By Ndumiso Mlilo JOHANNESBURG South
Africa (Xinhua) -- South Africa’s
Standard Bank said Thursday intra-Africa trade could fast track
economic development in the continent like it happened in Asia.
Vinod Madhavan, head
of transactional products and services for Africa at Standard
Bank, said the continent is expected continue as the second
fastest growing region in the world over the next four years
returning growth rates between four and five percent.
He said intra Africa
trade reduced due to low commodity prices last year, and trade
within the continent would create more jobs.
“Africa could increase its intra- Africa trade three fold and
still not match Asia’s level of internal trade. In Asia, trade
and exports have been central to the region’s exponential
growth, lifestyle improvements and stability of the last 30
rebound, 2017 is expected to set new records in the volume and
value of African trade however, the point is not to get
side-tracked by some of the current headwinds,” he added.
He said Africa
should learn from Asia, increase trade volumes in the continent
for maximum benefits. Global and cross-border trade is the
fastest contributor to growth, and it supports domestic trade,
small and medium enterprise formation and job creation.
Madhavan said this
has been seen in emerging markets over the last 30 years. He
however cautioned that Africa should address the current
challenges like legislators not adopting the most efficient
policies and political risks.
Madhavan said there
has been debt default in Mozambique and local currencies are
losing value, U.S. dollar and other hard currencies remains
scarce within key economies.
He also mentioned,
there have been over 10 bank defaults in a number of countries,
in the near past.
“While this growth has not been even, much can be done to ensure
that future growth continues to support economic development.
Despite the defaults seen over the last year, we are seeing
greater accountability and transparency in the banking system
across markets which provide a level of comfort for investors.”
Standard Bank also
believes the continent should fight the negative perception
which some potential investors have on Africa just like for
other emerging markets.
He said the negative
perceptions reduce the funding available for trade finance,
widening the gap between the need for trade finance and the
Madhavan said this
has been the case in the emerging markets where negative
perception negatively impacts trade-fueled growth, reducing the
number of jobs created along with the development revenue
He said there have
been, “the concerns around operating in Africa are often much
higher. As an African bank, we need to be clear on how we help
our client manage risk, by helping clients understand the
headwinds in the right context and then delivering the solutions
that mitigate such headwinds. Beyond managing risk, we work
across all our markets in Africa to create an environment that
allows people in Africa to do business within and between
countries as well as for people across the world to do business
He said banks have a
pivotal role to play to reduce the perception gap that can
materially affect people’s lives by diminishing the continent’s
ability to trade.
Madhavan said this
year the continent will realize opportunities available to drive
regional and global trade. Standard Bank also believes that
Africa has rich and varied financial services.
Madhavan said South
Africa leads countries like UK, Germany and France in financial
services sector. He also said, “This combination of
world-leading expertise and capability, with untold opportunity
for growth, defines the continent as a hot bed for innovation.”
He said around 2019
he expects to see indigenous technology that will drive regional
trade. The indigenous technology made in Africa could reduce
cross border friction.
“As we develop the
mind-set, clear policy commitment to multilateral trade, and the
platforms, to drive African development through trade-led
growth,” he added.