- Prioritising value addition could make Africa home to 35 per cent of the global manufacturing industries by 2063.
- Currently, the continent only contributes three per cent of the global manufacturing portfolio.
African leaders have been urged to focus more on value addition of their exports to boost revenues and job creation.
Speaking at the 14th African Union high-level private sector forum in Nairobi, Equity Bank managing director and CEO James Mwangi said the continent controls 30 to 35 per cent of the global natural resources, a great potential for production.
“If we can do value addition for the 35 per cent of the total world resources we offer through manufacturing, it would make Africa home to 35 per cent of the manufacturing industries by 2063,” Mwangi said.
Mwangi said currently, the continent only contributes three per cent of the global manufacturing portfolio.
He added that apart from creating more jobs, value addition would make African states more resilient and independent in terms of goods and services.
“Covid-19 pandemic demonstrated how manufacturing is concentrated. When the global supply chain broke, Africa could not get manufactured goods,” Mwangi added.
“This taught us that we need to have robust national, regional and continental production.”
Further stressing the importance of value addition, Mwangi gave an example of Kenya’s tea production where farmers are receiving less returns for their tea, which is earning good returns in global market, thanks to value addition.
Data by Statista shows for the 52 weeks to December 2019, the average unit price of ready to drink tea reached $1.92 (Sh270.8) in the United States.
A single cup of tea was approximately four times more expensive, with an average unit price of $7.95 (Sh1, 121).
“Today, a single cup tea in foreign market retails averagely at about $7 (Sh987) per unit, compared to the Kenyan market where it retails at an average of $2(Sh282),” Mwangi said.
Africa Union's commissioner for economic development, trade, tourism, industry, and minerals Albert Muchanga said such initiatives would be vital to boost the continent's growth.
“The current study by AUDA-NEPAD positions African economies to grow at seven to 10 per cent annually between now and 2063. This requires, among others, increasing investments from 20 per cent of the continent’s GDP to 40 per cent,” Muchanga said.