost of production, reduces efficiency and makes it difficult to transport goods to the market. Innovative solutions tailored towards tackling Africa’s infrastructure challenge will go a long way in boosting trade.

As discussions about increasing intra-Africa trade continues, the P&G IMEA president advocates for liberlization of the skies, “making it one Africa.”

Studies have found out that liberalised air markets benefit from reduced air fares, increased air traffic, more competitive airlines and a consequent growth in employment and GDP. Ministers for civil aviation across Africa, themselves acknowledged this in 1999, when they adopted the Yamoussoukro Decision, which calls for full liberalization of intra-African air transport services in terms of access, capacity, frequency, and tariffs.

While hopes are high that Africa’s economic growth will continue, Samir expects to see decisive actions from policy makers. “I’m a man of choices,” he says, explaining that he would rather see a government that chooses a few projects that can be completed instead of promising to embark on several projects and end up completing none. If policy directions are clear to the private sector, they can plan accordingly, he adds.

Despite unfavourable policies in some African markets, P&G believes in Africa. The consumer goods company has been in the country for nearly two centuries and has invested more than $1 billion. Samir posited that if you’ve invested as much as $1 billion, “you have to invest more to keep innovation going and to protect the investments you already made.”

“We are keen on Africa. We do not talk Africa based on its growth potential but about what progress is happening now,” says Samir.