Industrialization in Africa in the Era of the AfCFTA: Towards Accelerated Global Integration through Regional Value Chains

Abstract

While Africa has made significant strides, its industrialization process remains markedly behind that of other global regions. The impressive economic achievements of recent decades, characterized by sustained economic growth and flourishing trade, have not been matched by a corresponding increase in export market shares, especially in terms of added value. Whereas intra-African trade is dominated by semi-processed and processed products, trade with the rest of the world reveals a predominance of raw materials, accounting for about 70% of the continent's exports. This article argues that the current trade configuration indicates Africa's limited integration into global value chains (GVCs) and highlights the varied trade policies across the continent. Moreover, greater trade openness leads exposure to international competition, compelling local businesses to align with the practices of foreign companies and subsequently boost their productivity. The AfCFTA, a flagship initiative of the African Union's Agenda 2063, presents a unique opportunity to unlock African economies, amplify intra-African trade, and foster economic diversification. It is a pivotal step towards Africa's integration into global value chains, through regional value chains, to catalyze the continent's industrialization.

Keywords: Industrialization, regional value chains, global value chains, Africa, AfCFTA.

JEL Classification : O13, O14, F15.

Paper type: Theoretical Research