Africa is rich in abundant natural resources including arable lands, surface and ground water, labor force, minerals, forestry and tangible and intangible tourist destination. However, because of the absence of sufficient technology, finance and well-trained human resource the resources are not sufficiently exploited. As the result, the continent still categorized as one of the pauperized in the world.
The continent still dominantly exports agricultural products and minerals in their raw state with no value addition which intern affects their competitiveness in the world market as they are sold for lower than the average price. Ultimately it earns less hard currency which is badly needed to support its development endeavor.
The continent also suffers from macro-economic imbalance manifested by high indebtedness, shortage of hard currency, inflation, unemployment, trade deficit and illegal trade. This all hampers the nation’s aspirations to tackle poverty and ensuring food security.
Considering alleviating the Africa’s economic malaise, recently in the margins of the 38th African Union Summit the 8th Africa Business Forum was conducted on the presence of African heads of states, governments and officials of international none governmental organizations and donors.
On the occasion, President Taye Atske Selassie highlighted the importance of realizing self- incentive and cultivating robust inter-Africa linkages to ensure a sustainable industrialization in the continent, which is instrumental to the economic growth through creating employment opportunity and income generation.
He also stressed the need for strengthening sustainable value chains to reduce Africa’s reliance on import trade.
The continent imports more than its exports and such trend left Africa to find it-self in trade deficit. Experts also proved that the continent contribution to the world market is only 3 percent and this clearly indicates that how far Africa is marginalized from the world economy.
The forum, themed “From Potential to Prosperity: Activating Africa’s Regional Value Chains,” attracted prominent leaders, including Presidents John Mahama of Ghana and Duma Boko of Botswana, as well as representatives from the AfCFTA Secretariat, WTO, African Development Bank, Afreximbank and other partner institutions.
Expanding Africa’s manufacturing capacity and fostering an attractive environment for FDI is necessitated over reliance, President Taye said, believing that external incentives would hamper the sector.
He further highlighted the growing competition for control over global value chains, driven by geopolitical and national security interests.
He emphasized that strengthening regional value chains is crucial for Africa’s meaningful participation in the global economy and its ability to shape its future.
Manufacturing, he noted, is the cornerstone of a successful value chain, but it requires a healthy population, making food sovereignty a key foundation for regional value chains in Africa.
Ethiopia, with its vast livestock resources, particularly alongside Botswana, was hailed as the country is well-positioned to meet the growing beef market demand, both regionally and globally.
Nevertheless even the remoteness location of the area where the livestock population is found has added to the difficulty of accessing market. The absence of plenty of infrastructure further put the sector in disadvantageous position. Poor veterinary service and forage also crippled the sector to attain its growth in snail pace.
The sector also critically suffers from the impact of global warming and climate change and in time of adversity, many of the cattle population die in the wilderness.
Taye further stressed that reliable and affordable energy is vital for the growth of regional value chains. Currently the government is aggressively involved in the expansion of manufacturing and the venture attracted both local and foreign investors but to continue the endeavor sustainable, availing reliable energy sources particularly the renewable one is essential.
He cited Ethiopia’s investment in energy resources, such as the Grand Ethiopian Renaissance Dam (GERD) and the Koysha Hydro Power Dam are contributing to regional energy security and industrial growth through the East African Power Pool. The completion of the two dams is expected to change the energy land scape of the country dramatically.
The African Continental Free Trade Area (AfCFTA) is a key tool for unlocking the continent’s potential, particularly in fostering industrialization and reducing food imports, he indicated.
The President further noted: “Resilient infrastructure, investing in human capital, and embracing digital transformation are essential to Africa’s growth.”
United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa (ECA), Claver Gatete, on his part acknowledged Africa’s immense resources despite economic slowdown. Gatete echoed the same sentiments on the importance of strengthening Africa’s value chains to drive economic growth and industrialization.
Acknowledging Africa is rich in resources, however, he said its participation in global value chains remains underdeveloped. It is understood that many African countries are still dwelled in mono economy. They export one or two types of products in the same manner and export it to the world market with no value addition and unable to create demand with in African countries. The east African countries can be mentioned in this regard.
For instance Ethiopia, Kenya, Uganda and Tanzania are coffee exporting countries. Each country does not need to import coffee from its neighboring countries while it produces domestically and such and other factors inhibits them not to create value chains for facilitating agricultural products market. Hence, they should understand that diversifying the types of their export products and standardizing it paves the way for creating and strengthening value chain to realize trading with in Africa.
The AfCFTA, with its single market of 1.5 billion people and a combined GDP exceeding USD 3 trillion, provides a blueprint for transformation. Therefore, it is imperative to move from vision to action.
Activating Africa’s Regional Value Chains builds on the work of the Economic Commission for Africa (ECA), the Regional Economic Communities and the initiatives of governments to identify bankable projects throughout the continent that promote investments and facilitate job and wealth creation in Africa.
ECA in collaboration with the Africa Finance Corporation (AFC) and the Arab Bank for Economic Development in Africa (BADEA) pledged to support regional economic integration through strengthening regional value chains.
According to ECA, African regional value chains offer a strategic entry point, through which investors can participate in the continent’s accelerated industrialization and secure a foothold in a rapidly expanding market.
The business forum allow countries to explore opportunities to invest in regional value chains and special economic zones in Africa and will facilitate a common understanding of the current demand for and supply of finance.
These insights will shape the analytical and operational support provided by ECA for the development of various regional value chains on the continent.
It also enables countries at enhancing awareness of regional value chains and special economic zones at the national, sub regional, continental and international levels.
Establishing a common understanding among all stakeholders on feasible solutions to overcome the implementation challenges faced by projects relating to African regional value chains is also its objective.
The Forum will create a platform for the exchange of information between traditional and non-traditional financiers; to establish whether there is consensus on the need for a digital platform that can be of service to investors, States and financiers on current trends and opportunities pertaining to African regional value chains and special economic zones.
The Forum also expects to obtain declarations of interest in investing in specific projects relating to regional value chains.
ECA has identified three especially significant regional value chains to be highlighted at the Africa Business Forum that include Agro-industrial value chains; Livestock value chains and Pharmaceutical value chains.
As mentioned above Africa has sufficient resources that can be a driving force for accelerating economic growth hence, creating consensus among stake holders to tap the resources is essential.
Accelerating the economic endeavor paves the way to conduct business in a simplest way and to that end countries on their part should create enabling environment to both local and foreign investors.
BY ABEBE WOLDEGIORGIS
THE ETHIOPIAN HERALD WEDNESDAY 19 FEBRUARY 2025
