Publications /
Opinion

Back
Global Value Chains: The Missing Link in Sub-Saharan Africa’s Trade Integration
Authors
Roger Nord
September 18, 2015

Sub-Saharan Africa’s trade flows increased sharply, multiplying by a factor of five over the past 20 years. Is this boom built on commodities only?  My answer is no ! Many countries have increased their integration in global value chains. But, it is also clear that sub-Saharan Africa still has some way to go.

Increased trade boosts for growth

Over the last two decades, the export-to-GDP ratio in sub-Saharan Africa increased from 20½ percent in 1995 to 27½ percent in 2013. This occurred to a great extent thanks to a rising demand for raw materials over that period, but not only, as some non-commodity exporters in the region also recorded impressive progress. In the process, the destination of sub-Saharan African exports changed substantially, with the development of new partnerships with emerging markets such as Brazil, China, and India—China is now the most important single trade partner for sub-Saharan Africa.

Our analysis finds that increased trade integration has had a strong influence on growth in sub-Saharan Africa. Average real GDP per capita growth increased from 2.9 percent in the 1990s, to 4.3 percent in the 2000s. Of that 1.4 percentage point increase, about half was accounted for by higher trade integration.

Still substantial untapped potential

Yet, despite this strong growth, the region’s trade has barely kept up with the expansion of the global trade network over the last 20 years. Of course, this partly reflects lower income levels, generally longer distances, and the specific challenges facing landlocked countries. But even after accounting for those factors, trade flows emanating from sub-Saharan Africa are found to be only half of the magnitude experienced elsewhere, with intra-regional trade only 15–20 percent of what is observed within South and East Asia or Europe.

Global Value Chains: Where are you?

One key dimension of globalization in recent decades has been the development of global value chains—large supply chains in which value is added at each stage of production before crossing borders to be passed on to the next stage. At the global level, deeper integration into global value chains has been accompanied by a rise in income levels over time, most evident in Asia and in Eastern Europe, where countries have successfully plugged themselves into downstream supply chain networks such as processing and assembly trade with imported inputs.

Figure 1 shows that most countries in sub-Saharan Africa have increased their integration in global value chains, as measured by the share of foreign value added in a country’s exports. But while there a substantial degree of heterogeneity across the region, it is also clear that sub-Saharan Africa still has some way to go.

PCNS

 

How to seize the opportunity?

How to accelerate the region’s integration into global value chains? The experience of five countries—Tanzania, Ethiopia, Seychelles, South Africa and Kenya—is instructive. These countries stand out, having seen their integration rise over two decades by a magnitude similar to the most successful countries in other regions, such as Poland or Vietnam.

We invite you to read the full OpEd by Roger Nord on Ideas For Development (ID4D) Blog

RELATED CONTENT

  • Authors
    Sous la direction de
    Omar Awadallah
    Muhammad Ba
    Farah Bashir
    Said El Hachimi
    Mostafa El Sayed Abo El Soud
    Saloi El Yamani
    Pierre Jacquemot
    Divine Ngenyeh Kangami
    Hafsa Maalim
    Samuel Muriithi
    Solomon Muqayi
    Brian Kelly Nyaga
    September 21, 2023
    Disponible bientôt en vente sur Livremoi   Cette édition du Rapport économique de l’Afrique est construite autour d’une thématique d’une grande actualité : les conséquences des incertitudes et des risques aussi bien sanitaires que climatiques et sécuritaires sur les économies du continent. L’exercice est d’autant plus légitime que la recomposition de l’ordre mondial questionne la place du continent à l’échelle planétaire, sur les plans économique, social et environnemental. L’éco ...
  • September 19, 2023
    Les corridors sont essentiellement de grands axes de transport facilitant la circulation des personnes et des biens entre des régions et entre des pays limitrophes. L’organisation de ces voies est complexe, parce qu’elles sont généralement multimodales et impliquent de multiples passages de frontières. L’Afrique s’est lancée depuis quelques années dans le développement et la mise en réseaux des infrastructures des corridors de toutes ses régions. La Communauté de l’Afrique de l’Est ...
  • June 6, 2023
    African countries were severely hit by the COVID-19 pandemic, which quickly drove the continent into its worst recession in fifty years. According to the 2022 African Development Bank African Economic Outlook (AEO), real GDP declined by -1.5% in 2020 compared to growth of 3.3% in 2019. Africa has recovered quickly from the recession, but this has not translated into favorable debt prospects for many countries. To make a challenging situation even worse, the Russia/Ukraine crisis has ...
  • Authors
    Abdelmonim AMACHRAA
    May 17, 2023
    Nothing better illustrates the positive contribution of the integration of national economies into global value chains than the fact that in the 1990s, the automotive sector barely existed in Morocco. Now, it is the leading export sector, with a production and assembly capacity of 700,000 vehicles, making it an attractive and competitive hub linking Africa and Europe in the automotive value chain. However, the automotive industry is on the cusp of change, with advances in electric a ...
  • Authors
    April 10, 2023
    The contemporary global energy landscape is experiencing noteworthy changes in demand, supply, technology, markets, and investment. These developments transcend conventional oil and gas security considerations. Renewable energy sources, such as wind and solar power, have become increasingly cost-effective compared to fossil fuels, and the minerals required to produce them are gaining importance. Nevertheless, recent events such as the Covid-19 pandemic and the conflict in Ukraine ha ...
  • April 10, 2023
    This policy paper examines India’s growing engagement in North Africa, focusing on five countries: Morocco, Algeria, Tunisia, Libya, and Egypt. Despite lacking a distinct regional policy for North Africa, India has amplified its bilateral engagement with these countries, underpinned by a steadfast commitment to the principle of South-South cooperation. Through its strategic moves in North Africa, India has established a powerful southern-west axis for its foreign policy that stretch ...
  • Authors
    Hala Boumaiz
    April 7, 2023
    In an attempt to bring the World Cup back to Europe and Africa, Morocco has joined Spain and Portugal in a three-way bid to host the 2030 FIFA World Cup. While there are still talks of Ukraine remaining in the bid, the three confirmed countries are hoping to score big with major economic, cultural, and political benefits. Although not as large as the Olympics in terms of logistics, the FIFA World Cup is one of the most prestigious and watched sporting events in the world. Early figu ...
  • December 30, 2022
    Le rôle des Investissements directs étrangers (IDE), comme catalyseur de croissance économique et facteur fondamental d’intégration dans l’économie mondiale, fait l’objet d’un grand consensus. Ce Policy Brief se focalise sur une dimension des IDE qui est le réinvestissement des bénéfices comme, non seulement une source de financement supplémentaire à travers l’expansion des IDE existants, mais également un fort signal des opportunités d’investissement pour les nouveaux i ...
  • Authors
    November 11, 2022
    If the recent peaceful transfer of power in Madagascar heralds a new trend, then the Malagasy people can dream big. For decades, the exercise of economic-cum-political power in the hands of a tiny elite has held the entire nation hostage. Today, the high poverty rate—around 80% (2021) stands in stark contrast to the natural resource abundance of this huge enormous island. There is hope, however, that with political stability, the Plan d’Émergence Madagascar (PEM) President Andry R ...
  • November 4, 2022
    Panel 2: Les Communautés Economiques Régionales : Quel apport à la résilience africaine dans un contexte de chocs multidimensionnels ? Modérateur:            Abdelaaziz Aït Ali, Manager – Département d’économie, Policy Center for the New South   Intervenant.e.s : Nezha Alaoui M’hamm...