Manufacturers have expressed worry over Nigeria’s participation and the rest of Africa in global value chains (GVCs) activities, particularly manufacturing-related output, describing it as abysmally low.
 
Nigeria and the rest of Africa currently account for less than three per cent of all global GVC activities with the figure declining yearly. President of the Pan-African Manufacturer’s Association (PAMA), Mansur Ahmed, decried that despite its rich endowment of natural resources and industrial potential, Africa’s integration into GVCs has been shallow and skewed towards low value-addition. He noted that Africa’s involvement in GVCs remains constrained by structural limitations, particularly low-value addition and persistent reliance on raw material exports.
   
Pointing out that Nigeria and the rest of Africa simply export primary commodities, he said the dependence on raw commodity exports has curtailed progress in climbing the global manufacturing value chain.
   
Since the 1990s, GVCs have reshaped international trade and account for nearly 70 per cent of all global trade, he said, adding that countries that embrace GVCs grow faster. He cited China, saying the country’s share in the GVCs has been substantial, jumping from seven per cent in 2000 to nearly 30 per cent in 2022.
   
“Data from the Industrial Analytics Platform suggests that in 2000, intermediate goods constituted 53.6 per cent of Africa’s manufacturing imports, but by 2021, this share had declined to 46.7 per cent, marking a 6.9 percentage point drop. This decline suggests a reduction in Africa’s backwards integration into GVCs. In other words, it means that Africa is importing fewer inputs used in the production of finished goods,” he said.
 
Decrying the fact that Africa acts primarily as a supplier of raw materials or semi-processed inputs, he noted that the continent is more of a contributor to other regions’ value chain development than a beneficiary of full manufacturing cycles.
 
According to a African Export-Import Bank (AfreximBank) 2023 report, over 80 per cent of Africa’s exports to the EU and China in 2022 were unprocessed commodities while only 17 per cent of goods exported within Africa were manufactured.
 
Secretary-General of PAMA, Segun Ajayi-Kadir, said Africa is locked in the low-value segments of GVCs, forfeiting significant opportunities for value addition, employment creation and industrial upgrading.
 
He regretted that performance in the global value chain remains low because of poor transport, logistics, energy and ICT infrastructure, which raise production and transaction costs for local industries, pronounced port inefficiencies, weak intra-regional connectivity, low industrial and technological capabilities and a pronounced skills gap.
 
He listed other factors to include non-tariff barriers, inconsistent standards and cumbersome customs procedures affecting cross-border trade efficiency, low genuine commitments and few actions on AfCFTA, poor access to affordable finance, inconsistent government policies, weak industrial policy enforcement and limited public-private coordination.
   
To unlock greater value capture and global competitiveness, he said, Africa must pursue deliberate, regionally-coordinated actions to strengthen its manufacturing base, trade infrastructure and innovation ecosystems.
 
“Africa must expand its manufacturing base to transition from a raw material exporter to a value-adding industrial hub within GVCs, implement AfCFTA with urgency to enable Africa’s GVC integration, establish regional sectoral clusters that leverage complementary strengths across borders, accelerate regional infrastructure and trade corridor development, harmonise standards and establish joint industrial zones, increase investment in research and technology as well as enhance access to finance for industrial upgrading,” he concluded.