Analysts have predicted that the open borders observed among African countries would help the continent in terms of financial inclusion.
The gross domestic product (GDP) per capita in Africa reached $2,150.6 in 2022, which was its highest value since 2015, according to Statista. It is anticipated that this number will reach $2,700 by the year 2026.
Considering that the continent is rapidly becoming a centre for the use of technology, this should not come as a surprise. As a result of the recent trend of open borders that have been observed across the continent, particularly in Rwanda, Kenya, Uganda, and Ethiopia, analysts have now predicted that the continent will benefit more than ever before from the transfer of technology and knowledge across borders.
The net present value (NPV) of skilled workers, the quality of labour, and intra-African trade.
The continent of Africa is now seeing a steady trend towards open borders. Regional integration is being promoted by a number of laws and agreements, which are also helping to facilitate movement and commerce across international borders.
Read also: How TikTok operates digital and financial inclusion
African Union in 2063
With the establishment of the African Continental Free Trade Area (AfCFTA), the African Union (AU) has been making a concerted effort to advance the concept of open borders. The objective of their Agenda 2063 programme is to create a united market in Africa that allows for the free movement of people, products, and services for everyone.
The East African Community (EAC) and the Economic Community of West African States (ECOWAS) are examples of regional economic communities (RECs) that were established with the purpose of promoting visa openness among its member nations. Because of this, the movement of expertise, labour, and technology was made more simpler, and regional reciprocity was also greatly enhanced.
By implementing open-border policies and regional agreements that encourage trade and mobility, RECs contribute to the reduction of fringes in mobility for net-positive skilled workers. This, in turn, enables African collective economies to flourish as a result of new technological knowledge, access to financial technologies and infrastructure for cross-border remittances, growth in tourism, and an increase in the economies of communities through economic migration.
The economic effects of free borders
For the purpose of fostering both bilateral and multilateral diplomacy, countries all over the world maintain open borders among themselves, similar to the Schengen Area. Some individuals do this merely for the sake of acquiring information, technology, and skills; others do it in order to expand tourism.
When it comes to open border policy, the most significant concern has been the potential for economic inequities to arise in less developed nations as a result of their decision to welcome individuals from more established and sophisticated nations. Countries like Singapore and Seychelles are living proof of the economic miracle that open border policies may bring about for those who are willing to seize the opportunity to innovate.
What Africa can learn from Singapore
It is clear that Singapore has one of the greatest economies in the world, as shown by the high value of its GDP according to the capita. In order to facilitate the operation of a free market, Singapore has established itself as an attractive destination for entrepreneurs to establish and develop into great firms.
The fact that Singapore is situated in a position that is suitable for commerce and logistics has resulted in a significant increase in the amount of foreign direct investment from global firms. Some people may claim that Singapore has landed its fair fortune. However, the reality is that its trade policies have also played a significant role in contributing to this.
The majority of African cities are the perfect places for possibilities to invest from outside. Cities such as Lagos and Kigali are excellent examples of hubs. Kigali has flourished as a result of tourism and visitors. The latest statement that it would open its borders is also anticipated to bring in a greater number of talented individuals.
The economic expansion of Singapore may be attributed to the country’s open-trade policy. This has resulted in the operation of a diverse economy that encompasses aspects such as manufacturing, banking, logistics, and technology.
Through increased intra-African cooperation, African nations have the opportunity to learn from one another and share more technologies with one another via the interchange of more technologies. includes financial technology.
The environment in Singapore is particularly conducive to the development of innovative and entrepreneurial ideas. It is for this reason that it is attractive to high-value international corporations, including the leading producers of rigs in the oil business, to invest in it from outside.
At the moment, Africa is the continent that has the lowest GDP per capita, which places it at the bottom of the list. On the contrary, this attribute does not represent the ambitious spirit that is characteristic of Africans. Identifying ways in which the African continent may profit from the economic advantages that African individuals contribute is one of the ways in which we can learn from policies that promote free commerce for the continent.
The impact on Seychelles
The tourist industry, fishing industry, and agricultural sector have all contributed to the success of Seychelles, which in 2022 had the highest GDP per capita in all of Africa.
When it comes to nations that do not need travellers to get a visa, Seychelles is at the top of the list. According to a research published by AVOI in 2022, only 54 percent of travel inside Africa is either visa-free or requires a visa upon arrival.
If a greater number of nations, especially those located in the southern and central parts of Africa, start to open their borders to people of African countries or establish more advanced procedures for electronic visas, this would make it easier for Africa to engage in more commerce.
As a result of migrants’ increased access to financial services, micro, small, and medium-sized enterprises (MSMEs) will reap the advantages of increased tax benefits for these nations. Flutterwave, Payoneer, Geegpay, and Palremit are some examples of companies that provide a multi-currency swap option.
This feature makes it simple for expats to switch currencies when they travel across the continent or abroad. This transferred access has the potential to allow increased trade in the fields of agriculture, commerce, and other economic sectors that are very important in Africa.
Arkel Consult and Management Services (ACMS) set to promote financial inclusion in Ghana
Participation in the financial system and open borders in Africa
There are many different ways in which financial inclusion might influence the expansion of the African economy. To be more precise, however, open borders will result in the creation of a larger market for financial institutions, which will make it economically feasible for these institutions to reach populations and areas that are underserved in economies that are less developed. To provide just one example, African financial technology companies such as Flutterwave, Paystack, and Palremit are extending their operations into the rural economy of Sudan.
Second, when migrants move, they confront the issue of having to send money over international borders, which can be rather costly, and they also lack access to financial services, such as access to credit and their credit history.
Migrants and rural communities in Africa can benefit from these technologies through foreign trades and easier means to move goods around and exchange currencies between suppliers and buyers at low fees, which will contribute to Africa’s dream of financial inclusion. However, this will only be possible if financial technology is expanded across the continent.
Inclusion in the financial system may be effectively developed via the facilitation of digital financial services, education and literacy, public-private partnerships, infrastructure development, and regulatory harmonisation across all African nations.
Prospects for the future
In the years to come, the economic miracle that will occur in Africa will serve as a demonstration of the potential of leveraging and investigating regional integration in order to elevate the level of commerce and foreign investment.
When it comes to releasing Africa’s full economic potential and encouraging shared prosperity throughout the continent, the keys to success will be the strategic execution of these programmes and the continuous emphasis on overcoming hurdles.
