By Rukayat Moisemhe (News Agency od Nigeria)

Africa’s integration into Global Value Chains (GVCs) has been simplistic and skewed toward low value-addition in spite of its rich endowment of natural resources and industrial potential.

The continent’s involvement in GVCs remains constrained by structural limitations, particularly low value addition and persistent reliance on raw material exports.

Since the 1990s, GVCs have reshaped international trade, now accounting for nearly 70 per cent of all global trade.

Africa’s participation in this structure remains disproportionately low, especially in manufacturing-related output, where it accounts for less than three per cent of global GVC activity.

Countries that embrace GVCs grow faster, such as China, whose share in the global value chain has been substantial due to its level of manufacturing value addition.

Meanwhile, in Africa, the trend is that the continent exports primary commodities like cocoa, cobalt, crude oil, and gold, and imports higher-priced finished goods such as chocolate, batteries, refined petroleum, and jewellery.

Consequently, this dependence on raw commodity exports has curtailed Africa’s progress in climbing the global manufacturing value chain.

According to the World Bank’s 2023 GVC Development Report, Sub-Saharan Africa’s participation in GVCs is less than three per cent.

Additionally, an African Export-Import Bank 2023 report shows over 80 per cent of Africa’s exports to the European Union and China in 2022 were unprocessed commodities.

Also, a United Nations Economic Commission for Africa (UNECA) 2024 report noted that only 17 per cent of goods exported within Africa were manufactured, versus 68 per cent in intra-EU trade.

On the implications of low value addition, Mr Mansur Ahmed, President, Pan African Manufacturers Association (PAMA), said that Africa is locked in the low-value segments of GVCs.

According to him, this makes the continent in forfeiting significant opportunities for value addition, employment creation, and industrial upgrading.

Ahmed stated Africa’s performance in GVCs remained low due to infrastructure deficits such as poor transport, logistics, energy, and technology capabilities.

He noted that port inefficiencies were pronounced, with turnaround times three to four times longer than in East Asia, making African suppliers less competitive in time-sensitive supply chains.

He said, “There is also a persistent mismatch between education systems and labour market needs, especially in technical and vocational fields.

“Technical and vocational training is underdeveloped, and this limits firms’ ability to employ qualified personnel to meet global standards, innovate, and move into higher-value chain segments.”

In creating a new pathway for Africa in GVCs, Ahmed stressed that trade barriers and market fragmentation must be addressed.

He said that it was important that non-tariff barriers, inconsistent standards, and cumbersome customs procedures affecting cross-border trade efficiency be nipped in the bud.

The PAMA president said there must be increased access to affordable financing for manufacturers, especially Small and Medium Industries (SMIs), to improve their capacity to innovate and integrate into global supply networks.

He added that government policies must henceforth be consistent, with strong industrial policy enforcement, and enhanced public-private coordination for gainful participation in GVCs.

Mr Segun Ajayi-Kadir, Interim Secretary, PAMA, said that to unlock greater value capture and global competitiveness, Africa must pursue deliberate, regionally coordinated actions to strengthen its manufacturing base.

Ajayi-Kadir said that the continent must also improve its trade infrastructure and innovation ecosystems.

He noted that Africa must expand its manufacturing base to transition from a raw material exporter to a value-adding industrial hub within GVCs.

According to him, this can be achieved through the full implementation of the African Union’s African Commodities Strategy, which emphasises transforming Africa from a supplier of raw materials into a competitive, value-adding industrial economy.

“Member states must be encouraged to swiftly ratify the African Union’s African Commodities Strategy, which has been delayed due to insufficient numbers.

“The African Minerals Development Centre (AMDC) must coordinate this strategy effectively and, as a matter of timeline, deliver on its mandate.”

Ajayi-Kadir said that the African Continental Free Trade Area (AfCFTA) must be implemented with urgency and industrial ambition to enable Africa’s GVC integration.

He maintained that its full implementation could serve as the backbone of Africa’s industrial revival and GVC participation in the most beneficial manner.

He added that African governments must invest in shared infrastructure to support intra-African supply chains and GVC integration, harmonise standards, and establish joint industrial zones.

Targeted reforms and strategic investments under the AfCFTA can reposition the continent for industrial takeoff, while Africa’s current participation in global manufacturing value chains appears limited.

Also, strengthening infrastructure, improving access to finance, investing in skills development, and deepening regional integration are key steps toward enhancing Africa’s manufacturing performance and enabling the continent to capture greater value in the global economy.(NANFeatures)

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