Although African countries have improved their participation in global manufacturing value chains in recent decades, it remains low and dominated by exports of raw materials and involvement in relatively unskilled tasks.
Countries on the continent need to seize opportunities to engage more in international trade, by promoting added-value manufacturing and investing more in human capital. This will allow them to exploit the potential of industrialization, which has the power to stimulate inclusive growth in Africa.
These were the findings of the five studies presented on Friday, during the sixth research session at the African Economic conference 2023.
The conference was held in Addis-Abeba, Ethiopia, from 16 to 18 November and was organized jointly by the African Development Bank, the United Nations Economic Commission for Africa and the United Nations Development Programme. Its central theme was: "Imperatives for sustainable industrial development in Africa".
Although employment in the manufacturing sector more than doubled in Africa between 1990 and 2018, from 8.6 to 21.3 million jobs, African countries' participation in global value chains (1.7% in 2019, compared with 1.5% in 2000, according to 2022 data from the African Union Commission and the OECD Development Centre) has been uneven.
This was the finding established by Bernard Nguekeng, lecturer in economics and management at Yaoundé II University, in Cameroon. "Higher upstream and downstream participation in global value chains in countries in southern Africa and North Africa contrasts with low participation in Central Africa," he noted in his study, which covers 51 countries on the continent over the period 1996-2018.
Emphasizing the positive impact on the economy of these sub-regions, Mr Nguekeng recalled that industrialization was "a key factor in job creation, improving productivity and strengthening exports in Africa". Industrialization is one of the African Development Bank's five strategic priorities, and a primary objective of the African Union's Agenda 2063, he commented.
The panellists shared the view that industrialization means African countries must focus on improving the skills of their workforce, and developing their infrastructure and wealth-generating activities to integrate more effectively into global value chains.
They need to implement appropriate policies, designed to exploit the comparative advantages of each country, while encouraging competition and innovation in high added-value industries, according to the experts' recommendations.
In this respect, the study on the structural transformation in around 20 sectors, conducted by Wissal Sahel, development economist at Mohammed V University in Rabat, showed the link between political reforms, sectoral growth and increased productivity in the workforce.
"Morocco's comparative advantage in agriculture was supported by deliberate policies, such as the Morocco Green Plan. Conversely, the manufacturing sector's contribution to growth remains low. Foreign trade weighs heavily on industry," emphasized Ms Sahel.
African governments need to support businesses on the continent to improve their competitiveness significantly, forge links with local economies and overcome obstacles to investment. Among other things, countries must invest in productivity and skills to attract investments in strategic value chains.
Bruno Emmanuel Ongo, professor of economics at Yaoundé II University, has focused his research on the effects of global value chains on inclusive growth in sub-Saharan Africa.
In his study, which covered 46 countries over the period 1995-2020, he found that few African countries were participating in global value chains. He also found that the robust growth in the continent's GDP, which averaged 5.1% over the last decade, had had a limited inclusive effect on employment.
"Let's promote our African products rather than importing textiles from other parts of the world! This would contribute strongly to developing local industry and African integration," urged Mr Ongo.
He also emphasized the need to create skills development policies as a matter of urgency, via teaching and continuing education programmes, particularly in technology. "Human capital and governance are not improving African countries' integration into global value chains," he observed.
Echoing her co-panellists' views on the need to invest in human capital, Nneka Esther Osadolor, professor at the University of Benin, Nigeria encouraged a shift towards vertical industrial specialization in order to export products with high added value.
Her study, which focused on participation in global value chains as a positive factor for sustainable industrialization in Africa, showed a contrasting picture between countries and sub-regions, with southern Africa and North Africa more favourable to industrialization.
"Participation in global value chain correlates positively with industrialization. And technology is an essential element for industrialization. It's important to focus on the production of intermediate and finished goods," maintained Ms Osadolor.
The final panellist, Olufemi Adebola Popoola, researcher at the Nigerian Institute of Social and Economic Research, was keen to show the effects on employment and innovation of participating in global value chains in Nigeria.
"This integration can help achieve the objectives, but the volume of trade in Nigeria is still too low and there is still a significant lack of technological innovation. As a result, very few businesses participate in global value chains," explained Mr Abedola. However, his study only covers 67 businesses in three key sectors in Nigeria: pharmaceuticals, petrochemicals and food.
