African 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, the UN’s trade and
development body UNCTAD said on Wednesday.
In a new report, UNCTAD shows that Africa can become a major exporter of higher value-added goods, creating growth and jobs, and fuelling a
rise in productivity and wages.
Launching the report in Nairobi, UNCTAD Secretary-General Rebeca Grynspan insisted it would offer a better future for
the continent’s economies.
Diversifying trade “builds resilience and enhances innovation”, Ms. Grynspan said, adding that diversifaction was “key”
for private sector development and employment opportunities for Africa’s growing population.Africa’s competitive advantage
Ms. Grynspan highlighted three factors driving the “huge” opportunity for the continent. From a geopolitical point of
view, countries and businesses are seeking to diversify their suppliers and thus reduce risk. Africa is well placed to
tap into this trend, Ms. Grynspan said, which together with the African Continental Free Trade Area offers “great
synergies” for participating in global supply chains.
Africa also has a unique advantage amid 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. It has the possibility to become a destination for manufacturing and should seek to export more complex
finished goods rather than just commodities, Ms. Grynspan said.
As for demographics, Africa boasts not only a dynamic, young workforce, but also a “burgeoning” middle class offering
local consumer markets for hi-tech goods.‘Untapped potential’
The report analyses “untapped potential” for African countries to strengthen their position in the automobile, solar
energy and pharmaceutical industries.
Encouragingly, Ms. Grynspan noted that Africa’s tech ecosystem growth has already proven impressive, as “hubs in
artificial intelligence, 3D printing, blockchain, fintech [financial technology] and e-commerce are thriving” in
countries such as Kenya, fostering innovation and strengthening Africa’s chance to capture technology-intensive global
supply chains.Higher wages and resilience
Creating an environment conducive to technology-intensive industries will raise wages, the UNCTAD chief said,
underscoring that the average wage on the continent is $220 per month while in the Americas, in comparison, it is nearly
$670.
According to UNCTAD, deeper integration into global supply chains would also diversify African economies, boosting their
resilience to future shocks.Attract investment
However, for this to happen, more investment will be needed, Ms. Grynspan said. The report highlights the fact that
currently, only about two per cent of global investments in renewable energy go to Africa.
Paul Akiwumi, Director of UNCTAD’s Division on Africa, Least Developed Countries and Special Programmes, said that in
order to drive more large-scale private investment, regulatory barriers will have to be removed and regional industrial
development plans put in place.
Mr. Akiwumi cited the example of a regional agreement between the Democratic Republic of the Congo and Zambia, allowing for the creation of an industrial zone for the
production of electric car batteries. He also highlighted the importance of product registration and intellectual
property in order to attract investors.Urgent debt relief needed
Ms. Grynspan stressed that in order for Africa to be able to seize its competitive advantage, the continent’s economies
need debt relief to create fiscal space so that countries can invest in strengthening supply chains and in education for
their workforce.
She recalled that 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.‘Change the rules’
“This must change if Africa is to achieve its full economic potential and be a major actor in global supply chains,” the
UNCTAD chief insisted, pledging the UN’s unwavering support to nations across the continent.
Ms. Grynspan highlighted UN Secretary-General António Guterres’ advocacy to “change the rules that reproduce these asymmetries” and fix the “distorted” perception of risk which
international investors hold in relation to developing economies.
ENDS