The ability of African economies to integrate into technology-intensive global supply chains depends on their ability to harness key market and investment trends, according to the UN’s trade and development body UNCTAD.
In a recent report, UNCTAD shows Africa has the potential to be a major exporter of high-value-added goods. Diversifying trade will be key for private sector development and employment opportunities for Africa’s growing population.
Africa’s competitive advantage
Three factors drive the “huge” opportunity. Africa can tap into this trend as countries and businesses seek to diversify their suppliers and thus reduce risk. Africa also has an advantage in the renewable energy market, as it is a vital source of raw materials for technology-intensive industries, including lithium, which is essential to producing electric car batteries. It can also become a destination for manufacturing.
The report analyses “untapped potential” for African countries to strengthen their position in the automobile, solar energy, and pharmaceutical industries. Africa’s tech ecosystem growth has already proven impressive, as “hubs in artificial intelligence, 3D printing, blockchain, fintech, and e-commerce are thriving” in Kenya, for example, fostering innovation and strengthening Africa’s chance to capture technology-intensive global supply chains.
Creating an environment conducive to technology-intensive industries will raise wages, the UNCTAD chief said, underscoring that the average salary on the continent is $220 per month while in the Americas, in comparison, it is nearly $670.
However, for this to happen, more investment will be needed, regulatory barriers will have to be removed, and regional industrial development plans put in place.
For example, a regional agreement between the Democratic Republic of the Congo and Zambia allows for the creation of an industrial zone for producing electric car batteries.
Africa’s economies need debt relief to create fiscal space so that countries can invest in strengthening supply chains and education for their workforce. African countries pay four times more for borrowing than the United States and eight times more than European nations, as shown in UNCTAD’s recent “World of Debt” report.
