Assisting African countries to make the most of their commodities, particularly in industrializing to promote growth, job creation and economic transformation is now a strategic priority of the Economic Commission for Africa says Stephen Karingi, Director of the ECA’s Regional Integration and Trade Division (RITD).
Mr. Karingi said this in opening remarks to an expert group meeting on the “Petrochemicals Cluster for Intergovernmental Authority on Development (IGAD) Member Countries”, focusing on “Regional Survey of Potentials, Trends and Possible Operational and Policy Measures” in Addis Ababa yesterday.
He said value addition in the petrochemicals sector has a huge potential to contribute to Africa’s industrialization, especially given the continent’s endowment in crude oil and natural liquid gas, which are increasingly being discovered in IGAD countries.
“It has always been the view of ECA, and I believe everyone here also shares the same view, that although Africa’s starting point is unfavourable, its potentials in industrial development are tremendous,” said Mr. Karingi, adding some other developing regions, like East Asia, had proven such potentials by their successful industrialization.
“Their success is an encouragement for us, that Africa also has the possibility to make significant progresses in industrialization given proper strategy, policies and efforts.”
Citing the success of Africa’s richest man Aliko Dangote and the Dangote Group, Mr. Karingi said the importance of petrochemicals is not going unnoticed in the continent.
“Dangote Group is an African industrial conglomerate. It feels that the big growth opportunities are mainly in Africa,” he said.
The Dangote Group is expanding with a market capitalization of about US$25 billion in 2015, aiming to reach US$100 billion by the year 2020 and it operates from Nigeria, the biggest oil exporter of the continent.
The group is building an oil refinery, with an output of 650,000 barrels per day, which will be the biggest petrochemical complex in the world in one single location. It will cost US$12 billion to build, and will generate a turnover of US$24 billion per year.
“This example could certainly be replicated in the IGAD region, where many countries are still net importers of refined petroleum products. Not to mention the opportunities provided by downstream activities,” said Mr. Karingi.
He added that intra-African trade could be a springboard to wider economic diversification and industrialization if regional integration recorded decisive progress.
The RITD Director said Africa has felt the pains of the major challenges confronting the global economy, adding these “challenges remind us of the urgency for Africa to achieve economic diversification to more value-adding sectors, in order to become less vulnerable to external shocks and promote sustainable development.”
“This era also presents Africa potential opportunities. The shift of global economic power opens a new gate for Africa to find access to additional resources for industrial development and lift itself from the risk of being marginalized in the global production chain,” said Mr. Karingi.
He told participants that new technologies, like mobile communication devices, were helping Africa business and industries to operate in a cheaper and more innovative way.
Mr. Karingi said the IGAD report being considered at the meeting draws on IGAD member States’ experiences to date with cluster-based economic development.
“It is my hope that this meeting will brainstorm on some of the key issues relating to the development of a petrochemical cluster the IGAD region. It will also contribute to the development of analytical framework for designing a competitive industrial economy in the continent,” he said.
IGAD was created in 1996 to succeed the Intergovernmental Authority on Drought and Development that was founded in 1986 to deal with issues related to drought and desertification in the Horn Africa.
The regional block came to existence with a new name, organizational structure and a revitalized ambition of expanded cooperation among its member States with a mission to assist and complement the efforts of the member States to achieve food security and environmental protection, peace and security, and economic cooperation and integration in the region.
Distributed by APO on behalf of United Nations Economic Commission for Africa (UNECA).