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Africa is well placed to address global supply chain challenges – UN Report

By Larry Claasen

Recent disruptions to the global supply chain have highlighted the need for manufacturers to set up operations in diverse locations.

GLOBAL supply chain challenges could spur widespread industrialisation across Africa, says the United Nations Conference on Trade and Development (UNCTAD).

The continent could become a hub for the manufacturing of high-technology sectors like automobiles, mobile telephones, renewable energy and health care due to disruptions to the global supply chain compelling manufacturers to diversify their production locations and geographical footprint.

This is according to The Economic Development in Africa Report 2023: The Potential of Africa to Capture Technology-intensive Global Supply Chains report produced by the UN body, which fosters the trade interest of developing countries.

The report says the abundance of critical minerals needed for high-tech and green products, as well as being home to “a young, tech-savvy population”, an adaptable workforce and a burgeoning middle class, makes Africa an attractive place for manufacturers to set up shop.

Africa, for example, has vast reserves of critical minerals – including aluminium, cobalt, copper, lithium and manganese – needed for high-tech and green products like smartphones and solar panels. It also has at least a fifth of the world’s reserves in a dozen metals needed for the energy transition.

South Africa is well placed to benefit from such a shift, as it holds about 42% of the world’s manganese reserves.

In addition, Africa’s young and growing population is projected to reach 2.5 billion by 2050 – a quarter of the world’s population- which could provide manufacturers with both a tech-savvy workforce and a burgeoning market for their goods.

All these benefits came in addition to the African Continental Free Trade Area easing access to regional markets and strengthening production chains across the continent.

Over the last few years, vulnerabilities in the global supply chain have been exposed by the Coivd-19 pandemic, the war in Ukraine, and the blocking of the Suez Canal. These events highlighted how easily supply chains could be shut down and that sourcing alternative products is often easier said than done.

Though there are many advantages to setting up manufacturing operations in Africa, the report notes that a substantial investment must be made in infrastructure, including ports, roads and rail, for it to tap into benefit from such a move.

It also points out that just because a country is well placed to benefit from integrating into the global supply chain, it does not mean it will succeed. South Africa, for instance, launched a programme to develop a lithium battery value chain in 2011, but to date, “there is little value addition and transformation of minerals to battery grade in the country.”

Even so, UNCTAD says the continent is still well placed to gain from manufacturers looking to Africa as a manufacturing hub.

“This is Africa’s moment to bolster its position in global supply chains, strengthen its emerging industries and create millions of jobs,” said UNCTAD secretary-general Rebeca Grynspan.

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