By Sharon Atieno
Despite the impact of COVID-19, climate change and the Ukraine-Russia war on Africa, the continent has potential to become a major actor in the global supply chain.
This is according to a report launched by the United Nations Conference on Trade and Development (UNCTAD) in Nairobi, Kenya.
According to the Economic Development in Africa Report 2023: The Potential of Africa to Capture Technology-Intensive Global Supply Chains, Africa is well endowed to be a global supply chain in high-technology sectors like automobiles, mobile telephones, renewable energy technology and health care.
The report finds that Africa has an abundance of critical minerals and metals, including aluminum, cobalt, copper, lithium and manganese, which are vital components in technology-intensive industries, thus positioning the continent as an attractive destination for manufacturing.
Additionally, the renewable energy potential of the continent in terms of geothermal, solar, wind and hydro energy means that it can produce and process raw materials using clean energy rather than exporting the raw materials to countries that are still reliant on fossil fuels.
The report also finds that the continent can leverage its growing technology ecosystem which is being driven by youths to attract investors and companies that are technology-based.
Creating an environment conducive to technology-intensive industries, the report says, would help raise wages on the continent. Currently, the minimum wage in the continent is $220 per month, compared to an average of $668 in the Americas.
Speaking during the launch, Rebecca Grynspan, UNCTAD’s Secretary General, said Africa’s priorities must guide this journey toward high-tech potential.
She said though the value of the African supply chain finance market increased by 40% between 2021 and 2022 to reach USD41 billion, it is not enough.
Grynspan said the continent can mobilize more funds by removing barriers to supply chain finance including regulatory challenges, high-risk perception, and insufficient credit information, especially for micro, small and medium enterprises.
Additionally, she said UNCTAD is advocating for relief for African countries’ fiscal space to invest in strengthening their supply chains, noting that African countries pay much more for their loans and for their debts than the rest of the developed countries.
On average, Africa pays four times more for borrowing than the US and eight times more than the European countries. “This must change if Africa is to achieve its full economic potential and be a major actor in global supply chains,” she said.