In times when global supply chains are recovering from the impact of COVID-19, the volatile geopolitical circumstances, the extreme weather events, and many other distractions, supply chain leaders are also taking measures to ensure that the industry’s footing is stronger than ever. There are new trends being witnessed to support global supply chains and make them more resilient. Restructuring and relocating them is one of these new trends. In this piece, we try to decipher the recent report from the United Nations Conference on Trade and Development (UNCTAD) titled ‘Economic Development in Africa Report 2023’, and its suggestions for solidifying Africa’s position on the global map of supply chains.
The supply chain industry in Africa has undergone significant evolution over time. History has witnessed that the continent has, for a long, faced challenges due to inadequate infrastructure, regulatory issues, and geopolitical factors affecting trade routes. To top it all, COVID-19 had a profound impact on Africa’s supply chains, and just like for the rest of the world, exposed vulnerabilities in the traditional supply chain model that many African firms relied upon. These vulnerabilities eventually lead to disruptions in production, distribution, and procurement.
The crisis prompted a reconsideration of supply chain management strategies, with digitalization and resilience becoming key priorities. COVID-19 also led to economic downturns and recession across Sub-Saharan Africa, influencing the trajectory of supply chain activities. It becomes safe to say that the pandemic highlighted how important is it to induce adaptability, diversification, and robustness in the African supply chain sector and renewed the call for Africa to build better policies for making the continent more competitive.
Home to many minerals and metals, African countries integrate with the global supply chain as tier-three suppliers, and looking at the growing demand for its produce hints at the various advantages that the continent offers. For instance, Africa accounts for 48% of global cobalt reserves and 47.6% of global manganese reserves – both of which are critical metals required to produce batteries and electrical vehicles.
Africa’s Potential in Technology-Intensive Global Supply Chains
The ‘Economic Development in Africa Report 2023: The Potential of Africa to Capture Technology-intensive Global Supply Chains’ was prepared and released recently by UNCTAD. The report provides a unique insight into the potential for increased integration into the supply chains in Africa by bringing together knowledge on how Africa can strengthen supply chain diversification in high-knowledge- and technology-intensive sectors.
The report suggests that a pivotal factor contributing to Africa’s economic development will be its role in technology-intensive global supply chains, and as the trends show, the world is going to further acknowledge the participation of the African economies in the global supply chains. The growing rate of technology and digitization, as well as favourable trade policies, are the reasons for this increased involvement of Africa.
The manufacturing sector takes centre stage in this narrative. The report emphasizes that Africa’s manufacturing sector has the potential to become a key driver of economic growth and diversification. The continent’s vast resources, growing population, and evolving consumer preferences offer a strong foundation for manufacturing expansion. Africa’s rising prospects in manufacturing will open doors to innovative production processes and increased efficiency, on the back of increasing technological development, the report says.