Canadian Manufacturing

Trudeau urged to scramble for African business and trade opportunities

Canadian products still account for less than 1% of what Africa imports

February 12, 2020  The Canadian Press

The Trudeau government needs to scramble to deepen trade and investment in Africa to make up for ground lost to competitors such as China, the United States and Europe, say Canada’s top chief executives.

As Prime Minister Justin Trudeau crosses Africa on his first major tour there, the Business Council of Canada is urging his government to do more to tap the continent’s “underappreciated growth potential.”

Trudeau spent last weekend meeting African Union leaders at their summit in the Ethiopian capital of Addis Ababa and has started a two-day official visit to Senegal on the continent’s western tip.

The prime minister is mainly focused on winning African support for Canada’s bid for a temporary seat on the U.N. Security Council in a vote later this year, but he did manage to kickstart talks in Ethiopia toward a foreign investment protection agreement.

On many of Addis Ababa’s streets, buildings are under construction under a skyline dotted with cranes. Many of the projects have been started by keen developers who hope to find investors to enable their completion.

The investments come often enough that now there is hope for more.

“Ethiopia can be connected,” said Samrawit Moges, who founded the company Travel Ethiopia 26 years ago. “We are the origin of humankind. We are the origin of coffee.”

Selam Wondimu, the founder and managing director of Grohydro Manufacturing, which makes hydroponic farming technology and equipment, said she sees a country gaining confidence.

But Ethiopia won’t be able to go where it wants to without outside help, she said.

“To create the Africa we want, we need this kind of collaborating,” Wondimu said. “Yes, we need technology, transformation, partnerships.”

Canada needs to speed its efforts with a comprehensive economic and development strategy because even though it has tripled its exports to the continent in this century, Canadian products still account for less than 1% of what Africa imports, a new report from the business group concludes.

Meanwhile, the European Union has negotiated partnership agreements, China is investing billions in new infrastructure through its Belt and Road Initiative, and the U.S. is countering China’s push with its own Prosper Africa project, the report says.

“The bottom line is we’re underperforming in Africa,” said council vice-president Brian Kingston. “Everyone is moving into the region and Canada better have a strategy and a plan if we want to be well-positioned there.”

The council’s report says Africa is home to six of the world’s 10 fastest growing economies and its overall gross domestic product is growing at 3.6% annually, faster than the global average. That could accelerate as the continent reaps the benefits of its own Africa-wide trade deal while 200 million new residents flood African cities by 2025.

By 2045, Africa will have a larger urban population than China or India, says the council’s report.

It cites agri-food and manufacturing as two key areas where Canadian firms can make inroads.

“For years, everyone was talking about the rise of Asia, and Canada was a bit late to that party. I don’t want to see us missing another opportunity like that, where we’re not putting enough attention and investment into the region at the right time,” said Kingston.

Trudeau’s own briefing book for his new term as prime minister, a copy of which was obtained by The Canadian Press under the Access to Information Act, describes sub-Saharan Africa as a region of “major economic potential and growing geopolitical significance.” But it also makes clear that despite the progress, 41% of sub-Saharan Africans live in extreme poverty.

“Sub-Saharan Africa faces significant challenges exacerbated by demographic pressures, with 60% of the population under the age of 25,” says the memo to Trudeau.

That disparity was evident during Trudeau’s visit to Addis Ababa, a thriving city but one very much still in transition. As the African Union’s home, it has become Africa’s version of Geneva or New York, with thousands of foreign diplomats injecting cash into the city’s economy.

Western-style shopping malls sporting the logos of Apple and Baskin Robbins sit adjacent to ramshackle shacks with corrugated metal roofs barely supported by dilapidated poles. Children roam the streets near large hotels, begging for help.

Between 2000 and 2018, Ethiopia cut its poverty rate from more than 50% to less than 30%. Infant mortality was halved, and life expectancy rose from 52 to 66 years. But in rural Ethiopia, the World Bank says, poverty still exceeds 40%.

“Things are changing for the better,” said Moges, the tour operator. “When mostly Ethiopia used to be known negatively with the famine, poverty, it has changed a lot.”

Kingston said Canada is well-regarded in Africa in part because it wasn’t a colonial power. That will be underscored when Trudeau visits Senegal’s Goree Island, which played a role in the African slave trade.

“Canada is really well-respected and well-liked, particularly on the trade side where we’ve helped them with capacity-building. We’re a big reason that the African Continental Free Trade Area is what it is today.”