Addis Ababa, Ethiopia, May 18, 2018 (ECA) – The 51st session of the Conference of African Ministers of Finance, Planning and Economic Development has come and gone but memorable speeches that sought to egg Africa on towards bolder policy formulation to support the continent’s efforts for inclusive economic growth remain etched on the mind.
In particular Ireland Bank Governor, Philip R. Lane’s keynote urging smaller African countries to sign up to the African Continental Free Trade Area (AfCFTA) Agreement, a move he said would have a game-changing impact on economies on the continent.
The message could not have come from a better person. Coming from a country considered as the poor man of Western Europe for nearly all of the 20th century; one that has gone through all the difficulties and challenges Africa faces today, Mr. Lane was the perfect person to encourage African leaders that if Ireland could do it, then they also can.
Ireland was a poor country and her people migrated in numbers such that over 80 million people worldwide claim Irish ancestry today. But in the 1990s the country turbo-charged itself to become a hub for transatlantic business and multinational investment, earning itself the moniker "Celtic Tiger."
“I think some lessons from Ireland can be useful in informing policy making in some of your countries and in maximising the benefit of the new Continental Free Trade Area,” Mr. Lane told African Ministers of Finance, Planning and Economic Development.
He said with Africa projected to see the largest increase in population of any continent in the coming thirty years, this presented both great opportunities and great challenges.
“In this context, an efficient, continent-wide single market can make a fundamental contribution in promoting inclusive economic growth across a more integrated continent,” said Mr. Lane.
Ireland joined the European Economic Community, now the European Union in 1973 and it was by far the poorest country in the Community at the time. It’s GDP per capita was just 53 per cent of the EU average.
“Ireland was a peripheral economy on the edge of Europe and quite dependent on exports of basic agricultural products. Ireland was also heavily economically dependent on our former colonial power, the United Kingdom: in the early 1970s, over 60 per cent of exports went to the UK market. A quarter of the Irish workforce was in the agricultural sector and Ireland experienced high levels of unemployment, high emigration rates and low productivity in key economic sectors,” said the Ireland Bank Governor.
Forty-five years later, he said, the picture is very different.
“Firms in Ireland now have access to a single market of over 500 million consumers across the EU. In turn, a large EU market provides a key foundation for global trading activity, both through scale effects and the assurance that EU membership provides to international customers in relation to regulatory and product standards.”
Stability
Mr. Lane said as a result living standards in Ireland were now comparable to those prevailing elsewhere in the EU. Exporters – both local enterprises and large- scale multinational sector – are a key driver of the overall productivity sector and provide an important source of economic and financial stability.
It’s traditional agri-food sector has been transformed, with a shift towards higher value-added activities, and the country is now an important location for international manufacturing, international business services and international financial intermediation.
“One primary lesson is that, for a small country, gaining access to a large market is an enormous opportunity. It has transformed the outlook of our domestic enterprise sector and has been a fundamental building block of our success in attracting FDI,” said Mr. Lane as he encouraged African nations that have not yet signed up to the AfCFTA to do so for their own benefit and the continent’s as a whole.
“A second lesson is that EU membership by itself was not sufficient. Domestic policies and domestic institutions must provide the environment conducive to a flourishing enterprise sector.”
Mr. Lane emphasised that sustainable growth was only possible due to a number of factors, including a long period of public investment in the education sector for the important local supply of high-skilled workers.
“A durable and successful domestic policy framework will only prove resilient in the face of external or domestic shocks if there is a shared social commitment to maintaining a robust set of institutions that underpin its foundations,” he said.
To sum up, the Bank Chief said his country’s membership of the EU had been transformational for its prosperity and growth.
“Our economy and society are unrecognisable today in comparison to the Ireland that the joined the EU in the 1970s. Access to a large market alone was a necessary but not sufficient condition for transformation. It also required an enabling business environment for domestic and foreign companies alike, effective policy frameworks and public investment in physical and human capital,” he said.
“I hope my remarks will assist you as you start to plan, both at regional and at national level, for the entry into force of the Continental Free Trade Area. We in Ireland are ready and willing to continue to share our experiences with you as you take forward this ambitious task.”
The theme for this year’s CoM was; the African Continental Free Trade Area: Creating fiscal space for jobs and economic diversification.