REGIONAL cement manufacturing giant, Pretoria Portland Cement (PPC), is strategically positioning itself to tap into trade opportunities under the African Continental Free Trade Area (AfCFTA) and has rallied the construction sector to warm up for increased business under the new trading framework.
PPC managing director in charge of international operations, Mokate Ramafoko, believes the AfCFTA is a giant step in the right direction and has called on the private sector to be proactive, particularly the construction sector, a key economic pillar with huge downstream impact, which stands to be immensely if it plays its role to ensure success of the proposed regional trading agreement.
A total of 44 out of 55 African Union (AU) countries signed the agreement establishing the AfCFTA on 21 March 2018 in Kigali, Rwanda. South Africa, which did not sign at the time together with Nigeria, has since come on board. If successfully ratified and implemented, it will be the biggest trade agreement since the formation of the World Trade Organisation in 1995 and aims to create a single market for goods, services and movement of people in the continent.
“These will not materialise if the industry is not proactive and strategically geared to leverage off these opportunities. With the implementation of the various infrastructure projects, it is likely that demand for our products and services will increase. The industry cannot afford to be found wanting when this happens,” says Ramafoko.
“It is, thus, my contention that, informed by solid and credible market intelligence, the industry should make the necessary investments before demand spikes. It is imperative that we start forming the necessary critical partnerships now to ensure that when the time comes we are well positioned to deliver world class quality infrastructure.”
He says PPC was already positioning itself for the widened regional market having already championed various investments running into millions of dollars across Africa, specifically in South Africa, Rwanda, DRC, Ethiopia, Zimbabwe and Botswana. These are set to go a long way towards bolstering cement production - a product that is critical and necessary in any large infrastructure project.
“PPC’s choice of countries to invest in was deliberate. Not only do these have a high potential domestic demand for cement and related products, but they are strategically positioned to serve neighbouring countries in regions where they are situated. Importantly, we don’t see ourselves as just cement producers; we see ourselves as playing a bigger role in contributing to the growth and development of all our chosen markets and the continent at large; igniting meaningful collaboration both within and outside our organisation. We call this ethos 'strength beyond', which is entrenched throughout our business,” says Ramafoko.
The AfCFTA) would be the largest such free trade area when one considers the number of countries involved. The PPC boss says its implementation is critical to weed out numerous trade barriers, which continue to negate economic growth in the continent as these frustrate investment.
“There is thus a general consensus amongst economists and scholars alike that when it comes to force, the trade area will yield major economic benefits for the continent, its citizens and businesses alike,” he adds.
Ramafoko further contends the AfCFTA will give the regional infrastructure-build programme an added impetus, which will assist the continent to bridge the infrastructure gap estimated at $93 billion annually, according to the World Bank. As such, he says the construction industry should play a leading role in harnessing the development of this much needed infrastructure.
“The rapid development of infrastructure, especially regional mega projects in the continent is urgent and critical. Infrastructure is a catalyst for economic growth, competitiveness and integration,” says Ramafoko.
“Modern and world class infrastructure will expedite the economic integration as envisaged by the Free Trade Area, ensuring that the barriers of trade are removed both on paper and physically.”
He acknowledged the AU efforts, in partnership with the UN Economic Commission for Africa, African Development Bank and the NEPAD Planning and Coordinating Agency, among other significant role players, towards developing a focussed programme to attend to the infrastructure challenge.
“In my view, the construction and associated industries should continuously and as a matter of urgency, engage the various governments and multilateral institutions that have the responsibility of providing the necessary infrastructure.
“This should be done with a view to understanding the priorities and development needs especially the scale, impact and bankability. This will guide both our production capacity allocation and investment decisions.” says Ramafoko.
Proponents of the regional integration agenda argue that many of Africa’s 55 countries are small, with populations of fewer than 20 million and economies of less than $10 billion. Their infrastructure systems, like their borders, are reflections of the continent’s colonial past, with roads, ports, and railroads built for resource extraction and political control, rather than to bind territories together economically or socially.
In view of this, Ramafoko says most countries would battle to build the critical infrastructure on their own and require partners that are driven by the same objectives within a regional integration framework.
“A proactive approach involving delivery-focussed partnerships will be a game changer as it will bring together small and big economies to deliver mega regional infrastructure projects. The essential benefit of regional infrastructure is the formation of large, competitive markets instead of the current collection of small, isolated, and inefficient ones. Undoubtedly, the industry will benefit during the construction phase as large competitive markets form as a result of integrated economic development,” he says.
The PPC top executive applauded initiatives such as the North-South Corridor and the Southern Africa Development Community (SADC) Infrastructure Master Plan, saying these present massive opportunities for public private partnerships (PPPs).
“There is recognition that PPP arrangements assist governments to close material financial, managerial and technical gaps, while supporting regional integration,” he adds.