When thinking about regional financial integration, one would think of regional currencies like the Euro as the epitome example, however a different story is unfolding in Southeast Asia. Financial integration in ASEAN has been a long sought-out dream for a region with an undeniably large market growth in the future. An integrated market would mean further development within the finance sector including banking, insurance, capital markets, as well as trade. In a region with great market potential yet low intra-regional trade, improving access to financial services will not only lead to economic and trade growth but also to market efficiency by lowering the cost of capital. However, financial integration is a complex matter and in order to fully understand it, one must understand ASEAN’s progress thus far and the small concrete steps the organization is taking in ensuring a financially integrated future.
ASEAN’s financial integration has been a drawn-out process, but its saliency has been expressed since the 1997 ASEAN Finance Ministers Meeting in Thailand. The first concrete step towards financial integration was taken in 2003 after the agreement between ASEAN’s finance ministers on The Roadmap for Monetary Integration in ASEAN.[1] This was followed by another step in 2007 when ASEAN leaders declared for the establishment of the ASEAN Economic Community (AEC) by 2016 within the formulation of the AEC Blueprint which encompasses plans for trade and services liberalizations, which includes financial services, capital account regimes, and financial system integration.[2] This would mean that the AEC plans to work on removing the restrictions for intra-regional financial service and capital account provisions, capital market harmonization and development, harmonization of payments and settlements systems, and mutual qualification for financial professionals.
By 2011, the ASEAN Financial Integration Framework was established as the main approach for initiatives to liberate and integrate financial sectors. With the goal of a semi-integrated financial region by 2020, the main objectives of the framework include the provision for intra-ASEAN financial services, capacity building and development of ASEAN capital markets, capital flow liberalization, harmonization of payments and settlement systems, and regional financing surveillance and arrangements. Two years after, the Central Bank Governors of ASEAN member states (AMS) published the “The Road to ASEAN Financial Integration—A Combined Study on Assessing the Financial Landscape and Formulating Milestones for Monetary and Financial Integration in ASEAN” Summary Report as a reference guide got the financial integration process.[3] The establishments of the AEC in 2015 only furthered the on-going progress. Currently, ASEAN has taken two very distinct steps in fulfilling the goal of the ASEAN Financial Integration Framework.
In a region where intra-ASEAN trade has not yet reached unprecedented levels, bilateral trade in Southeast Asia has long been dominated by the use of the dollar. This is mainly due to the dollar’s stability and liquidity, and also the lack of a regional currency unlike the Eurozone.[4] However, transactions using the dollar has made trade, investments, and business less efficient as it takes more time to convert local currencies into the dollar and reconvert them back. Overreliance on the dollar also causes it to strengthen which could potentially make local currencies depressed and trade more costly. Furthermore, ASEAN local currencies are known to fluctuate against the dollar which may impact their debt value, as a stable currency against the dollar would lead to less debt, but a fluctuating currency would increase debt.[5]
In 2016, Thailand and Malaysia initiated a bilateral cooperation for a local currency settlement and was followed by Indonesia in 2018. The aim was to establish a monetary framework that enables the usage of local currencies to facilitate cross-border payments and flow of trade. This framework became known as the Local Currency Settlement Framework (LCS) which enables bilateral transactions to be done using local currencies within each country. The goal was to reduce overreliance on the US dollar as the currency used for trade transaction settlements and to generate local currency stability by diversifying currency exchanges.[6] Ultimately, LCS is also a strategic move in developing transaction efficiency by implementing direct trading without having to buy and sell the dollar for conversion. Broadly, it will also enhance market efficiency and local currency market development.[7]
In its implementation, the central banks of these AMS (the Bank Negara Malaysia, Bank of Thailand, and Bank Indonesia) have appointed several banks within their respective countries as Appointed Cross Currency Dealers (ACCD). These are banks that have the ability to facilitate transactions in foreign currencies, under the consideration that they have good resilience and health, experienced in providing various financial services, and have good relations with banks in partner countries.[8] Services provided by the ACCD banks in local currencies includes issuing receipt of import and export payments for trades in goods and services, receipt and payment of labor compensation transactions and investment incomes, remittances, and direct investment between LCS customers with a 10% ownership minimum limit. Currently, there are 7 AACD banks appointed by Indonesia, 6 ACCD banks appointed by Malaysia, and 5 ACCD banks appointed by Thailand.[9]
As of now, the LCS cooperation has expanded to include Japan and China through the MoU signed between Bank Indonesia and the Ministry of Finance of Japan in 2020, followed by an MoU signed by Bank Indonesia with the People’s Bank of China (PBC) in 2021. The central bank of the Philippines, the Bangko Sentral ng Pilipinas, has also signed commitments with the central banks of Indonesia, Thailand, and Malaysia during the ASEAN Finance Ministers and Central Bank Governors Meeting in 2019, though they have yet to appoint any ACCD banks domestically.[10] Though trade between these countries is still heavily dominated by the dollar, the implementation of the LCS has showed a positive trend. In 2018, Bank Indonesia reported that Indonesia’s trade with Malaysia using the LCS framework reached 1.4% which rose to 3.6% in 2019 and 4.1% in 2020. Thailand also experienced a rise in LCS implementation numbers from 0.6% in 2018 to 1.1% in 2019 and 1.3% in 2020.[11] Additionally, it is predicted that trade and investments using the LCS framework will increase up to a targeted 10% in 2022, noting the US$2,53 billion transactions done within the framework in 2021. Such number constitutes 35% from trade transactions, 14% from remittances, 1% from investments, and 50% from interbank cover positions.
The LCS framework brings several notable benefits as its payments system is more efficient for faster transactions, provides alternative hedging instruments to export financing and direct investment, and exposes transaction settlement to diverse currencies whereby diversification is hoped to be able to support macroeconomic stability and foster economic recovery. The usage of the LCS has the potential to bring structural changes in payments invoicing within ASEAN. Though the share of local currency usage for trade and investments are still small—with only around less than 10% of transactions conducted in local currencies compared to the dollar—there is great hope for a more wide-spread use of the LCS framework, noting the positive growth of its usage since 2016. As of 2019, total trade done within the LCS has accumulated up to US$83 billion.[12] It is a slow and small step towards the long road for currency resilience in ASEAN.
Likewise, Indonesia recently created an initiative to expand the Quick Response Code Indonesia Standard (QRIS) features and services. The initiative was reiterated in 2021, and was followed with the commitment to establishing QR interconnectivity domestically and regionally. This is in line with the Bandar Seri Begawan Roadmap (BSBR): An ASEAN Digital Transformation Agenda to Accelerate ASEAN’s Economic Recovery and Digital Economy Integration document endorsed by the AEC that reaffirms ASEAN’s collective agreement to a five-year agenda towards the development of the ASEAN Digital Economy Agreement and negotiations on the Digital Economy Framework Agreement (DIFA) by 2025. Within the document, there is a special focus on the creation of financing, payment, and service connectivity in relations to the ASEAN Payments Policy Framework as also noted in the joint statement issued during the 8th ASEAN Finance Ministers and Central Bank Governors Meeting (AFMGM) this year.[13]
The ASEAN Payments Policy Framework for Cross-Border Real-Time Retail Payments fall under the Acceleration phase, whereby it aims to implement an inter-operable cross border digital payment via QR within the ASEAN region. This is done to increase the promotion for financial inclusion through digital finance services and regional payment connectivity in order to accelerate the Inclusive Digital Transformation Strategy, which includes the development of an ASEAN inter-operable QR Code Framework by 2022.[14] This is in line with the ASEAN Payments Connectivity Initiative which plays a key role towards furthering financial integration and connectivity of financial transactions in ASEAN, noting that QR payments are a reliable, affordable, and efficient method of payment that holds the potential to boost SMEs participation within international trade of goods and services, particularly within the tourism sector due to its practicality and convenience.[15] A cross-border QR holds a potential in increasing transaction efficiency and hastens the digitalization of trade and investment. Furthermore, the initiative holds the potential to go hand-in-hand with the LCS framework to help maintain macroeconomic stability. According to Bank Indonesia Governor, Doni P. Joewono, Bank Indonesia, Bank Negara Malaysia, and the Bank of Thailand has initiated a pilot cross-border QR that allows merchants and consumers to make retail and real-time cross-border payments via QR known as the Real-Time Retail Payments Systems (RT-RPS).[16]
A conclusion on the future of ASEAN’s financial integration
It should be noted that the current existing cooperation for the LCS framework and the cross-border QR initiative is being spearheaded by Indonesia, Thailand, and Malaysia, which so happens to also be part of the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT). These three countries also share similar sentiments in decreasing reliance on the dollar, and their strategic geographical proximity may have contributed to higher levels of trade amongst them, considering Malaysia and Thailand are part of Indonesia’s top 10 trading partners in 2018.[17] Through small concrete steps, these three ASEAN member states are paving the way for a wider ASEAN financial integration.
Since a reduction on dollar reliance and currency diversification could mean value stability for local currencies, governments need to make sure that data disclosures on the usage of the LCS framework is accessible to SMEs who may interested in conducting business with lowered exchange rate risks due to the wide choice of transaction currencies. Furthermore, information on preferential settlement currencies between firms and regular surveys for local currency usage in investments and trade are the key to promote greater use of the LCS within the region, as it would increase the numbers of direct transaction markets and create an ASEAN foreign exchange market to reduce local currencies transaction costs further.[18]Similarly, there is a lot of hope that cross-border QR payments would contribute towards economic recovery and the future of digital payments and finance, as an integrated cross-border QR initiative could spearhead the development of standardized financial technologies and infrastructure, which could hopefully expand for cross-border remittance payment and stock market sales. This initiative may hold great prospects to increase efficiency within international wholesale and retail trade and promotes investments digitalization.[19] Additionally, it has the potential to increase SMEs added values in conducting online direct transactions and boosting tourism recovery.[20]
However, for any of these initiatives to work regionally, ASEAN member states’ central banks need to expand efforts in digitalizing financial sectors in order to create an inclusive environment for an integrated financial market. Greater access and awareness on digital finance would not only drive the regional economy, but also reduce cash dependence, financial exclusion, and further realizing the AEC’s investment and trade liberalization. In this sense, the Qualified ASEAN Banks Framework should be utilized to help banks carry out the appropriate financial services and work together with stakeholders in ensuring the provision of digital financial technologies and e-platform services are accessible to many ASEAN member states, particularly for the CLMV (Cambodia, Laos, Myanmar, and Vietnam) where there is a cash-based market dominance and limited finance technological readiness.[21] The LCS and cross-border QR initiative have already operated under the principles of non-intervention and interacts with the ASEAN Way in regards to monetary power and autonomy through currency deterritorialization.[22] Hence, cooperation in fostering the political will and domestic readiness between ASEAN member states needs to happen to secure the future of ASEAN financial integration.
[1] ASEAN, “Finance Integration,” asean.org, n.d., https://asean.org/our-communities/economic-community/finance-integration/.
[2] ASEAN Briefing, “Understanding Financial Integration in ASEAN,” ASEAN Business News, April 27, 2016, https://www.aseanbriefing.com/news/financial-integration-in-asean/.
[3] ASEAN Briefing, “Understanding Financial Integration in ASEAN,” ASEAN Business News, April 27, 2016, https://www.aseanbriefing.com/news/financial-integration-in-asean/.
[4] J Shimizu, “Exploring Local Currency Usage to Reduce Exchange Rate Risks in Asia,” AMRO ASIA, January 30, 2019, https://www.amro-asia.org/exploring-local-currency-usage-to-reduce-exchange-rate-risks-in-asia/.
[5] A. Y. Widyastuti, “Gubernur BI Yakin Transaksi Local Currency Settlement Tahun Ini Naik 10 Persen,” Tempo (TEMPO.CO, February 16, 2022), https://bisnis.tempo.co/read/1561500/gubernur-bi-yakin-transaksi-local-currency-settlement-tahun-ini-naik-10-persen?page_num=3.
[6] Jalin, “Understanding Local Currency Settlement in Bilateral Transactions,” jalin.co.id, October 22, 2021, https://www.jalin.co.id/en/understanding-local-currency-settlement-in-bilateral-transactions/.
[7] Bank Indonesia, “Bank Indonesia Committed to Local Currency Settlement in ASEAN Region,” www.bi.go.id, 2019, https://www.bi.go.id/en/publikasi/ruang-media/news-release/Pages/Bank-Indonesia-Terus-Berkomitmen-Dukung-Implementasi-Penggunaan-Local-Currency-Settlement-di-Kawasan-ASEAN.aspx
[8] Jalin, “Understanding Local Currency Settlement in Bilateral Transactions,” jalin.co.id, October 22, 2021, https://www.jalin.co.id/en/understanding-local-currency-settlement-in-bilateral-transactions/.
[9] Bank Indonesia, “Bank Indonesia Committed to Local Currency Settlement in ASEAN Region,” www.bi.go.id, 2019, https://www.bi.go.id/en/publikasi/ruang-media/news-release/Pages/Bank-Indonesia-Terus-Berkomitmen-Dukung-Implementasi-Penggunaan-Local-Currency-Settlement-di-Kawasan-ASEAN.aspx
[10]The Jakarta Post, “ASEAN Local Currency Deals,” The Jakarta Post, 2019, https://www.thejakartapost.com/academia/2019/04/10/asean-local-currency-deals.html.
[11] Jalin, “Understanding Local Currency Settlement in Bilateral Transactions,” jalin.co.id, October 22, 2021, https://www.jalin.co.id/en/understanding-local-currency-settlement-in-bilateral-transactions/.
[12] A. Y. Widyastuti, “Gubernur BI Yakin Transaksi Local Currency Settlement Tahun Ini Naik 10 Persen,” Tempo (TEMPO.CO, February 16, 2022), https://bisnis.tempo.co/read/1561500/gubernur-bi-yakin-transaksi-local-currency-settlement-tahun-ini-naik-10-persen?page_num=3.
[13] ASEAN, “ASEAN Economic Community Council Endorses Roadmap to Accelerate Economic Recovery, Digital Economy Integration,” asean.org, 2021, https://asean.org/asean-economic-community-council-endorses-roadmap-to-accelerate-economic-recovery-digital-economy-integration/.
[14] Monetary Authority of Singapore, “Joint Statement of the 8th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting (AFMGM),” www.mas.gov.sg, 2022, https://www.mas.gov.sg/news/media-releases/2022/joint-statement-of-the-8th-asean-finance-ministers-and-central-bank-governors-meeting
[15] E Haryono, “Cross-Border QR Transactions Support ASEAN Financial Integration,” www.bi.go.id, 2022, https://www.bi.go.id/en/publikasi/ruang-media/news-release/Pages/sp_245022.aspx.
[16] IDN Financials, “BI: Cross Border QR Transactions Support ASEAN Financial Integration | IDNFinancials,” www.idnfinancials.com, 2022, https://www.idnfinancials.com/news/42210/bi-cross-border-qr-transactions-support-asean-financial-integration
[17] H Supadi, “The Use of Local Currency Settlement in Trade among Indonesia, Malaysia, and Thailand,” JOM FISIP 8, no. 2 (2021), https://jom.unri.ac.id/index.php/JOMFSIP/article/download/30945/29808
[18] N. Laoli and B. Pink, “BI Berencana Perluas Kerja Sama Local Currency Settlement Di Sejumlah Negara Ini,” PT. Kontan Grahanusa Mediatama, September 9, 2021, https://newssetup.kontan.co.id/news/bi-berencana-perluas-kerja-sama-local-currency-settlement-di-sejumlah-negara-ini.
[19] N. Ihsan and A. Olivia, “Cross-Border QR Code Bolsters Financial Integration in ASEAN Region,” Antara News, 2022, https://en.antaranews.com/news/215325/cross-border-qr-code-bolsters-financial-integration-in-asean-region.
[20] E Haryono, “Cross-Border QR Transactions Support ASEAN Financial Integration,” www.bi.go.id, 2022, https://www.bi.go.id/en/publikasi/ruang-media/news-release/Pages/sp_245022.aspx.
[21] P. Chuasakulvanich and P. Srimanote, “ASEAN – the Significance of Financial Inclusion by Qualified Financial Institutions,” Trade Finance Global, September 19, 2019, https://www.tradefinanceglobal.com/posts/asean-significance-of-financial-inclusion-by-qualified-financial-institutions/.
[22] Adinda Mardania and Mohtar Mas’oed, “Local Currency Settlement (LCS) Framework and the ASEAN Way: Implementation of Regional Monetary Agenda,” etd.repository.ugm.ac.id, 2018, http://etd.repository.ugm.ac.id/penelitian/detail/159989.
Marsha Phoebe is on her fourth semester as an international relations major in Gadjah Mada University, Jogjyakarta, Indonesia. Her academic concentration is on global politics and security with a special interest for low security issues. Regions of interest include Southeast Asia, Japan, Latin America, and Africa.
ASEAN-US Summit: Vietnam and the United States Place a High Value on Their Partnership
Where is ASEAN amidst the rise of protectionism?
Pillars of Economic: Entrepreneurs, Digitization, SME & Exports
Vietnam Promotes ASEAN’s Role in Resolving the South China Sea Dispute
Biden’s Indo-Pacific Economic Framework Lacks Teeth
Three decades of India’s ‘eastward engagement’ and a persisting set of challenges
Russia is the world’s largest and one of the most populous country, with a population of more than 145 million people. Aside from its statistical prowess, Russia has been a formidable economic force, serving as the world’s greatest provider of key commodities such as oil and coal. During the Soviet regime, Russia harnessed natural resources to acquire power and economic advancements, which helped to grow major industries like energy, mining, and engineering. In addition, Russia’s oil, gas, and electrical industries grew at a tremendous pace.
After the Soviet Union started to disintegrate, Russia got integrated with the global system markedly. Despite economic turmoil and hyperinflation first slowed the entry of capital inflows into Russia, it experienced rapid expansion in the early 1990s and came to a halt in 1998 under the effect of the crisis. Apart from a strong centralized state, Putin desired economic stability for the fatigued Russian people who had lived through the Soviet Union and the 1990s. As a result, in the new time in which he took power, he would acquire the people’s approval and enhance his position. In terms of the consequent budget deficit, foreign debt could not be found in sufficient quantities, and the situation was attempted to be rectified in part by printing money, which resulted in significant inflation. As a result, Putin has reduced spending and begun to collect more taxes since 2000 in attempt to find a solution to the budget problem.
Russia expanded both internal and outward flow of capital after restructuring its foreign loans in the early 2000s, and economic growth and liquidity expanded dramatically as oil prices rose. They also implemented policies which transformed their economy into the capitalist principles where they did it with the help of privatization. Financial stability improved because of external factors, and between 1996 and 2005, it grew at a rate of 3.8 percent per year on average. Currently, Russia is the world’s largest exporter of wheat, and they also export crude oil, refined petroleum oils, and coal to many countries. Since 2017, Russia’s exports have increased rapidly, and they export the goods mostly to China, Netherlands, Germany, Turkey, etc.
To begin with, coal has long been one of their most important exports. Russia is now the world’s third largest coal exporter, after Indonesia and Australia, accounting for around 18 percent of worldwide coal supply, and almost three-quarters of coal takes place in Siberia. Russia exported 211 million metric tons of coal in 2021, up 12.8 million metric tons from the previous year. Furthermore, Russia supplies coal mostly to the OECD (31%), China (43%), Japan (22%), and South Korea (20%). However, following the conflict between Russia and Ukraine, Russia’s coal exports to the OECD fell by 12%, from 6.45 million metric tons to 5.67 million metric tons. The largest resources of coal are found in Tunguska and Lena basins of East Siberia and the Far East, and, almost, 75% of Russia’s coal is produced in Siberia.
During 1970 and 1990, the Soviet System was buying grains, wheat, or cereals to feed and provide food for their livestock industry. However, in 1990, Russia could not refinance their industries, so the country’s livestock fell by half. Since that time, Russia’s main goal has been to revive the livestock and to be as self-sufficient as possible in agriculture. To accomplish this goal, Russia has been developing its grain infrastructure to accelerate trade by investing huge amounts in ports. In 2000s, Russia was producing 30 million tons of wheat per year, however, now, this number is more than 80 million which is 150% increase in just 20 years. Wheat is one of the most essential exports of Russia, with the country being the largest exporter of it, currently. Russia exported 38.5 million mt wheat in 2020, making it the country’s seventh largest export, accounting for 19% of global grain production. Furthermore, in 2021, the country exported around 44 million mt of wheat, accounting for nearly 24 percent of total global wheat output. However, the conflict between Ukraine had a negative impact on their wheat output, and they temporarily ceased exporting wheat to several nations, particularly OECD countries.
Russia is one of the most significant countries for oil, gas, and petroleum because of its vast energy resources, ranked in third place globally. In 2021, Russia generated more over $211.5 billion in mineral fuels, accounting for about 43% of total exports. Furthermore, the country produces more than a quarter of all the oil in the globe. Most Russia’s oil resources originate from the northern section of West Siberia, but the Volga-Ural zone and the Komi-Ukhta field are also key sources of oil. China ($23.8 billion), the Netherlands ($9.26 billion), Germany ($6.38 billion), South Korea ($5.03 billion), and Poland ($4.22 billion) are the top buyers of Russian crude oil. It sends over half of the 5 million barrels of oil it produces and exports every day to Europe. Russia’s oil imports satisfy 8% of Britain’s oil requirements. Although the United States is less reliant on Russia than other countries, Russia supplies 3 percent of imported oil. Because of the war, European countries started to discuss possibility of finding alternatives for Russian petroleum.
In 2021, iron and steel contributed for over 6% of Russia’s total exports at $28.9 billion. The majority of Russian iron is produced in the Kursk magnetic anomaly, the Kola Peninsula, the Urals, and Siberia. Currently, the country generates 17% of total global iron and steel output and 20% of other valuable commodities such as jewels. The nation is also a major producer of cobalt, copper, gold, nickel, and platinum. Russia now sells Iron Ore mostly to China ($885 million), Ukraine ($202 million), Germany ($155 million), Slovakia ($129 million), and Turkey ($101 million).
After several negotiations, the Corporate Council on Africa (CCA) has finally launched its 14th US-Africa Business Summit from July 19 to July 22 under the theme ‘Building Forward Together’ and will be held in Marrakech (Morocco) in partnership with Africa50 (the pan-African infrastructure investment platform) and the Kingdom of Morocco.
United States investors are looking forward to exploring several opportunities in the African Continental Free Trade Area (AfCFTA), a policy signed by African countries to make the continent a single market. The market, with estimated 1.3 billion population, requires all kinds of consumable products and new legislations stipulate localizing production inside Africa.
Thus the summit will further explore a renewed commitment by both public and private sector stakeholders to building stronger United States and Africa trade, investment, and commercial ties, emerging from unprecedented health and economic challenges for the past two years.
With AfCFTA that aims at boosting Africa’s trade, the United States investors are prepared to adjust their initiatives and pursue agreements that go beyond African Growth and Opportunity Act (AGOA). The Corporate Council on Africa is facilitating for potential investors in pursuing public-private partnerships that support the United States’ and African businesses, including women-owned and led Small and Medium-Scale Enterprises.
The three-day summit will include plenaries and panel sessions highlighting key economic recovery strategies and focused on a range of sectors and issues, including health and vaccine access, trade, digital transformation, infrastructure, financing, small and medium scale enterprises, tourism, women’s leadership and investment opportunities in various African countries.
The high-level dialogue is expected to set the scene for reviewing the opportunities for the United States and African public and private sector leaders, how to strengthen the economic partnership between the United States and Africa related to large-scale investments in key sectors such as oil and gas exploration, new trade agreements, and reviewing the African Growth and Opportunity Act (AGOA).
The 14th U.S.-Africa Business Summit, the first major in-person US-African gathering will attempt to re-engage and collaborate since the start of the Covid-19 pandemic. The Corporate Council on Africa has an exciting line-up of high level and panel discussions, networking opportunities, and activities that will allow attendees to meet face-to face to engage on key US-Africa economic issues and re-establish important business contacts that were not possible over the past two years.
The African Heads of State, US government and African officials, top CEO’s and senior executives from US and African companies operating in sectors contributing to Africa’s economic growth and relaunch including infrastructure, ICT, health, energy, mining, and creative industries.
The United States government report said the Biden-Harris Administration has been prioritizing to broaden and deepen economic relationships with Africa. The United States government and private sector leaders, together with African political and corporate business leaders, have been working consistently over these years to share insights on critical issues and policies influencing the US-Africa economic partnership. It will drive billions of dollars of investment in Africa, build new markets for American products and create thousands of jobs for African and American workers.
According to information made available, the lined up guest speakers include Mokgweetsi E.K. Masisi, President of Botswana; Filipe Nyusi, President of Mozambique and Nana Akufo-Addo, President of Ghana. Attendees will participate in high-level roundtables, panels, and country forums, with ample opportunities to network with business and government leaders to develop new business partners. The exhibition center will allow organizations to amplify their brand and showcase their business to leaders and the investment community.
During the summit, Africa50 in partnership with the Corporate Council on Africa, will run a series of discussions dedicated to infrastructure investing in Africa. The sessions will include a presidential dialogue; a roundtable discussion on ways to mobilize institutional investors’ capital to fund infrastructure projects; a session on opportunities to increase public-private partnerships in the power transmission sector; and a panel on tech-enabled infrastructure.
Speaking about the partnership, CEO Alain Ebobissé said, “we are pleased to partner with the Corporate Council on Africa for this important event which comes at a crucial time, as the continent faces unprecedented external shocks and is recovering from the Covid-19 pandemic. There is a need for strong, innovative, and bold responses to accelerate the recovery while driving climate-resilient and sustainable growth, and infrastructure will play a key role.”
The Kingdom of Morocco, the host organizer, reassured facilitating, as part of the corporate summit, group visits and tours of Marrakech and other Moroccan cities for special guests. As the only African nation with a Free Trade Agreement (FTA) with the United States, a major investor in sub-Saharan Africa and successes to showcase in penetrating key global manufacturing ecosystems (including aviation, agribusiness, and automotive), Morocco has much to showcase around the areas of increased intra-African trade as well as enhancing the US-Africa trade, investment, and commercial relationship.
With more than 1,000 US and African private sector executives, international investors, senior government, and multilateral stakeholders expected at the summit during Marrakech’s high season, it is strongly encouraged that attendees register early.
The Corporate Council on Africa is extremely grateful for the excellent partnership of the Kingdom of Morocco as the summit host, and partner Africa50 as well as summit sponsors including Royal Air Maroc (the summit official airline), Axxess, Jean Boulle Group, Pfizer, Visa, USP, Amazon, Gilead, Trimble, IHS Towers, Trade and Development Bank, Acrow Bridge, Trinity Energy, Citi, Flutterwave Inc., P&G, DLA Piper LLP, Attijariwafa Bank, Maroc Telecom, Creative Associates, Google, CrossBoundary and Frontier Bridge.
The summit media partners 35°Nord, All Africa, Jeune Afrique, and the African Media Agency. Without their collaboration, support and generosity, this year’s U.S.-Africa Business Summit would not be possible. The Corporate Council on Africa (CCA), a leading reputable American business association, continues facilitating the growth and enhancement of US-Africa trade, investment, and commercial engagement that supports the prosperity of the United States, its African partners, and American and African businesses and people.
Russia’s “special military operation” that was approved by State Duma and Federation Council, and directly aims at “demilitarizing and denazifying” the neighbouring former Soviet republic of Ukraine has shattered the global economy. The Ukraine crisis and its adverse impact and consequences is squarely blamed on Russia. Beyond that, some experts believe that Russia and China are ambitiously creating a “new world order” to halt unipolar system and the hegemony of the United States.
In the meanwhile, Russia has come under a raft of draconian sanctions imposed by the United States and Canada, European Union, Japan, Australia, New Zealand, and a host of other countries. The sanction-imposing countries are equally under the harsh conditions, equally as many Asian, African and Latin American countries are unbearably suffering from the global escalating prices. Wide-spread social discontent is also deepening against governments that supported war-mongering Russia.
According to the United Nations Food and Agriculture Organization, nearly half of Africa’s 54 countries rely on Russia and Ukraine for wheat imports. Russia is a major supplier of fertiliser to, at least, 11 countries. Reuters news agency reported that Africa is suffering from disruptions in food supply and soaring prices of basic goods and risks “disastrous consequences” if the situation endures, African Union Chairman Macky Sall said during a conversation with philanthropist Mo Ibrahim at the Ibrahim Governance Forum, far ahead before he travelled to Russia.
Early June, Senegalese President and African Union Chairman Macky Sall and the African Union Commission Moussa Faki Mahamat went to the south-western Russian city of Sochi for a top-level meeting with President Vladimir Putin purposely to discuss measures which could alleviate the escalating problems related to the food and agricultural inputs, and to find some strategic solutions within the context of Russia-African relations.
During the discussions, Macky Sall explicitly complained: “Anti-Russia sanctions have made this situation worse and now we do not have access to grain from Russia, primarily to wheat. And, most importantly, we do not have access to fertilizer. The situation was bad and now it has become worse, creating a threat to food security in Africa.”
Sall further explained: “It is also possible to look at Asia, the Middle East and Latin America – we see that the world is closely following the developments, but the countries that are so far away from the hotbed of the conflict are still experiencing its worse consequences.”
Russia, these years, plays a lot driving home Soviet-era sympathy to win the hearts of African leaders. Its traditional links are prioritized mainly on Soviet-era African allies, and its foreign policy is highly state-centered. Worse, it has poor public outreach policies and thus there are still negative perceptions and attitudes among the African public towards Russia.
“We are at a new stage of development and attach great importance to our relations with African countries,” Putin noted. According to him, the development of relations between Russia and Africa has shown positive results. Russia has always been on Africa’s side, has always supported Africa in its fight against colonialism. Though never a colonial power in Africa, Moscow was a crucial player on the continent in the Soviet era, backing independence movements and training a generation of African leaders.
Admittedly, Russia’s ties with Africa unexpectedly declined with the collapse of the Soviet Union in 1991 and China has emerged as a key foreign power, investing in many sectors, on the continent. While Russia’s economic footprints and in developing the needed infrastructures are still parctically invisible, the fact still remains that the United States, European Union and a number of Gulf States are also investing significantly in Africa.
Putin’s meeting with Macky Sall and with the participation of Moussa Faki Mahamat was very significant within the context of Russia-African relations. This high-level meeting shows Russia’s interaction has entered a new stage of development with the African Union, including expanding political dialogue, and possibly bolstering more practical economic cooperation as well as re-identifying cultural exchanges with African countries.
In an article published by the French Press Agency (AFP), it says talks between the AU leadership and the Russian president illustrate the importance of enhancing the bilateral relations. While African leaders are attempting to build international solidarity aims at achieving genuine peace and global security, it also important to initiate a new reform drive to transform agricuture and industry throughout Africa.
With the changing global situation, there is absolutely the need for reviewing policies. In terms of the foreign policy, Africans have to understand that the “new global order” as globe-throtted by Russia and China has limitations. Experts say Russia is highly limited by its own global economic footprints despite its ambitions to lead the world, and here it can only seek alliance with and swim in the glory of China that has spent years expanding and practically setting its economic policies around the world.
Despite criticisms, China with an estimated 1.5 billion population is considered as an economic power. It has collaborative strategic diplomacy with external countries have made it attain superpower status over the United States. The United States influence seems fading away, China has indeed taken up both the challenges and unique opportunities to strengthen its position, especially its trade and investment, and consistently building economic muscles.
There are now three dimensional crisis: food, energy and finance. With the economic consequences of the Russia-Ukraine crisis, it is another signal for African leaders to rethink about designing import substitution policies. Beyond all that, it seems Africans have no other way to reverse their addiction for food imports that take significant part of their budgets, despite the huge arable land. Food deficits are occurring with the potential for causing famine especially in the Sahel and Horn of Africa regions.
Previous months, especially in March and April, a number of reports published by the International Monetary Fund (IMF), the World Bank (WB) and many international organizations and academic institutions show that Sub-Saharan economies are likely to be impacted by tightening of global conditions and reduced foreign financial flows into the region. The analysis noted the high fuel and food prices will translate into higher inflation across African countries. Most of the reports, however, warned the broad impoverished population will further be badly hurt and be vulnerable to the unexpected changing conditions.
Some pointed directly to the increased likelihood of civil strife as a result of food and energy-fueled inflation, particularly in this current environment of heightened political instability. “As African countries face continued uncertainty, supply disruptions and soaring food and fertilizer prices, trade policy can potentially play a key role by ensuring the free flow of food across borders throughout the region. Amid limited fiscal space, policymakers must look to innovative solutions such as reducing or waving import duties on staple foods temporarily to provide relief to their citizens,” said Albert Zeufack, World Bank Chief Economist for the Africa.
On the other hand, Africa countries are indeed struggling with recovery efforts after two years of Covid-19 that locked them behind borders. One notable fact is that recovery remains uneven, incomplete and happening at varied rates of speed across the region. For example, the United States, the German and French have broader plans, not arms and weapons, on food security for Africa.
Ms Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), has urged African countries not to close down trade while calling for deeper investment especially in agriculture: “The message the world needs to hear is, keep trade open. Africans can help Africans by urgently investing in more food production in the continent. We are looking for ways to invest with you in resilience to shocks, especially climate shocks.”
Under the article headline “Harness Africa’s Agric potential to feed the World” published in April, Dr Akinwumi Adesina, the President of the African Development Bank (AfDB) Group, has charged Africa countries to harness their agricultural potential and become the global food buffer. His arugemt was based on a basic fact that the continent occupies about 20 per cent of Earth’s total land area, and 65 per cent of uncultivated arable land, unlocking its potential would make it a solution to global food crisis.
Dr Adesina, who is also a former Minister of Agriculture and Rural Development of Nigeria, said: “Africa must become a solution to global food crisis by unlocking the full potential of agriculture sector. What Africa does in agriculture will determine the future of food in the world, because Africa has 65 per cent of all the arable land in the world that is not yet cultivated.”
The AfDB President has urged African countries to ensure quality standards of food produce and export to other countries. The Feed Africa strategy for Agricultural Transformation in Africa (2016 to 2025), was initiated to make Africa a net food exporter and move the continent to the top of export-orientated global value chains where it has comparative advantage. This is aimed at contributing to eliminating extreme poverty in Africa and ending hunger and malnutrition in Africa by 2025.
Dr Adesina has several times atempted explaining a simple fact that the drive for structural transformation of agriculture becomes absolutely necessary as there was no dignity in Africa begging other countries for food. “Africa does not need bowls in hand, Africa needs seeds in the ground and mechanical harvesters to harvest bountiful food produced locally. Africa must feed itself with pride. There is no dignity in begging for food.”
The Bank’s efforts has brought home $1.5 billion for the African Emergency Food Production Facility. During the Bank’s presentation on its financial statement on the sidelines of the annual meeting, indicated that the facility was a bold response by the Bank to revolutionize food production and mitigate a looming food crisis due to the Russia-Ukraine war.
It’s now imperative for African leaders to search for sustainable investments in agriculture and for building industry with their foreign partners. Essentially, investing in agriculture, adding new technologies to help farmers increase their productivity, even in climate change is what should be in the African leaders begging bowls, but it is more descent to fairly negotiate for funding support rather than begging the potential external partners.
The AfDB has encouraged consistently building on higher productivity rather than aid dependency. It has been advocating for expanding social protection programmes, strengthening economic resilience and responsiveness to shocks of Russia-Ukraine crisis, labour market programmes, protecting urban informal workers and helping the population invest in their health and education. The African Development Bank Group is Africa’s premier development finance institution.
Ever since the British voted to leave the European Union in 2015, the country has struggled to articulate a vision...
Is mankind really on the brink of an exciting, but potentially terrifying future? Some scholars think that this is the...
When thinking about regional financial integration, one would think of regional currencies like the Euro as the epitome example, however...
China could be entering choppy Middle Eastern waters. Multiple crises and conflicts will likely shape its relations with the region’s...
The war of attrition is gradually becoming a reality as Russia continues to make gains in the east. According to...
The first Summit of the Americas convened in Miami, Florida (Dec 1994). Imagined by Bill Clinton, it increased trade and...
Russia’s President Vladimir Putin has given lengthy assessments of the situation in global policy and economy when speaking at the...
Africa’s Economy and the New Global Order
US national policy regarding the nuclear threat in the Russo-Ukrainian war
Artificial intelligence and moral issues: The essence of robotics
The Insane Energy Policies of the Biden Administration
Why Africa Comes Under Critical Review at St. Petersburg Forum
More Action; Fewer Words: Pakistan’s Military Diplomacy
How to fight a wage garnishment in Georgia
Morocco Hosts the 14th US-Africa Business Summit