A new report has prioritized pharmaceuticals, baby food, cotton clothing and automotive among 94 feasible value chains to boost intraregional trade and create jobs for women and youth.
The report called for investment in pharmaceuticals, baby food, cotton clothing and automotives, in line with African goals to improve food security, health and tech skills, to kickstart trading under the €2.5 trillion market of the African Continental Free Trade Area (AfCFTA).
That was the key message of the new report ‘Made by Africa: Creating Value through Integration’ which was released today, Tuesday, November 22, 2022 during the African Union Summit on Industrialization and Economic Diversification in Niamey, Niger.
The International Trade Centre (ITC) produced the report, in close collaboration with the African Union Commission and the European Commission.
The report identifies 94 value chains with high potential for sustainable development, with each value chain linking to at least five African countries from different regions. These four sectors emerge as especially promising, including for small businesses, which make up 90% of companies and more than half of jobs worldwide: pharmaceuticals, baby food, cotton clothing and automotive.
The ITC explained that Pharmaceuticals is a critical sector, especially at a time that the continent is emerging from the pandemic, to improve health and reduce imports.
Baby food draws on the agricultural sector, contributing to sustainable food security and nutrition, at a time of global supply chain disruptions. Cotton clothing, on the other hand, offers opportunities for millions of people in Africa’s least developed countries to find jobs through value chain integration.
Automotive has high potential for intraregional trade growth, with links to other value chains, such as leather and electrical machinery, as well as foreign multinationals looking to invest.
Companies, business support organizations and industry experts in Africa confirmed – through thousands of interviews and consultations – that these sectors are feasible for intra-regional growth – and that transformation is already happening in those sectors.
For example, 77% of surveyed companies along the four value chains are already greening their production processes, from reducing energy and water use to recycling waste, investing in recyclable or biodegradable packaging and developing circular business models, for example, by producing high-quality clothing from fabric waste and second-hand clothing.
Investing in Africa
ITC data show current intra-African export growth potential to be US$22 billion. While the opportunities are great, so is the need for action.
Africa’s footprint in the international market is still small, accounting for just 2.3% of global exports, with an export basket heavy on primary commodities and natural resources, according to the ITC.
About 14% of the continent’s exports are destined for other African countries, and much of this trade is in transformed products. The ITC noted that surprisingly, intra-African trade is more diversified and technologically advanced than Africa’s trade with the rest of the world.
The report underscored that strengthening regional trade boosts resilience to crises and sustainable industrialization – ultimately contributing to job creation and better livelihoods on the continent.
The ITC argued in the report that investing in diversification and stronger regional value chains, under the umbrella of the continental trade agreement, is key to unlocking Africa’s full economic and development potential.