Experts from various industries have emphasised the need for African nations to invest in the development of regional value chains (RVCs). They stressed that for the African Continental Free Trade Area (AfCFTA) to deliver on its potential for economic development, countries must collaborate to create harmonised trade policies and invest strategically in industrial development. In this new economic landscape, nations are encouraged to identify niche industrial sectors where they can excel and add value while utilising AfCFTA as a game-changer for Africa’s growth and prosperity.
The topic was a major focus of the Africa Economic Conference 2023, which was held in Addis Ababa, Ethiopia, under the theme, “Imperatives for sustainable industrial development in Africa.” During the session titled, “Is Africa having potential for regional value chains?”, speakers highlighted the need for African nations to focus on developing RVCs that add value to the continent’s industrial sector. They noted that this would allow countries to move away from exporting raw materials and focus on producing high-value goods and services.
Joy Kategekwa, a strategy advisor to the United Nations Development Programme (UNDP) and moderator of the session, highlighted the transformative potential of RVCs for Africa’s industrial revolution. She pointed out that RVCs enable countries to build on their unique strengths and collaborate to participate in industries that may be beyond the capacity of any single nation.
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According to Kategekwa, by harnessing the power of regional collaboration, RVCs can drive economic growth, job creation, and improved livelihoods for millions of people. Kategekwa also noted that RVCs are essential for the success of the AfCFTA and its goals of boosting intra-
“Africa is industrialising, we must now grow bigger and faster,” she added.
Kategekwa further pointed out that the realisation of RVCs in Africa requires a holistic approach, including the implementation of consistent and supportive government policies, the establishment of public-private partnerships (PPPs), and the creation of special economic zones (SEZs) to foster industrial development. She also noted that the removal of barriers to the free movement of people is vital for RVCs to thrive, as she emphasised, “We cannot trade and industrialise if we cannot move freely across borders.”
Olawale Ogunkola, an economics professor at the University of Ibadan, highlighted the need for policies and strategies that promote efficient industrialization, which requires the mass production of goods to meet market demands. Ogunkola also noted that infrastructure development is key to ensuring the success of RVCs. This includes addressing trade costs, such as high tariffs and other barriers to trade, to ensure profitability for businesses and industries involved in RVCs. In addition, Ogunkola emphasised the need for policies that stimulate innovation and creativity within RVCs to ensure sustainable growth and development.
Ogunkola cautioned that some countries’ SEZs have been isolated like military zones, disconnected from the domestic economy. This, he said, can be detrimental to RVCs and prevent them from thriving. He emphasised the need for an integrated approach to the development of SEZs, ensuring that they are connected to the technology transfer and skills development necessary for RVCs to succeed. Additionally, Ogunkola called for policy coherence between national and regional policies to ensure that special economic zones are relevant and beneficial to the regional economy.
Grace Nshemeirwe, the CEO of the Uganda Private Sector Federation, highlighted the importance of removing trade barriers and providing access to trade finance for businesses. Nshemeirwe also stressed the need for harmonised trade policies across the region, as this is critical for facilitating trade and enabling African countries to effectively compete in the global market.In addition, she pointed out that many African countries lack the necessary infrastructure and resources to support regional value chains, and called for greater investment in developing and improving infrastructure to ensure the success of RVCs.
Pradep Mehta, the president of the India Chamber of Commerce, offered a different perspective on the matter, arguing that trade policies must evolve to place greater emphasis on consumer welfare.
Mehta’s argument is based on the premise that consumers are the ultimate beneficiaries of trade, and therefore policies should be designed to ensure that consumers receive the highest value from trade. He stressed the need for a consumer-centric approach to policy making, particularly in the context of regional value chains.
The UNDP and the African Continental Free Trade Area Secretariat recently released the Futures Report, titled, “Which Value Chains for a Made in Africa Revolution.”
The report identifies ten key value chains that offer significant investment opportunities within the African single market. These include automobiles, leather and leather products, cocoa, soya, textiles and clothing, pharmaceuticals, vaccine production, lithium-ion batteries, mobile financial services, and cultural and creative industries. The report recommends that governments strategically target these sectors to take advantage of the opportunities they offer for entry into the AfCFTA market
Furthermore, the report highlights areas that require further improvement to ensure the success of the ‘Made in Africa’ movement. By identifying these areas of weakness and proposing solutions, the report hopes to lay the groundwork for a robust and successful economic revolution on the African continent.