Businesses globally are diversifying their suppliers to reduce risk, and Africa is ideally placed with its African Continental Free Trade Area (AfCFTA) to tap into this trend and participate more in global supply chains.
This was the conclusion of the United Nations Conference on Trade and Development’s (Unctad) Economic Development in Africa Report 2023 released in Nairobi last week by Unctad secretary-general, Rebeca Grynspan.
She highlighted factors driving the "huge" opportunity for the continent to exploit this trend towards alternative sourcing.
“Africa has an advantage with the rise of the renewable energy market, as it is a vital source of raw materials for technology-intensive industries - for instance lithium, essential to the production of electric car batteries. The continent has the possibility to become a destination for manufacturing and should seek to export more complex finished goods rather than just commodities,” Grynspan said.
As for demographics, Africa not only has a dynamic, young workforce but also a "burgeoning" middle class, offering local consumer markets for hi-tech products.
The continent’s economies should seize the opportunity to better integrate into technology-intensive global supply chains and boost prosperity, but this depends on their ability to harness key market and investment trends.
She said diversifying trade “builds resilience and enhances innovation”, adding that diversification was key for private sector development and employment opportunities for the continent’s growing population
The report analyses "untapped potential" for African countries to strengthen their position in the automobile, solar energy and pharmaceutical industries.
Encouragingly, Grynspan noted that "hubs” in artificial intelligence, 3D printing, blockchain, fintech [financial technology] and e-commerce were thriving in countries such as Kenya, fostering innovation and strengthening Africa's chance to capture technology-intensive global supply chains.
Director of Unctad’s division on Africa, Least Developed Countries and Special Programmes, Paul Akiwumi, said it was also important to ease regulatory barriers to drive more large-scale private investment and establish regional industrial development plans.
He cited the example of a regional agreement between the Democratic Republic of the Congo and Zambia to create an industrial zone for the production of electric car batteries. He also highlighted the importance of product registration and intellectual property security to attract investors.
