1. Introduction Transformative industrialisation remains a development imperative for Africa. Over the last two decades, positive anecdotes of economic growth on the continent have largely been driven by gains in primary resource export. Lopes and te Velde (2021) have argued that while Africa’s share of manufacturing value-added between 2000 and 2017 reflects a slight decline from 12.6 to 11.3% of GDP, its overall level of industrial growth since 2000 has been significant. However, economic growth, as the African Development Bank (2016) recounts, has not been inclusive enough in creating jobs and improving the quality of life. Today, there is still a heavy reliance on imports for manufactured goods, including essentials such as medicines. Examples of dynamic industrial clusters, large scale indigenous manufacturing firms and domestic technological development are few
and far between (Markowitz & Black, 2019). More conspicuous, however, is the virtual absence of regional value chains (RVCs), which have been an integral aspect of rapid industrialisation success in Asia (UNESCAP, 2015). Trade in value-added goods within the region is by far the lowest in comparison with Asia and Latin America (Slany, 2019). In this context, the African Continental Free Trade Area (AfCFTA) offers an opportunity for the continent to recommit itself to transformative industrialisation by building competitive and robust RVCs that exploit existing comparative advantages and complementary features within the region including differentiated labour cost, productive capabilities, natural resource endowment and geopolitical advantages (Weigert & El Dahshan, 2019). The appeal of RVCs as an industrialisation pathway for the African continent is four-fold (Figure 1).
Mitigating negative distributional impacts In the context of AfCFTA, RVCs constitute a viable strategy for mitigating possible negative distributional impacts that Africa’s smaller and more vulnerable economies are likely to suffer under AfCFTA trade liberalisation (Ismail, 2018). Transitional solution for competitive integration into GVCs Given the individual African countries’ lack of competitiveness in global trade, RVCs offer transitional solutions for regional firms to progressively upgrade their production process and optimise productivity before integrating competitively into global value chains (GVCs) (Weigert, 2016; Slany, 2019). Opportunity for diversifying from global supply chains and their risks RVCs offer an opportunity for diversifying from global supply chains thereby reducing the continent’s exposure to future adverse global shocks (Banga et al, 2020). Suited for industrial development in sectors unique to the continent RVCs are uniquely well-suited for industrial development in sectors where idiosyncratic factors determine consumption behaviours and market opportunities (Weigert & El Dahshan, 2019).
Figure 1: The appeal of RVCs as an industrialisation pathway for the African continent
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