Out of several challenges that impede growth of the manufacturing industry in Africa, the CEO of First National Bank of Botswana (FNBB), Steven Bogatsu, has identified the market as the most prominent one.
Participating in a panel discussion at the US–Africa Business Summit that tackled “Enhancing Africa’s Value in Manufacturing Value Chain,” Bogatsu said the prominence of the market is the reason organisations of regional cooperation are being established as an attempt to improve market access.
“We have talked a lot about AGOA (the African Growth and Opportunity Act), and I am not diminishing or taking anything from its benefits,” he said. “But when we start talking about AGOA too many times, I believe we are actually externalising our control.”
The business case
Bogatsu pointed out that the US has a market of about 330 million people whereas Southern Africa alone has 379 million people. “Africa has 1.4 billion people, which is five times the size of the AGOA market,” he noted.
“Why are we failing to ensure that all these regional organisations, or even the bigger one that we have in place that was established in 2021, work by removing all the restrictions and regulations that make it difficult for one company to export to another within the continent? If we did that, we would succeed in the business case because the business case would stack up.” He emphasised that there would be synergies because the banking sector usually works with a business case. “The business case has to stack up in order for us to provide the financing that is required,” Bogatsu said.
Agreements and resolutions
“We would not have to ask questions like how the US can help us. Investors would come here because there would be a business case. Everything would work as it should. There wouldn’t be any issues of financing because FDI would come in.” He asserted that it is also important to implement agreements and resolutions of symposia like the US–Africa Business Summit. In such a scenario, he added, the US could assist by enacting anti-dumping legislation to ensure that goods produced in Africa are protected.
“They can assist probably with skills. They can also encourage FDI into Africa. That’s what we need,” said Bogatsu. Outlining Botswana’s manufacturing industry, he pointed out how it has been dependent on mining. “It is only in the last couple of years that we started making inroads into the value chain around jewellery – cutting and polishing.
Machinery and pharmaceuticals
“But there are more opportunities that have been identified downstream, again in the mining environment,” he said, adding that such opportunities include production of machinery and other equipment.
“There are also opportunities that have been identified by the government around pharmaceutical production,” Bogatsu pointed out. Also taking part in the same panel discussion, Alicia Eggington, Vice President and General Manager of Procter and Gamble (P&G) South Africa, Botswana and Namibia, said the company has learnt a lot in its young journey in Africa as it strives to uplift the continent.
SMMEs and global companies
“We have an SMME academy where we have worked with over 2,000 SMMEs to improve their capability, particularly with regards to working with global companies,” she said.
She disclosed that the company, which mostly focuses on production of consumer goods, has partnered with another entity to educate 460 women-owned African SMMEs. “Through this programme, we have allowed them to work with other multinationals,” she said. “Our operations in Africa talk to about 10,000 direct and indirect jobs.”
The CEO of African Association of Automotive Manufacturers (AAAM), David Coffey, said Africa’s automotive remains largely unregulated, hence between 3 million and 5 million cars per year are dumped on the continent. “That needs to change,” he said. “The majority of those vehicles are not roadworthy and don’t have the right conditions or standards.”
Afrexim Bank and automobiles
Coffey revealed that the AAAM has collaborated with the secretariat of the African Continental Free Trade Agreement (AfCFTA), the African Union (AU) and the Afrexim Bank, among others, to develop a strategy for Africa. “It was approved by a council of ministers at the ministerial meeting in Botswana in February this year,” he said.
“We believe that with the right policies in Africa, the demand and production of new vehicles can increase from 1.1 million last year to 5 million in 15 years.” But it is important that the value chain is also developed to a point where every country is able to produce vehicles. Chief Supply Chain Officer at The Children’s Place (which focuses on children’s clothing), Gregory Poole, called for developing an integrated supply chain.
Vertically integrated supply chain
He disclosed that the company is building a vertically integrated plant in Togo, which will become a real game changer. “Through this vertically integrated supply chain, we can create transparent, traceable and environmentally responsible supply chains,” Poole said.
Another panelist, the Executive Director of Tropical General (TGI) Group – Africa, Farouk Gumel, said manufacturing is about patience and having a long-term outlook. “You cannot get it done at the first attempt and you cannot get it done at the second attempt,” said Gumel. His conglomerate of global businesses operates in 13 countries across Africa, the Middle East and Asia in various business verticals such as food and agribusiness, FMCG, chemicals, pharmaceuticals and financial services.