by Ndumiso Mlilo
JOHANNESBURG, March 9 (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.
Madhavan said, "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 years."
"As commodities 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.
Madhavan said, "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 funding available.
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 generated.
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 with Africa."
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.