Beverages industry showcases potential of business coalitions for African inclusive growth

Since the launch of the potentially US$3trn African Continental Free Trade Area (AfCFTA) on 7 July 2019, Africa has a renewed optimism for inclusive growth fuelled by intra-Africa trade. Fully realising this potential will require not only liberalisation of trade and harmonisation of policies but the expansion of existing industries that will benefit from the agreement’s rules. 

As such, the AfCFTA presents an opportunity to further the continent’s economic and social integration by building cross-continental industries and value chains and driving economic inclusivity deep and wide into the youthful population of African entrepreneurs.

To do this, the private sector will have to be at the forefront of this endeavour by identifying opportunities and coordinating among players.

Continental industry coalitions can play a pivotal role in supporting such ambitions by allowing diverse industry players to exchange practices, identify needs and build scale while communicating their aims to governments and regional economic communities and multilateral agencies.   

The non-alcoholic beverage industry is a particularly interesting example as it unites not only beverages companies and their bottlers but farmers, raw material producers, packaging material companies and all those players that allow drinks to reach even the most remote corners of the continent.

This vertical and horizontal integration of diverse industries yields the potential to generate thousands of jobs, enhance skills and drive multiplier investments. Take Ethiopia: a member of the non-alcoholic beverage industry in this emerging market currently employs approximately 1350 full-time employees directly whereas an additional 50,000 people are employed along the domestic value chain.

Over the past decade, opportunities for viable recycling businesses have emerged in numerous African countries and industry in all regions of the continent is working towards decreasing its environmental impact, notably by reducing PET footprints through package innovation and increased collection and recycling. Industry calculations show that such voluntary initiatives driven by the collective business community have the potential to bring about a positive GDP net impact.

Industry-driven partnerships to implement recycling and sustainable waste management solutions are already delivering promising results. In South Africa, the PET Recycling Company (PETCO), a voluntary Extended Producer Responsibility model set up by the industry, has increased the country’s PET collection rate to 63% in 2018, from 16% in 2005. Uganda’s PET recycling rate also exceeds expectations as a result of industry-led initiatives to set up and support collection infrastructure. Across the continent, the voluntary Extended Producer Responsibility approach is proving to be successful in driving collection and enabling recycling where appropriate.

A sustainable recycling system has the potential to create jobs and build businesses while providing an overall positive net GDP impact of one per cent. Yet some markets may prove too small for local PET recycling solutions, calling for regional action. The rules of the AfCFTA will be critical to fostering such solutions. By facilitating intra-continental trade and investment, regional integration can be a strong vector to develop innovative solutions, new business streams and even new industries facilitated by regional scale. This prompts us to rethink our borders, assess growth differently and redefine our business models.

The Beverage Forum of Sub-Saharan Africa (BFSA) has been founded to facilitate the realisation of such scenarios. It aligns across diverse non-alcoholic beverage industry players and associations from the continent with a view to providing a neutral forum to discuss common issues and to engage with governments and regulators on continental, regional and national levels. We realise that only by acting in concert can the non-alcoholic beverage industry hope to jointly develop sustainable responses to social, environmental, economic and fiscal challenges faced by African societies and industries.

The forum will allow industry to jointly work towards a conducive business environment that supports the realisation of new opportunities, secures continued growth and unlocks the tremendous potential for job creation. In addition, the momentum generated by the forum will lead to better planning to preserve natural resources and to a strengthening of the links between the informal and formal sectors. From global brands to small and medium producers, the forum seeks to serve as a unified voice for all operators across the whole value-chain and a single point of entry for regional governmental organisations and other stakeholders to engage with the industry.

More than ever, the continent is currently shaped by emerging trends, environmental, demographic, technological and political, that are substantially changing the structure of industries and the rules of the game. In light of these dynamics, we need platforms to foster integrated value-chains across multiple markets and build strategic partnerships that deliver a comprehensive set of social and economic benefits at scale. BFSA believes that the non-alcoholic beverage industry has an important role to play in this and thus sets out to provide a holistic industry voice that supports the AU’s promise of an integrated, inclusive and prosperous Africa. n

Mapule Ncanywa (l) is Executive Director at the Beverage Association of South Africa.