SPECIAL REPORT
The need for strengthened regional production networks
– through trade facilitation – and strong institutions is much
more pertinent today if Africa, and COMESA in particular,
is to boost its participation in GVCs.
What’s COMESA’s niche?
The blossoming of Kenya’s cut-fl ower industry, now
employing about 100,000 direct workers and having the
biggest market share for exports to Europe, generated
about $500m in sales in 2013. It shows the niche economic
opportunities that the Common Market for Eastern and
Southern Africa (COMESA) could have. But this is not
without challenges.
Tariffs and border ineffi ciencies still present a major
hurdle to intra-trade and regional value
chain development. Within the COMESA,
it is identifi ed that differing documentation
procedures on transport, prolonged clearance
processes, and corrupt practices are the three
most trade-affecting non-tariff barriers.
For COMESA, there are opportunities
to develop, for example, a competitive
leather and leather products sector, which
experienced a rise in share in global exports
from 1.5 percent in 2000 to 3.6 percent in
2011. For this to happen, COMESA requires
a functioning institution to drive a common
agenda among the countries. The COMESA Leather and
Leather Products Institute could be a motor in building such
a bond in regional value chain development.
in Africa is signifi cant to attracting investments, creating
economies of scale and boosting participation in RVCs.
Investing in infrastructure is also linked to developing a
skills-based economy that prioritises technical and vocational
training. Key to participating in GVCs is digitisation, which
is a workforce skilled in information and communication
technology. Yet, the ICT sector receives the lowest amount of
allocated spending across Africa, with a total of $853 million
in 2016. It is important that governments and private partners
increase investments in ICT infrastructure.
This is where institutions like the African Development
Bank come into play. Increasing the fi nancial portfolio for
transformative infrastructure would place the region in a better
position to develop regional value chain and, consequently,
Africa’s participation in GVCs will boost
its manufacturing sector, but making
inroads into the global economy will
require tapping into less-exploited
regional value chains across the
continent. COMESA has a role to play.
Africa’s free trade vision
There was excitement at the recent signing of the African
Continental Free Trade Area (AfCFTA) in Kigali, Rwanda,
which forms an integral element of the African Union’s
Agenda 2063. The AfCFTA commits countries to phase out
tariffs on 90 percent of goods, with 10 percent of "sensitive
items" to be phased out incrementally. It will also liberalise
trade in services.
The AfCFTA holds tremendous opportunity as it could
boost intra-African trade by more than 52 percent, worth
about $35 billion per year. Most importantly, it signals a step
towards building strong RVCs. Signing the agreement is a
major milestone, but it will take the political will of African
leaders to ratify and bring it into operation.
Fostering Africa’s RVCs will require building strong
institutions that will regulate and facilitate the production
and distribution of goods and services. A major bottleneck
to a functioning institution is the unavailability of adequate
infrastructure. The continent has a huge infrastructure gap, at
$130–170 billion a year, which cuts an estimated 2.6 percent
of its GDP growth every year. Playing host to many small-
sized economies, cross-border infrastructure investment
compete favourably in GVCs. The African Development
Bank’s High 5 agenda offers an important vehicle for
unleashing innovative fi nance to boost infrastructure.
Conclusion
Africa’s participation in GVCs will boost its manufacturing
sector, but making inroads into the global economy will
require tapping into less-exploited regional value chains
across the continent. COMESA has a role to play in this.
Given the region’s demographic structure and immense
natural resource potentials, the world stands to gain from a
strong manufacturing base through increased participation in
regional and global value chains.
* The author is the co-founder of Commodity Monitor,
an African tech-based business that uses data analytics
to generate an exchange of information on sustainable
production, supply, and consumption of commodities in
Africa. He has about eight-year experience in research and
policy analysis in Africa’s extractive sector, agriculture,
energy, and climate. He has published more than 100 articles,
blogs and papers on energy and climate, fi nance, agriculture,
natural resources governance and sustainable development
in Africa.
Email:[email protected]|
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COMESA• 2018 • 35