Leveraging technology, value addition seen giving local manufacturers advantage in AfCFTA

As countries participate in the African Continental Free Trade Area (AfCFTA), it is important for them to maximize the benefits of the trade platform. Achieving this will require the optimization of industrialization, technology and value addition by participants and the provision of an enabling environment by the government.

This was discussed at a high-level roundtable on industrialization in Africa organized by the Manufacturers Association of Nigeria (MAN) themed “Positioning African industries for economic transformation and continental free trade” held in Lagos.

Albert Muchanga, trade & industry commissioner, African Union Commission, said the role of manufacturing cannot be underestimated in African trade however it needs to be well developed to deliver results.

He said for Africa to fully establish itself in manufacturing, it needs to invest heavily in research and development and warned that if adequate investments are not made in research, manufacturing prospects will be limited which will continually leave Africa at the bottom of the global value chain.

“Skilled development focused on leveraging the fourth industrial revolution should be promoted, economies must also invest in processes engineered to take advantage of the offers of research institutes,” he said.

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Benedict Oramah, Chief Executive Officer, African Export–Import Bank (Afreximbank) mentioned that already many African countries rank low on the ease of doing business while they struggle with infrastructure deficit, all of which complicates and dampens trade activities

Oramah represented by Amr Kamel, Executive Vice President, Business Development & Corporate Banking, Afreximbank, that Africa has a twin challenge and an opportunity which is how to accelerate its industrial development drive on the back of manufacturing and how to leverage digital technology.

“We have to collectively establish the right regulatory framework for investment inflow in digital industrialization technological advancement to provide opportunities,” he said.

In boosting competitiveness, he advised manufacturers to embark on bankable projects which will attract funding and support.

He noted that banks are beginning to adopt a different model of lending where attention is diverted from physical collaterals to company cash flow and ability of the loan to repay itself from the transaction or the project.

Wamkele Mene, Secretary General, AfCFTA, said a major challenge affecting African countries and trade activities in the continent is lack of depth of industrial development, industrial capacity and productive capacity.

He added that the trade agreement is a tool that will be used to facilitate industrialization and expanded capacity in Africa, however the chances are slim seeing that a large part of African trade focuses on primary products.

“We require the right skills to drive industrialization and our capacity particularly from a manufacturing point of view our ability to manufacture value added products,” he said.

Mene also said that creating value in local manufacturing will require government support through the provision of an enabling environment as well as the prompt implementation of business friendly policies.

Mansur Ahmed, president, MAN said driving industrialization in manufacturing requires closing the gap on digital technology and skilled manpower. This he said will commence from schools through the promotion of vocational and standard education.

Creating skilled manpower needed for the new industries will require a reform of the educational process to ensure that learning and training in digital technology is not isolated,” Mansur said.

Aliko Dangote, chairman, Dangote group in a fireside chat said for manufacturers to be competitive they have to produce high quality products with low production cost, however the huge presence of challenges limits the possibility.

“We need government support to stabilize and be able to compete anywhere in the world, this is only possible when there is an enabling environment to function,” he said.