The term Value Chain, entails a sequence of value-adding activities involved in the line of production of goods and provision of services, from the beginning to the end. In case of production of goods, it starts from the extraction of raw materials, through the processing at the factory, till it gets to the final destination, where it is finally consumed. A number of products consumed globally have their origin in Africa. But how much do Africans get from the proceeds? This is dependent on how much of these value-adding activities Africans are involved in. Getting involved, unfortunately, does not depend on mere wishful thinking, but on taking some positive and deliberate steps towards capacity-building in terms of productivity. Where do Africans feature on the global value chain, as far as goods that have their origins in Africa?

 Africa’s current Plight

Right from the start, economic relations between Africa and the rest of the industrialised world have been imbalanced, such that Africa does not have a very strong bargaining chip in determining her entitlement from the productive activities that centre around her God-given Natural resources. The industrialised west purchases cocoa from Africa, for example, at a price set by them (the west), and then takes the raw product to their own country for more value-addition. Later, they would return with drinks and chocolate bars made from cocoa, and establish the selling price, with, of course, a very large mark-up, leaving Africans, the true owners of the items, who had put in the most hours of labour into generating it with peanuts. 

Credit: The Africa Report

The same goes for every other agricultural produce from Africa, which has no doubt denied the continent the deserved “end-to-end” supply chain presence. Africa only features at the primary level of production; that is where it ends. The richness of Africa in terms of mineral resources has never been in doubt. Coastal Congo,for instance, contains bauxite, gold, and offshore deposits of petroleum. The limestone deposits that occur throughout the country are considered to be among the richest in Africa. Congo’s forest reserves cover more than half of the country and are among the largest in Africa, according to the Britannica. However, Congo does not get commensurate benefit from the mining of these minerals as they are taken abroad to places like Belgium and Switzerland for processing into final products. These products are then  brought back to the country for sale, at exorbitant rates. 

Ditto for Nigeria, which happens to be the richest African country in oil and gas deposits. Talk of limestone, iron ore, tantalite, gold, coal, bitumen among others. Unfortunately, as rich as these African countries are, they hardly get their deserved due from their God-given endowments; at least, it is not telling on the citizens’ quality of life and standard of living. This is due to limited “end-to-end value chain visibility”. It also happens in the importation of refined petroleum products to meet her domestic consumption needs, despite having some countries that are among the largest producers of crude oil in the world. Most African exports crude oil for sales, then plough the proceeds back into procuring refined petrol, diesel, kerosene and other allied products for domestic uses. 

Southern Africa

South Africa exports mostly: mineral products (25.1 percent of total exports, including chrome, manganese, vanadium, vermiculite, ilmenite, palladium, rutile and zirconium, crude and coal), precious metals (16.7 percent, mainly gold, platinum, diamonds, and jewellery), vehicles and aircraft vessels (11.9 percent), iron and steel products (11.9 percent), machinery (8.1 percent), chemicals (6.1 percent) and vegetables (5.4 percent). Main export partners are: China (9.7 percent of total exports), the United States (7.5 percent), Germany (7.1 percent), India (4.7 percent), Japan (4.7 percent) and Botswana (4.3 percent). Others include Namibia, the UK, Mozambique and Netherlands. This is according to a report by “Trading Economics.” 

Image credit: Corporate Finance Institute

Northern Africa

In the Northern part of the continent, the story is not too different, as the majority of the countries, like Libya, Algeria, Morocco, and to an extent, Egypt relies on mining and exporting mineral deposits to remain economically sovereign. That does not imply that they are not doing relatively well, in food processing. Egypt, for example, is more steeped in agriculture than the rest of the North African countries, and they have done themselves a world of good by consolidating on the economy of scale, offered by the River Nile, and going a step further to add value, through food processing. And that, reflects in the Contribution of manufacturing to the Gross Domestic Product (GDP) in North Africa as of 2018, by country, according to Statista. A lot more can still be achieved, though. 

AfCFTA: The Game Changer

 Image credit: The Africa Report

 Africa, however, seems to have woken up from their deep economic slumber, especially in the aftermath of the adoption of the AfCFTA. For instance, the Dangote Fertiliser and Petrochemical Refinery Plants, which are located in the Free Trade Zone of Lagos, appears to be a game-changer. Africa has been waiting for projects like this to happen in order to achieve the economic independence and breakthrough that has been predicted due to the country’s huge resources. It is planned to be operational by the first quarter of 2023. With AfCFTA in full operation, it is predicted most of Africa’s petroleum needs would be taken care of by these plants. The Group Executive Director, Strategy, Portfolio Development & Capital Projects, Dangote Industries Limited, Mr. Devakumar Edwin, spoke with The Punch newspaper about the prospect of the plants. 

 

With this, I think the time to say “Good Morning Africa” is now, as the black continent appears to have woken up from its deep slumber. To buttress the point, the Deputy Prime Minister of the Democratic Republic of Congo (DRC), Eve Bazaiba, recently at the COP26 climate conference in Glasgow, told Swiss delegates that her country will no longer accept the export of its raw materials, notably cobalt, by commodities giant, Glencore. She revealed that the raw material would be processed into finished products locally, before being exported so that there can be that end-to-end value chain visibility, to the economic benefit of the people of the DRC. The DRC is responsible for more than 60% of the world’s cobalt, a by-product of copper and nickel mining that forms an essential component of rechargeable batteries powering electric cars. The Deputy Minister was also quoted in an interview with “The Swiss Info”, to have said that, “Cobalt cannot be exported, transformed and manufactured into batteries outside the country, while we are reduced to selling our teeth to afford a green vehicle.”

 

Intra-African Investment

 

 Image credit: Trade Finance Global

 

In all of this, there is an intriguing twist: investors from inside Africa are now engaging in cross-border investment in nations other than their own. It’s a case of opportunity meeting preparation. For instance, the Dangote group of companies (a fully Nigerian-owned multinational business concern, with presence in Benin, Cameroon, Ghana, Nigeria, South Africa, Zambia, among others) has a Cement factory in Ethiopia. Another of such development is about 26 Kenyan investors, coming into the Democratic Republic of Congo, to invest in different sectors of the Congolese economy, following the admission of the mineral-rich Central African country into the East African Community. The announcement was made in the presence of DRC’s President Felix Tshisekedi at a business event hosted by Equity Group to celebrate the signing of the accession treaty by DRC after admission into the East African Community (EAC) and in furtherance of the Kenya-DRC Trade relations, according to “The Capital Business” a Kenyan news medium. This will no doubt enhance AfCFTA’s vision and mission, as Africans would see themselves as brothers, neighbours and business partners.

Conclusion

There is an African proverb which says; “whenever a man wakes up, it must be regarded as his morning”. Since Africa seems just to be waking up to the need to tilt the balance of bilateral relation with the West in her favour, with a view to strengthening its position as a global economic bloc, the AfCFTA is that missing piece of the jigsaw that is now fortunately in place, and could prove to be a “Game Changer”. So, let us all say in chorus; “Good morning Africa”, It is better late than never.

Adebayo Abubakar is a Nigerian journalist. You can reach him via  email: marxbayour@gmail.com