Ensuring that the African industrialization process grows with a dynamism of its own.

Accelerating productive transformation through industrialization, a higher form of value addition, is at the centre of Africa’s agenda towards sustainable development, structural transformation, competitiveness, recovery, resilience and inclusive prosperity and gained in importance in the current complex geopolitical context. The start of trading under the African Continental Free Trade Agreement (AfCFTA) in January 2021 offers Africa the most significant opportunity for socioeconomic progress. It is as of now, Africa’s biggest development programme. The AfCFTA becomes even more relevant when viewed against the backdrop of global supply chain disruptions which are bringing in train, inflation and threats of economic recessions. An integrated continental market of 1.4 billion people and growing, opens up large economies of scale and scope that can attract investments in manufacturing and agro-processing, which in turn, can boost economic diversification and intra-African trade. Projections show that tariff liberalization alone could increase intraregional trade across Africa by as much as €17 billion while removing other market frictions could unlock another €19 billion. The AfCFTA joins the Regional Economic Communities as building blocks to deeper continent-wide economic integration, and in the process, improving the prospects for the establishment of the African Economic Community. With respect to inclusive sustainable industrialization, the development of regional and continental value chains becomes more viable with a large mar74.ket offered by the African Continental Free Trade Area. This in turn opens possibilities for Africa to trade her way to prosperity through export of manufactured and agro-processed goods as well as trade in services in other world markets. The publication, Made by Africa, highlights vast opportunities in the development of regional and continental value chains across the continent. The task ahead is to promote effective collaboration among policy makers, investors, manufacturers and agro-processors. The material in the publication was selected as part of a joint research commissioned by the Department of Economic Development, Trade, Tourism, Industry and Minerals (ETTIM) of the African Union Commission and the Directorate-General for International Partnerships (DG INTPA) of the European Commission. The research was conducted by the International Trade Centre.

The diagnostic study reveals ninety-four (94) potential value chains at the African continental level. Each of them links at least five African countries from different regions and offers the potential to add value, reduce imports, boost trade, diversify economies and open opportunities for women and youth. The value chains covered in the publication span four strategic sectors: pharmaceuticals, infant food, cotton clothing and the automotive sector. 

Investing in the pharmaceutical sector is critical to improving health and reducing import dependence, especially as Africa emerges from the COVID-19 pandemic. Infant food production can contribute to sustainable food security and nutrition in the midst of global supply chain disruptions. The cotton-clothing sector offers many opportunities for Africa to move up the global value chain and develop markets within and beyond the African continent. In the same vein, automotive manufacturing can add value and contribute to skills development by leveraging advanced technology. 

All these open up possibilities for Africa to enhance investments in Research and Development (R&D) as a way of boosting innovation, upgrading industrialization as well as ensuring that the African industrialization process grows with a dynamism of its own, while factoring in the demands of the fourth industrial revolution and decarbonization. The process of inclusivity is highlighted by the fact that the publication has analyses on women’s participation in regional and continental value chain development as well the efforts of small and medium firm to embrace the green and digital transition. In this way, considerations of inclusivity and sustainability inform strategies for continental integration.

 

Albert Muchanga Commissioner for Trade and Industry African Union Commission.