How regional value chains can boost industrilisation in Africa

The Intra-African Trade Fair, now in its third iteration, has become a platform dedicated to boosting intra-African trade and enhancing the continent's industrialization prospects. In a recent interview with CNBC Africa at the sidelines of the fair in Cairo, Egypt, Pamela Coke-Hamilton, the Executive Director of the International Trade Center, highlighted the critical importance of increasing intra-African trade for the competitiveness of the continent as a whole. Currently, intra-African trade stands at a mere 14 to 16%, the lowest among all regions worldwide. The major impediments to intra-African trade include logistical challenges, transportation issues, customs, non-tariff measures, and taxation. Additionally, historical trade patterns have favored external markets over intra-African ones, hindering the continent's ability to see itself as a primary trading partner. To address these issues, a shift towards regional value chains and industrialization is imperative. Regional value chains have the potential to drive economic growth and industrial development in Africa. A study conducted by Coke-Hamilton's organization identified automotive, baby food, pharmaceuticals, and cotton textiles as sectors with the highest potential for regional integration. By leveraging Africa's resources and expertise in these areas, the continent can position itself as a hub for manufacturing and processing. For example, with Africa being a major source of minerals used in electric vehicle batteries, the continent has the opportunity to become a leader in the electric vehicle industry. Similarly, Africa's dominance in agriculture presents opportunities for agri-processing and value addition, reducing commodity dependence and increasing competitiveness in global markets. The synergy between trade and industrialization is vital for achieving sustainable economic growth. Coca-Hamilton emphasized that regional integration can accelerate the industrialization process by pooling resources and expertise from various countries to create value chains and foster innovation. Moreover, embracing green technologies and changing trade terms to support local industries are key strategies for enhancing industrialization in Africa. Institutions like the International Trade Center and Afreximbank play crucial roles in promoting intra-African trade and educating stakeholders about the opportunities within the AFCFTA. Collaborative efforts between institutions are essential to building knowledge, enhancing product development, and facilitating trade among African countries. Moving beyond goods and services, the free movement of people across the continent is equally important for unlocking the full potential of intra-African trade. Initiatives like Kenya's visa-free policy for all African countries demonstrate the commitment to promoting intra-African mobility and fostering business innovation. By removing barriers to movement and trade, African nations can harness the collective power of their people and resources to drive economic growth and prosperity. As Africa continues to prioritize regional value chains, intra-African trade, and industrialization, the continent is positioning itself as a formidable player in the global economy.