2023-10-11 12:00:37
Interview with Lauras Anagonou, investment banker on Wall Street in the United States
Lauras Anagonou holds a Bachelor’s degree in public policy from the University of Illinois at Chicago. He will earn his master’s degree in public finance and international economics at Northwestern University in 2019. The African question is no longer a secret for him given his expertise in one of the most prestigious investment banks in the United States. United. For him, the rise of Africa is dependent on its industrialization. And Morocco has already jumped on the bandwagon to speed up the process. Decryption.
ALM: As a guest, how do you read the choice of location (editor’s note: African country) for holding the 2023 Annual Meetings of the World Bank and the IMF?
Lauras Anagonou: The choice of Marrakech as the venue for this meeting is of great significance. It demonstrates the importance given to Africa in the global economic agenda. This choice also provides a forum to highlight the unique development challenges that African countries face, while reinforcing the commitment of the World Bank and the IMF to inclusion and sustainable development on the entire African continent.
What are your expectations from this event?
I expect concrete measures, going beyond mere rhetoric to translate into tangible actions, with particular emphasis on job creation for youth, digital inclusion, sustainable mobility and electronic provision of services governments. Furthermore, I hope that urgent measures will be taken to strengthen infrastructure financing, encourage public-private partnerships (PPPs) and stimulate technological innovations conducive to poverty reduction.
What are the main factors contributing to the rise of industrialization on the African continent in recent years?
Although Africa’s share of global manufacturing output remains below 2%, most African countries are slowly but surely moving towards industrialization, driven by several dynamic factors. Africa’s abundant natural resources provide a reliable source of raw materials for a wide range of industries. Improvements in the business climate and prudent macroeconomic management have created a stable and attractive environment for domestic and foreign investment. In addition, increasing commodity prices, the emergence of a growing middle class and competitive labor costs are key factors. The continent’s industrial journey is marked by the creation of more than 230 special economic zones (SEZs) and industrial parks, thus creating specialized hubs for industrial activities.
What are the major challenges that African countries face when it comes to boosting their industrial sector?
Africa’s industrial growth faces significant challenges, including access to reliable power supply and insufficient infrastructure such as roads, airports, ports and railways. For example, Africa only has regarding 31 km² of paved roads per 100 km² of territory, compared to 134 km² in other low-income countries according to a United Nations study. In addition, more than 80% of paved roads are not in excellent condition. Worse, 85% of rural roads are impassable in rainy seasons. Africa has more than 100 ports, but port operations are often slow, causing cargo waiting times to average two weeks, compared to less than a week in other regions such as Asia, Africa. Europe and Latin America. Handling costs in Africa are also around 50% higher than elsewhere, according to data from the African Development Bank (AfDB). In addition, rail transport in Africa is largely insufficient. Indeed, despite the vast surface area of the continent, which is equivalent to China, India, the United States and much of Europe combined, the African railway network is not significantly more extensive than that of France and Germany combined. Even more surprising, 13 African countries have no operational railways. These challenges, resulting in high transportation and logistics costs, hamper industrial growth. To boost industrialization, Africa must ensure access to finance for small and medium-sized industries, have reliable energy infrastructure, maintain low transport costs and train a competitive workforce.
Can you share concrete examples of African countries that have successfully developed their manufacturing industries and the lessons that other countries might learn from them?
Morocco, a country that I love very much, is an example in terms of industrialization on the African continent. The country has a total of 119 industrial zones and 7 special economic zones, including Casablanca, Rabat, Oujda, Tangier, Kenitra and Agadir. These areas benefit from a full tax exemption for the first five years, followed by a reduced rate following this period. They thus meet the needs of a wide variety of industries. The Kingdom has free trade agreements with more than 50 countries as well as bilateral tax agreements. Regarding the automotive sector, the country currently has a production capacity of 700,000 cars per year. Nine car models, including two electric, are assembled in Morocco. Exports from the automotive sector reached a record level of $11 billion in 2022. Groups such as Renault-Nissan, Peugeot, Volkswagen and Hyundai have automobile factories in Morocco. The Moroccan aeronautical sector is a driver of the economy, generating US$2 billion in exports. Leading original equipment manufacturers (OEMs) are integrating Moroccan-made components into their products, creating long-lasting and mutually beneficial partnerships with major industry giants such as Airbus, Boeing, Pilatus, Sukhoi, Comac and Embraer. This integration helps strengthen Morocco’s position as a key player in the global aeronautical industry. Regarding the lessons to be learned from Morocco in the field of industrialization, I would highlight the importance of two words, namely vision and leadership.
How can governments and international partners work together to foster sustainable industrial growth in Africa?
It is essential to collaborate to fund scientific research, facilitate technology transfer and knowledge sharing. Additionally, public-private partnerships are necessary to build transportation and energy infrastructure. When it comes to energy, it is crucial to define Africa’s role in the global energy transition by exploring, for example, the production of green hydrogen. As for the question of financing industry in Africa, a McKinsey study shows that institutional investors in Asia, America and Europe, who are interested in investments in Africa, currently have 11,000 billion US dollars at their disposal. . It is essential to direct this capital towards infrastructure projects and industrial factories in order to catalyze wealth creation.
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