Industrialising Africa through regional value chains

The three-day Biashara Afrika 2024 conference, the second edition of the AfCFTA business forum, concluded with a focus on creating dialogue between the African public and private sectors to explore the potential of intra-African trade. CNBC Africa's Ridhima Shukla engaged Themba Khumalo, the Principal Advisor for Value Chains at the AfCFTA Secretariat, to delve into the strategies employed to foster cohesion between historically competitive regions and leverage assets spread across different nations. Khumalo highlighted the organization's aim to promote import substitution strategies and enhance Africa's competitiveness on both regional and global scales. One of the key areas of focus for the AfCFTA Secretariat has been identifying priority sectors that offer immense opportunities for value chain development. Khumalo emphasized the staggering importation bill in sectors where African nations possess the capacity to produce, such as pharmaceuticals, second-hand vehicles, and food. By strategically prioritizing these value chains and engaging key stakeholders, including SMMEs, women, and young entrepreneurs, the organization is working towards fostering industrialization in Africa, creating jobs, and boosting economic growth. Moreover, Khumalo highlighted the importance of addressing transportation and logistics challenges that hinder the development of productive sectors across the continent. By streamlining trade processes and reducing associated costs, the AfCFTA aims to facilitate smoother trade flows and enhance the competitiveness of African industries. The alignment of priority sectors across different regional economic communities, such as SADC, EAC, and ECOWAS, offers a unique opportunity to leverage economies of scale and drive investment to bolster industrial capacity and promote regional value chains. The Guided Trade Initiative introduced by the AfCFTA Secretariat plays a crucial role in facilitating the effective implementation of trade rules and agreements. By providing a platform for companies to engage in cross-border trade and tap into new markets, the initiative has already shown promising results in promoting intra-African trade and creating value. The exchange of goods, such as tea from Kenyan cooperatives and coffee from Rwanda, underscores the potential for job creation and economic growth through expanded market access. In addition to addressing trade barriers, currency volatility poses a significant challenge to intra-African trade. To mitigate these risks, the AfCFTA Secretariat has collaborated with Afreximbank to establish a Pan-African payment and settlement system. This innovative platform enables direct payments in local currencies, eliminating the need for third-party currencies and reducing transaction costs significantly. By promoting seamless financial transactions within the continent, the PAPS aims to stimulate trade activities, retain capital within Africa, and support the continent's development goals. As Africa continues to chart a course towards industrialization and economic transformation, initiatives like the AfCFTA and the Guided Trade Principle play a pivotal role in harnessing the continent's immense potential for intra-African trade and value chain development. By fostering collaboration, promoting regional integration, and addressing key challenges, African nations can unlock new opportunities for growth and prosperity in the global marketplace.