Nairobi, 24 August 2023 (TDI): With its abundant resources and a burgeoning consumer market, Africa is on the cusp of establishing itself as a formidable force in the global supply chain. The United Nations Conference on Trade and Development (UNCTAD) recently launched its “Economic Development in Africa Report 2023” in Nairobi, shedding light on the continent’s untapped potential.
The report underscores that African economies can become major participants in global supply chains. This is primarily due to their vast reserves of materials that are indispensable to high-technology sectors.
UNCTAD Secretary-General, Rebeca Grynspan, expressed optimism about Africa’s prospects, stating that this is the continent’s moment to solidify its position in global supply chains.
As diversification efforts persist, Africa has a unique opportunity to bolster its emerging industries, thereby spurring economic growth and generating employment opportunities for its populace.
One of Africa’s standout attributes is its wealth of critical minerals and metals. Elements such as aluminium, cobalt, copper, lithium, and manganese are pivotal for tech-intensive industries.
Given the recent disruptions in global trade dynamics due to geopolitical events and economic uncertainties, manufacturers actively seek to diversify their production bases.
In this context, Africa emerges as an attractive destination, offering benefits like shorter and simpler access to primary inputs.
The UNCTAD report also emphasizes the significance of fortifying African supply chains for the region’s overall growth. By fostering an environment conducive to tech-intensive industries, there’s potential for wage increments.
Currently, wages in Africa are pegged at a minimum of $220 per month, starkly contrasting the $668 average in the Americas.
A deeper integration into global supply chains can also enhance the resilience of African economies, making them less susceptible to future economic shocks.
Furthermore, the report identifies the expansion of energy supply chains into Africa as a means to expedite climate action.
The continent’s immense renewable energy potential, especially in solar power, can be harnessed to reduce production costs and diminish reliance on fossil fuels.
Also Read: Tanzania: Fastest Growing Economy in Africa
However, there’s a pressing need for more investments in renewable energy. At present, a mere 2% of global investments in this sector are directed towards Africa.
By ramping up these investments, there’s potential to boost the manufacturing of solar panels on the continent.
Infrastructure development is another area that requires attention. To truly position itself as a prime supply chain destination, Africa needs significant infrastructural investments.
Several African countries, like Angola and South Africa, have introduced local content regulations to enhance supply chains and create jobs. Kenya is at the forefront of adopting digital technologies, vital for streamlining supply chain processes.
Moreover, UNCTAD emphasizes the need for robust policies to promote technology adoption and calls for better financing to empower African businesses. The African supply chain finance market grew by 40% in 2021-2022, hitting $41 billion, still, it is less than its actual potential.
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