The recent disruptions in the global supply chains has presented a unique opportunity for African countries to dominate the supply of finished high technology commodities, strengthening their economic resilience in the face of shocks.
This is according to the United Nations Conference on Trade and Development (UNCTAD), which says leaders must take action to ensure this opportunity does not slip Africa, which has for long been isolated from the global supply of finished goods.
In its latest Economic Development in Africa Report released this week, the UN agency says Africa’s riches in minerals crucial for the low-carbon transition and technology-intensive goods, especially, give it a competitive advantage in the supply of related commodities as countries seek to diversify supply chains.
According to the report, Africa’s integration into the global supply chains has for long been low compared with other regions, slowing the continent’s economic progress as other countries dominate international supply of high-tech goods and services, made from African minerals.
But, with the recent trade turbulences, uncertainties, natural disasters and geopolitical tensions that have put supply chains under immense pressure, businesses across the globe have been seeking to diversify their source markets to stabilise their supply, presenting a unique opportunity for Africa, the report says.
“Africa can become a major actor in the global supply chains by harnessing the vast resources and materials needed by high technology sectors and growing consumer market,” said Rebeca Grynspan, UNCTAD’s Secretary-General, during the launch of the report in Nairobi on Wednesday.
Ms Grynspan said Africa’s reliance on primary commodity exports, from the agricultural and extractive sectors is risky and “we have to get away from it” especially now that there’s a window of opportunity to export higher-tier commodities.
“Diversifying trade builds resilience and enhances innovation because our wide based economy is key for private sector development and employment opportunities and that is what the demographic bonus of Africa really requires,” she said.
Apart from the supply chain disruptions that’s driving the need for diversification of supply, the report says, the growing transition to renewable energy sources also boosts this opportunity as Africa is rich in minerals needed for this.
“The growing youthful population on the continent will also provide both the market for high-tech commodities and the needed technical skillset to accelerate production of more complex finished goods,” UNCTAD said.
According to the report, this unique mix of opportunities, if properly utilised, can propel Africa to be a leading exporter in the automotive industry, pharmaceuticals, and electronics like mobile phones and laptops, which have always been dominated by other countries.
Based on UNCTAD’s research, most of the mineral inputs used in the manufacture of these commodities come from different countries on the continent, yet these products are not made in Africa, and they still constitute a huge part of their imports.
Paul Akiwumi, UNCTAD’s director for Africa and least developed countries, said that while not all African countries are endowed with these crucial minerals, they will all benefit from this opportunity as they trade more with one another to capitalise on the gains of increased export of finished goods.
Low levels of technology, insufficient human capital, and low financing for investment in these industries on the continent are, however, the key bottlenecks keeping Africa from fully seizing this opportunity, the report reveals.