“With such a high expectation, greater regional co-operation becomes imperative, and this lack of trust and the historical tensions between economic regions need to be removed.”

Tom Winterboer, PwC Financial Service Leader for South Africa and Africa leader said that the creation of trade blocs make economic and resource sense, because the countries involved are generally already each other’s biggest trading partners. “Also, many manufacturing and service companies in Africa are keen to expand their regional production and distribution footprints, and the impediments to this should be removed.”

The African Union is highlighted as a body which can play a key role in fostering regional co-operation and harmonisation. Other RECs such as the East African Community (EAC), the Economic Community of West African States and the Southern African Development Community can also promote business growth through supporting the movement of goods, services and talent, for example with scarce specialised skills in the financial services industry, across borders, and through harmonised tax and regulatory structures. Some of the existing challenges may take longer to resolve, such as regulatory frameworks relating to currency movements and exchange rate issues.

Winterboer noted that the African financial services sector in particular could benefit from improved regional co-operation. “Banks are looking for uniform regulatory structures across individual markets to facilitate regional expansion. Recognising the high cost of complying with multiple regulatory regimes, RECs such as the EAC are working towards common publication and disclosure requirements for the financial statements of regional commercial banks.

Across Africa, RECs can support information sharing among central banks, and promote consolidated supervision regimes for regional banks to encourage growth in the sector – and at the same time preserve the independence of the central banks.”

More complex

With regional trade in Africa expanding and becoming more complex, Winterboer says the issue of good governance is now a priority. “Increasingly, companies in Africa are adopting international governance standards, either voluntarily or in response to pressure from African and international capital markets, which should not be underestimated.

Throughout Africa there is a move towards international governance standards to facilitate the movement of capital, across the continent and internationally. It is significant to note that these governance standards should not only be audited, but embedded in the business culture of organisations. However, there is still much to do on transparency and governance so that regions will have greater confidence in each other, which in turn leads to enhanced inter-regional trade.”

Governments have a critical role to play in fostering good governance and Winterboer believes the private sector should be actively engaging with governments and regulators to ensure countries and regions implement appropriate frameworks. He added, “This interactive relationship between business and the state becomes even more important when the continent is constantly changing and business expanding so rapidly.”