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Italy rarely, if ever, features on the list of countries with a big presence in the East African region. Not anymore. Italy’s Minister of Economy and Finance was in Kigali and spoke to The EastAfrican’s BERNA NAMATA on the renewed interest in the region.
What is driving Italy’s seemingly renewed interest in the East African region?
There is growing interest from Italy — we recently launched the Italy-African initiative to intensify ties and facilitate economic integration between the Italian economy and African economies.
I’m very interested in the process of integration in East Africa – it is a fascinating experiment. What we know in Europe about integration is that it is a powerful driver of growth and it is taking place within economies that are already doing very well. My expectation is that with further integration this boost will continue. This will also be instrumental in facilitating integration of the African economy into the global economy. It is important that this is about trade and investment as well as monetary integration.
What specific sectors are Italian companies targeting in East Africa?
Italian companies are looking for opportunities for investment and market expansion. They are also flexible enough to integrate in the economies of East Africa, which are not only integrating but also transforming themselves. Italian companies have diverse expertise including investment tools, machinery and high value added goods. They can make the best of dynamic expansionary situations because of their specific comparative advantage — they are keen on doing this.
Dynamic Italian companies are, for instance, specialised in machine tools so any process of industrial transformation would benefit from intermediate and capital goods coming in from those companies. But they are also capable of transferring management and production technology based on ICT that can be applied to African companies.
Let me add that Italian companies also have a comparative advantage in energy sources, especially renewable energy, which could be of interest.
One thing that can help this process would be to know more about the characteristics of the integration process and to learn more about this part of the world.
Currently, the EAC is in the advanced stages of launching a monetary union. What lessons can these countries draw from the Eurozone crisis?
There are a number of lessons – one is that having a good integration of the real side of the economy in terms of labour markets, business environment so that companies can easily reallocate resources, will make the monetary union much stronger.
What makes monetary union difficult to manage is rigidities in labour markets and lack of competition on one hand and difficulties in reconciling monetary stability with fiscal equilibrium on the other hand.
It is also important to design macroeconomic rules and institutions in a way that allows convergence in a gradual but precise way. If the target is to form a monetary union, then ensure fiscal sustainability and growth at the same time.
One of the problems that the European economies are facing right now is that there is lack of growth, making the functioning of the Eurozone particularly difficult.
Africa is increasingly developing a number of ground breaking partnerships with the rest of the world, with China taking the lead. How do you view this development?
This is a very important opportunity provided that the playing field on which this competition takes place remains level and transparent. Otherwise, there may be risks of becoming captive of some national policies that may in the long run not be so positive for the country.
For instance, in some cases, countries may offer resources without looking at the environment in which those resources are invested.
It is important to establish ties with other economies. It is equally important that while integration proceeds, alternatives are kept open. Integration should be global and not just bilateral to avoid being captive of certain countries with a lot of resources.
What are the prospects the region?
I’m convinced that Africa has a bright future — most of the African countries are on the right path and I hope this can be achieved with increasing integration plus stability from a political and social point of view.
– The EastAfrican