Value addition is not economically exploited in Africa, making it difficult for the continent to grow. The continent needs to invest in industrialization to create jobs as well as increase the foreign exchange.
Why is Africa, endowed with vast natural resources, still struggling to feed its people? The answer to this is loud and clear- Africa relies majorly on exporting its raw materials only to buy them back in the form of finished products.
To beat the perpetual poverty, African countries need to invest in creating industries, building up skills and technologies aimed at producing high-quality products for export as well as local use. By industrialization, the nations are also able to address the challenge of jobs, thus creating income for their people.
African leaders have vigorously stressed the need for the region to industrialize with an aim of adding value to natural resources or beneficiation as it is called. The notion has been captured in Africa’s Development Agenda 2063, which singles out beneficiation as one of the key priorities for the continent.
Some two years back, Zimbabwe’s President Robert Mugabe noted that while Africa “is potentially one of the richest regions in the world, most of its agricultural and natural resources are exported unprocessed, which earns the region 10 percent of their actual value. Through beneficiation, we will be able to increase our returns ten-fold.”
Most recently, at the just concluded AU Summit held in Kigali (10-18 July 2016), regional leaders reiterated the need for Africa to move away from selling raw materials to exporting finished products, which will not only increase foreign exchange but also create jobs and move millions out of poverty.
Speaking at the Kigali event, Dr Darlington Muzeza, an expert from the Zimbabwean Ministry of tourism and hospitality industry said that “Africa must focus on technology transfer models to close the existing gaps in value addition, we incur losses in export of raw materials, there is need for technological partnerships with developed countries so we can transform our raw materials into finished goods.”
It is unfortunate that a continent which still has agriculture as the biggest employer of the population still imports food worth about $40 billion a year to feed its population.
To make industrialization a reality, Dr John O. Kakonge, a senior consultant and adviser in sustainable development, agrees that to achieve the much needed structural transformation, “value must be added to Africa's commodities, and specific industrial policies and programs such as regional value chains are of key importance.”
This, Dr Kakonge argues can be achieved by concentrating on the value chains (Value-added products and services) which consist of interlinked value-adding activities that convert inputs into outputs. The outputs end up in markets and bought by clients and customers, thereby adding to a company's profits and helping to create competitive advantage. “A value chain typically consists of, first, inbound distribution and logistics; secondly, manufacturing operations; thirdly, outbound distribution and logistics; fourthly, marketing and sales; and, fifthly, after-sales service,” Kakonge adds.
To convert its raw materials into finished goods, the 27th African Union Summit was told that Africa also needs to address some of the challenges in the continent such as skills gap, energy, and infrastructure, if it’s to achieve double-digit growth by the year 2030.
Even as AU continues to address policy issues, Dr Muzeza says that it needs to also deal with “the pessimism that comes with nationalistic interests of member states”.
“AU must not be a talk show, but a platform to interrogate issues and come up with practical solutions to people’s problems; it needs to revisit its founding principles of a united Africa, the vision of Kwame Nkrumah,” he said.
Dr Kakonge advises African governments to focus on upgrading the capacity of the people in involved in productive sectors, specifically small and medium-sized enterprises. Even though he acknowledges that the undertaking will not be cheap, he calls on African governments to collaborate with local institutions to set up “tailor-made vocational training courses at certificate, diploma and graduate levels.”
Quality is of the essence when it comes to attracting and retaining customers and clients. To ensure market growth in the region, African enterprises should focus on producing quality finished products. This will ensure that high-end users do not result into exporting their products from Europe, the US and Asia where they believe quality products exist.
Moreover, Africa needs to invest in emerging technologies to compete with other continents. Calestous Juma, a Professor of the Practice of International Development and Faculty Chair of the Innovation and Economic Development Program at Harvard Kennedy School, notes that Africa needs to explore emerging technologies like “3D printing” and “genetic engineering” which are relevant to Africa’s growth.
“So far the role of this technology [genetic engineering] has been discussed in the narrow context of genetically modified (GM) foods,” argues Prof Juma adding that “the intensity of the controversies surrounding the issue, however, has blinded African countries to the benefits of acquiring and applying the same techniques in fields such as the development of vaccines and drugs against emerging infectious diseases.”
The process of adding value is expensive, but rewarding at the end. To ensure that African nations reach this goal, they need to employ deliberate strategies focused on changing attitudes in order to deliver quality products that are competitively priced. While addressing the issue of value addition, Africa should also focus on adopting innovative technologies that will not only make work easier but also provide solutions to stagnating problems in health, education, social and economic sectors.
Image Credit: Africa Business Magazine
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