Regional Integration as the main course…

Esaja.com is driven by the core philosophy that the integration of Africa is the key to prosperity and development. As globalisation spreads its tentacles to each and every corner of the world, Africa’s fragmented markets will simply not cope when faced with bigger players from abroad. Pre 2009 Zimbabwe is the most fitting example of what happens when domestic economies are not integrated enough. Politics aside; the country went from being one of the most robust markets in Africa to a state of disarray, breaking inflation records in the process. In hindsight, it is evident that a dependency on internal markets and a lack of regional exposure contributed to the cocktail of chaos.

Zimbabwe used to have thriving industries across a plethora of sectors, yet very few companies actively ventured out into the neighbourhood (regional expansion). They rather chose to lock themselves up in their comfortable home market or deal with distant western outposts. When dark clouds began gathering, it was simply too late to respond. Value was eroded overnight as company after company gave way to very dire operating conditions. At about the same time as the country was plunging down the economic scoreboard, new markets were opening up across the region. Increasing geo political stability and a commodities boom led to the emergence of stars like Ghana & Zambia. Zimbabwe could have played a greater role in the development of these countries as demonstrated by Zambeef’s expansion into West Africa.  But it didn’t. Instead it lost its luster.

As an unprecedented wave of growth sweeps across Africa, many countries risk falling into the trap Zimbabwe did. An unsustainable commodities boom or short term political stability in a country could result in a period of growth and national spending. Memories of tough times will quickly disappear as the pantry at home is overstocked. Little long term investment, economic diversification and regional expansion will occur. At about this time, Dutch Disease will begin hovering about. Factors underpinning commodity booms are simply too volatile for ANY modern country to underpin its economy on. When prices crash, the unprepared economies will undergo a severe beating that could trigger instability.

African enterprises, trade bodies and entrepreneurs need to stop looking at regional expansion as dessert. It should be at the top of the agenda as the main course if long term continuity is to be guaranteed. A lot of the continent’s governance and structural mechanisms are relatively young and WILL experience growing pains. Survival of the fittest in this case will be hinged on regional expansion. The bulk of our markets are under served and wide open to home grown players that are flexible enough to see opportunities where others see difficultly.

Image courtesy of Eatout.co.zw

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