Indonesia-Africa Forum 2018

KOMPAS/DIDIE SW

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Indonesia will host the Indonesia-Africa Forum (IAF) 2018 in Bali on Apr. 10-11. President Joko "Jokowi" Widodo is scheduled to open the IAF, which will be led by Vice President Jusuf Kalla on its second day. Even though the forum is not a ministerial meeting, the Indonesian Foreign Ministry has invited a number of African cabinet ministers. The forum will discuss the economic and trade cooperation agenda, and is set to be the platform of the government’s diplomatic achievement with Africa under the leadership of President Jokowi.

As Jokowi once pointed out at the G-20 Summit in Berlin on July 8, 2017, the close political ties between Indonesia and African countries that was established at the 1955 Asia-Africa Conference (KAA) must be realized as close economic ties through encouraging investment, reducing and eliminating trade barriers and improving technical cooperation. Therefore, Africa must be prioritized in Indonesia\'s diplomacy, development cooperation, investment and trade.

African economic potential

Indonesia and Africa are predicted to be strategic powers in the future global economy. PricewaterhouseCoopers released a report in February 2017 on projected global economic growth until 2050, which forecast the 32 countries that would evolve into world economic powers. The report said economic growth in Asia and Africa would drive the global economy. In 2050, Indonesia is predicted to become the 4th world economic power. Several countries in Africa will follow Indonesia, such as Nigeria at 14th, Egypt (15th) and South Africa (27th).

The International Monetary Fund (IMF) has predicted that Africa will become the second fastest growing region in the world between 2016 and 2020 with 4.3 percent annual growth. Meanwhile, McKinsey Global Institute described the potential and economic progress of Africa as a "lion on the move".

The World Bank also expects economic growth in Africa will continue to rise. At a time when many countries around the world are still struggling with the prolonged economic crisis, like the European Union whose economy has grown only by 1.6 percent, Africa\'s economy has grown by about 3.5 percent, the second highest in the world after Asia.

There are three positive trends for supporting Africa’s economic development. First, the continent has a young population that works as laborers. By 2034, Africa is estimated to have the world\'s largest working age population at 1.1 billion. Second, Africa is still experiencing urbanization. According to the UN, 187 million Africans will live in cities within the next decade. This urban expansion will contribute to growth in household and business consumption, and African consumers will spend an estimated US$2 trillion in 2025. Third, technological developments have also had a positive impact on Africa in opening up economic growth.

Mario Pezzini in his “Africa\'s transformation: Open for business”, which was published in The Africa Investment Report 2016, predicts that the extractive sector will no longer be a major driver of the African economy, and that continent will experience two economic transformations.

First, Africa\'s significantly increasing domestic growth will create a large market and a major driver of the economy. Its indicator is the continuously growing population of Africa. The African population had reached 1 billion people by 2010. It is projected to reach over 2 billion people in the next 30 years and more than 4 billion by the end of the century. All these people need food, housing, clothing, transportation and with mobile phone connectivity.

Second, it is not enough for Africa to be just a big market, and it will also be a producer of high-value goods and services. This will accelerate regional integration and domestic reform to increase productivity and eliminate various obstacles to economic growth, particularly in the infrastructure, energy and skills sectors.

Indonesia\'s opportunities

Indonesia needs to capitalize on Africa\'s future economic transformation. Indonesia has made various intensive efforts in the African market. It has assessed the establishment of a tariff reduction mechanism through Preferential Trade Agreements (PTAs) with a number of key countries, such as Angola and Mozambique, as well as with the Southern African Customs Union and Economic Community of West African State regional groupings. Other efforts include increasing the intensity of mutual visits among high-ranking officials, businesspeople, academics and other stakeholders. At the multilateral level, Indonesia took advantage of its attendance at the 44th Conference of Islamic Conference in July 2017 in Côte d\'Ivoire to continue communicating with a number of African countries.

Indonesia’s diplomatic strategy is also complemented by technical cooperation. Since 2006, Indonesia has gained much recognition from African countries for its active role and contribution in supporting Africa’s development. This is mainly done through training in agriculture, fisheries and SMEs. Indonesia is also committed to advancing development in Africa by supporting the G-20 Africa Partnership and the African Union Agenda 2063.

Based on the Trade Ministry’s data on Indonesian-African trade, Indonesia’s total trade and investment with Africa in 2017 was worth US$8.83 billion, $4.86 billion in exports and $3.97 billion in imports. Currently, more than 28 private companies and state-owned enterprises are conducting trade, business and investment in Africa. Meanwhile, Africa\'s cumulative investment in Indonesia since 2010 is $5.23 billion with 1,270 projects.

The best way to combine diplomacy and political efforts with business and economic partnerships is with South Africa. South Africa is Africa\'s third largest economic power after Nigeria and Egypt, with a GDP of $314.6 billion (2015) and covering 20 percent of the African continent. South Africa has also received World Bank ranking as an upper-middle income country.

Indonesia and South Africa have a bilateral consultation mechanism in the form of the Joint Trade Committee (JTC), and have signed agreements and MoUs in various fields such as trade, agriculture, defense, culture, financial transactions, taxation and technology research. JTC meetings have been conducted three times: 2006 in South Africa, 2012 in Indonesia; and the latest in 2017 in Pretoria, South Africa.

As a fellow country that has felt the bitterness of Western colonialism, the Indonesia-Africa cooperation must be based on the spirit of "Dasasila Bandung" (the Ten Principles of Bandung), namely mutual, non-exploitative benefits and jointly advancing civilization. The Indonesia-Africa Forum 2018 should be a historic occasion to transform the political and potential ties of Indonesia and Africa into concrete, sustainable economic and development cooperation.

Eko Sulistyo, Deputy of Political Communication and Information Dissemination, Office of the Presidential Staff