Positioning Africa as the next global supply chain hub

On Wednesday, August 16th, 2023, the United Nations Conference on Trade and Development (UNCTAD) released its Economic Development for Africa Report for 2023. Centred on the theme “The Potential of Africa to Capture Technology Intensive Global Supply Chains,” the report examines Africa’s potential to become a significant participant in global supply chains for “high-technology” sectors like automobiles, mobile telephones, renewable energy, and healthcare.

As noted in the report, disruptions in global supply chains caused by trade turbulence, economic uncertainty, a global pandemic, and geopolitical events have forced manufacturers worldwide to diversify their production locations. Accordingly, the report confirms that the current geopolitical supply chain climate offers African businesses and governments a unique opportunity to establish the continent as a global supply chain hub.

For African leaders and the African business community, UNCTAD’s faith in the unique potentials of the African supply chain ecosystem is only a timely reminder of the assertions of many African economic observers, including my humble self, about the outsized economic windfalls that will accrue to the African continent if her supply chain systems are well harnessed.

The abundance of rich critical minerals necessary for developing high-technology products already places Africa in a position to harness and lead the global supply chain marketplace

In my book, “The Potentials of Indigenous Logistics Systems To Drive Trade-In Africa: Nigeria As A Case Study,” I asserted that if Indigenous Logistics Systems (ILS) in Nigeria are standardized and improved upon with the application of cross-cutting technology, this mode of the supply chain, otherwise known as the “waybill system” holds a variety of keys to unlocking the challenges impeding logistics and supply chain management (SCM) procedures in Africa.

To build upon the submissions in UNCTAD’s ECA report for 2023, which I am proud to have made a most apposite contribution, I will dedicate the rest of this essay to further outlining the ways and means by which Africa can emerge as a globally leading destination for supply chain systems, especially by integrating high-technology sectors that are getting ever more relevant in our world today.

What Africa can do to become a destination for global supply chains

The abundance of rich critical minerals necessary for developing high-technology products already places Africa in a position to harness and lead the global supply chain marketplace. Africa has the richest concentration of natural resources of any continent, including possessing exclusive ownership of nearly half of the world’s gold and one-third of the world’s entire mineral reserves. Africa also produces 90% of the world’s chromium and platinum, 12% of the world’s oil reserves, and 8% of its natural gas reserves.

What’s more, Africa’s endowment with the presence of a young, boisterous, and virile population also gives it credence when it comes to becoming a leading global supply chain player. As of 2022, more than 40 percent of the African population was 15 years and younger, compared to a global average of 25 percent. Indeed, the African median age remains 20 years old, while more than 650 million Africans are 17 years old and younger.

So, with the unique providential blessings of human and material resources, what factors are holding Africa down from meeting its economic goals concerning supply chain development, and how best can they be eliminated?

1. Strengthening the legal system around the exploration of Africa’s rare earth minerals

In his seminal work “Leviathan,” Thomas Hobbes, an English philosopher, argued that without governance and the unbiased interventions of the rule of law, there would be continual fear and danger of violent death. Indeed, man’s life in any society will be “solitary, poor, nasty, brutish and short.”

For Africans, the revelations of Thomas Hobbes have proven to be a more than accurate observation of the continent’s economic reality. Stacked with a wealth of natural resources, the legal system underpinning the exploitation and exploration of many African resources has, sadly, proven to be suboptimal in strengthening and protecting African economic heritage.

Oxfam International, the global non-governmental organization (NGO) working against eradicating poverty, has noted that the major challenges Africans face about exploiting their resources all border on three critical standpoints:

● Negative environmental and social impacts

● Forced displacement

● Arbitrary resource allocation to host communities

To ensure that host communities are not left poorer by exploiting their natural resources, African governments must enact strict regulations that protect vulnerable people when and where mineral resources are being exploited, especially women and children.

In Kenya, for instance, the government has committed to publicizing Production Sharing Contracts (PSCs) with multinational oil exploration companies. International Oil Companies (IOCs) in the country, like Tullow Oil, have also restated their commitment to disclosing their petroleum agreements that do not leave the host communities poorer.

Environmental and Social Impact Assessments (EIAs) must also be conducted before full-scale operations in Africa’s rare earth minerals begin.

2. Diversifying the African supply chain ecosystem

The most effective way of positioning Africa as the destination for global supply chains is by diversifying the African supply chain ecosystem. Due to the reverberating shocks of the global geopolitical ecosystem that have precipitated simultaneous challenges like the Covid-19 pandemic and the Russia-Ukraine crisis, diversification of supply chain bases in Africa has become all too important.

Read also: Home builder assures of increased supply amid challenging economy

The UNCTAD advises key stakeholders working across the African supply chain complex to adopt an evolved supply chain network that allows different stages of the supply chain system to be managed from various parts of the continent. This position of UNCTAD is not in any way new. Some leading global manufacturers have manufacturing plants on different continents that make various car parts and car brands.

It is imperative that African governments promote the investment friendliness of their national economies so that global manufacturers can diversify their supply chain systems on the African continent by taking advantage of the recently promulgated African Continent Free Trade Agreement (AfCFTA).

Conclusion

Africa can leapfrog other continents in the race to become the leading global supply chain marketplace of the future. However, the continent’s policymakers and top enterprises must key into the vision of a prosperous and unstoppable Africa. And that vision can only be realised when resource rights are stable and the African supply chain ecosystem is well diversified, at the very least.