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Tuesday, 28 March 2017

How can Africans trade more with other Africans?

As The Economist put it in January, “the companies at the cutting edge are local, not global.” As a result of these and other factors, such as the strong dollar, the profits of multinationals are falling. Thus it is increasingly difficult to make a business case for the global company, at least in the form of costly brick-and-mortar operations in numerous countries. And the reduction of global ambitions among the multinationals has coincided with resurgent populist nationalism in the developed world. Still, if intra-African trade is to be lifted from its current paltry level, it is likely to come about through the cross-border supply chain activities of pan-African multinationals. Thus, it behoves African companies to take on the mantle of intra-African trade. Besides, African banks are already well set up for the task. Ecobank is the quintessential pan-African bank – headquartered in Togo, it has operations in 36 African countries. Another example is Nigeria’s United Bank for Africa, which already operates in 18 African countries, but has plans to expand to another seven. Meanwhile, some retailers and manufacturers have moved from being regional champions to developing an African ambition. Shoprite, the South African retailer has operations in at least 15 African countries, selling products manufactured in its home country across the continent. In countries where the authorities have sought to buoy their domestic manufacturing capacity, Nigeria for instance, the retailer has adapted, adding locally manufactured products to the mix of goods on its shelves. And in the construction sector, Nigeria’s Dangote Cement, largely owned by Africa’s richest man, Aliko Dangote, is not only building plants across the continent, but has now begun to export cement from these plants to those countries where it only has import terminals.

Source: African Business Magazine