PAMA Scrutinizes Why Africa’s Global Value Chain Remains Low

• Proffers robust recommendations to tackle challenges

The Pan- Africa Manufacturers Association (PAMA) has through its PAMA May 2025 News Bulletin has highlighted its impactful advocacy efforts that are helping to shape the progress of the manufacturers in Africa and scrutinized why Africa’s global value chain remains low and harped on collective, practical steps needed to drive sustainable industrial growth across the region.

PAMA cited infrastructure deficits, which include: Poor transport, logistics, energy, and ICT infrastructure which raise production and transaction costs for local industries, adding that it also undermines the continent’s capacity to attract and retain global production networks.

It noted that Port inefficiencies are pronounced as turnaround times are three to four times longer than in East Asia, making African suppliers less competitive in time-sensitive supply chains.

While Intra-regional connectivity is weak, limiting the scalability of regional value chains, it noted low industrial capabilities as many African economies still rely heavily on raw material exports with minimal processing.

It listed others to include weak backward and forward linkages hinder the development of local supplier networks; Limited technological capabilities; Insufficient investment in R&D, digital technologies, and automation restricts productivity and quality standards; Adoption of Industry 4.0 technologies is very low across SMIs and even among some large firms; Skills gaps; Persistent mismatch between education systems and labour market needs, especially in technical and vocational fields; Technical and vocational training is underdeveloped. This limits firms’ ability to employ qualified personnel to meet global standards, innovate, and move into higher value chain segments;Weak innovation ecosystems limit entrepreneurial development and firm-level upgrading.

The news bulletin also mentioned Trade barriers and market fragmentation to include Non-tariff barriers, inconsistent standards, and cumbersome customs procedures affect cross border trade efficiency; Too many talks, low genuine commitments and few actions on AfCFTA; many States are noncompliant with AfCFTA protocols; Limited access to affordable financing by manufacturers, especially SMIs, undermines their capacity to innovate and integrate into global supply network.

According to the PAMA Survey report, SMIs account for about 90% of Africa’s industrial base but receive less than 10% of formal credit, noting that “In many African countries, average interest rates range between 25% and 30%, impeding investors from investing in capital equipment, skills, and product upgrades essential for GVC participation.

“High perceived credit risks discourage both local and foreign direct investment into value adding sectors in Africa.

“Inconsistent government policies, weak industrial policy enforcement, and limited public-private coordination reduce Africa’s full integration and gainful participation in GVCs.

“Political instability, insecurity and regulatory unpredictability deter long-term supply chain partnerships and manufacturing upgrade for high-level Africa’s GVCs participation.”

According to the  PAMA May 2025 News Bulletin  to unlock greater value capture and global competitiveness, Africa must pursue deliberate, regionally coordinated actions to strengthen its manufacturing base, trade infrastructure, and innovation ecosystems.

The news bulletin highlights key policy on what to do:

It stated that to deepen manufacturing capacity: Africa must expand its manufacturing base to transition from a raw material exporter to a value adding industrial hub within GVCs vis-à-vis:

“Full implementation of the African Union’s African Commodities Strategy, which emphasizes transforming Africa from a supplier of raw materials into a competitive, value adding industrial economy.

“Encouragement of member states to swiftly ratify African Union’s African Commodities Strategy, which has been delayed due to insufficient numbers.

“The African Minerals Development Centre (AMDC) must coordinate this strategy effectively and, as a matter of timeline, deliver on its mandate.

“Fast-track AfCFTA implementation for industrial integration: The AfCFTA must be implemented with urgency and industrial ambition to enable Africa’s GVC integration.

“AfCFTA is already facilitating industrial clustering, standards harmonization, and crossborder SMI integration.

“Regional manufacturing specialization is emerging, e.g., textiles and cotton processing in West Africa, agribusiness and pharmaceuticals in East Africa.

“Full implementation can serve as the backbone of Africa’s industrial revival and GVC participation in the most beneficial manner.

“Develop cross-border sectoral value chains: African countries should establish regional sectoral clusters that leverage complementary strengths across borders.

“Example: Raw material extraction in the DRC, refining in Zambia, and final manufacturing in South Africa create integrated regional value chains.

“Such models of productive interdependence enable Africa to move into intermediate and final manufacturing stages with higher value capture.

“Accelerate regional infrastructure and trade corridor development: Governments must invest in shared infrastructure to support intra-African supply chains and GVC integration.

Other recommendations include: “The Lobito Corridor (Angola–Zambia–DRC) which exemplifies how coordinated development can link mineral zones to processing and export terminals.

“Develop corridors through joint planning, co-financing, and governance structures to ensure regional competitiveness and sustainability.

“Harmonize standards and establish joint industrial zones: Continental harmonization of standards and industrial cooperation zones are essential to reduce technical trade barriers and boost GVC participation, adding that the African Organisation for Standardisation (ARSO) is already harmonizing over 500 product standards, which should be adopted and enforced continent-wide.

“Cross-border industrial parks like the Djibouti–Ethiopia Corridor offer shared infrastructure for co-manufacturing, logistics, and investor appeal.

“Scale collaborative R&D and technological upgrading: Increased investment in research and technology is crucial to move African industries up the value chain, adding that Africa’s current R&D expenditure is only 0.5% of GDP, far below the global average of 2.2% (UNESCO, 2023).

“Strengthen institutions like Pan African University Institute for Basic Sciences, technology and Innovation (PAUSTI) to coordinate regional innovation, technology transfer, and industrial problem-solving.

“Encourage joint R&D projects in key manufacturing sectors such as green tech, agro-processing, and digital manufacturing.

“Enhance access to finance for industrial upgrading: Develop and expand financial mechanisms that address the capital needs of manufacturers.

“Africa’s development and financial institutions should introduce dedicated supply chain finance, credit guarantees, and long-term concessional loans tailored to manufacturing investment cycles.

“Governments must collaborate with DFIs and AfCFTA institutions to fund industrial upgrading, especially in regional value chains.”

It acknowledged that while Africa’s current participation in global manufacturing value chains remains limited and skewed toward low-value segments, targeted reforms and strategic investments—especially under the AfCFTA framework—can reposition the continent for industrial take-off.

Accordingly, it affirmed that strengthening infrastructure, improving access to finance, investing in skills development, and deepening regional integration are key steps toward enhancing Africa’s manufacturing performance and enabling the continent to capture greater value in the global economy.