By Fyodor Dmitrenko
We would like to thank the Warwick Economics Summit and WESJournal for granting Fyodor special access as a WES 2025 student journalist which enabled him to write this article.
At the recent Warwick Economics Summit, Kevin Chika Urama (Chief Economist at the African Development Bank Group) and David Omojomolo (Capital Economics’ Emerging Markets Economist) introduced me to the idea that African nations should seek to move up the global value chain. Unsurprisingly, this sparked a series of interesting questions that took me down a rabbit hole – what is a global value chain, why are African countries on the lower stages of the value chain in the first place, what measures can be used to increase the value-added, and how effective would moving up the value chain be in terms of delivering promised prosperity to Africans?
Tackling the first question, according to the 2001 International Development Research Center (IDRC) report, “the value chain describes the full range of activities which are required to bring a product or service from conception, through the different phases of production…, delivery to final consumers, and final disposal after use,” with the global value chain simply distributing these activities across various countries.
Delving deeper into the concept, I discovered that 45 of Africa’s 54 countries remain dependent on exports of primary products in the agricultural, mining and extractive industries. This makes these African economies extremely primary sector-dependent, or in other words, in the early stages of the value chain. Mr. Omojomolo highlighted this high figure during the WES conference as most of the value added occurs outside of African economies, thereby significantly limiting the continent’s development potential as the incomes generated at this stage of the global value chain, and therefore the concurrent benefits, are comparatively low.
An infamous example of this has been the mining of lithium in the Democratic Republic of Congo, where some miners earn as little as $3.50 a day. The material they mine is exported to developed economies like China to be processed into lithium-ion batteries, a critical component for the manufacture of high-end products like electric vehicles e.g., Teslas whose cheapest car model with minimal furnishings costs approximately $35,000, a far cry from the pocket change paid to the miners back in Africa.
A key reason for this present trend is the colonial legacy of the African continent. Historians like Waltner Rodney have argued through books like “How Europe Underdeveloped Africa” that African colonial economies were built around an extractivist economic model. This involved the export of natural resources to a colonial overlord, including infrastructure such as railways to carry resources to ports to be exported, administrative structures to manage this process, and law enforcement to crack down on anyone who would oppose this economic model.
Other factors also play a role in this trend of commodity export dependency such as poor investment climates. These limit the capacity of economies to move into other sectors of production due to their inability to make relevant capital investments and their comparatively limited human capital. As Mr Urama put it, African administrations feel like they are effectively “subsidising” the economies of other countries due to brain drain when they make significant investments in education, as skilled workers emigrate in search of better jobs. This causes African countries to “continue to export raw materials instead of improving the technology value added in those materials.”
Despite these difficulties, there is nonetheless an increasing trend of African countries and private stakeholders in these economies attempting to move up the value chain to reap the resulting benefits.
For example, despite the risk of brain drain, African institutions have realised that the labour force still needs to develop skills that would allow them to work in more specialised and better-paying fields. They are pushing policies of human capital development forward both unilaterally e.g., the creation of universities like Morocco’s Mohammed VI Polytechnic University inaugurated in 2017, as well as multilaterally e.g., the African Union’s Skills Initiative for Africa (SIFA) which finances skills development initiatives in pilot member states.
Another policy has been the development of modern infrastructure to support the development of more sophisticated industries which can consequently add value. For example, due to advancements in African telecom networks, 4G is expected to surpass 3G as the primary technology in the region – a significant shift given the importance of quality telecom coverage to competitiveness in the modern tertiary sector.
More broadly, regional organisations such as the East African Community (EAC), the Economic Community of West African States (ECOWAS), and multilateral agreements such as the Common Market for Eastern and Southern Africa (COMESA) among others have promoted the lowering of trade barriers between African states. This helps to reduce dependence on foreign markets and develop economies of scale for local producers, aiding them to grow similarly to the manufacturing sector in the EU.
The largest of these Free Trade Areas (FTAs) – the African Continental Free Trade Area (AfCFTA) – was developed by the African Union in 2018, but will take several years to fully take effect after being signed by 54 countries and ratified by 47. It plans to reduce tariffs by up to 90% on all goods, expecting to “increase Africa’s exports by $560 billion, mostly in manufacturing” according to a 2020 report by the World Bank.
However, moving up the value chain is not guaranteed to ensure prosperity for all Africans. Building on Mr. Urama’s emphasis on the uneven growth in incomes globally during his speech at the Warwick Economics Summit, income growth and wealth accumulation in Africa, as a result of climbing the value chain, have developed in a lopsided manner. The current richest 10% of Sub-Saharan Africa’s population holds approximately 56% of the total income generated according to a 2023 study done by the World Inequality Database. This suggests that the benefits from domestic value production are reaped by a select few.
Nor would inequality be purely based on class. Despite programs by national and multilateral institutions to promote gender equality in the economy, such as the African Women Rising Initiative (AWRI) funded by the European Investment Bank to increase access to finance for female small business owners in the region, the benefits gained still appear to be concentrated in the hands of men. The economic parity indicator in fact declined from “61% in 2019 to 58.2% in 2023.”
In other words, while climbing the value chain is clearly vital for economies in the African continent to achieve the “economic convergence” that Mr. Urama emphasised in his speech during WES 2025, much more still needs to be done to make this process an inclusive one. This will be achieved not just by including African economies in higher tiers of the global value chain, thereby driving convergence between them and leading economies like “China, India, and South Korea”, but also by expanding access to the resulting benefits within African economies themselves to drive an economic convergence between economically disenfranchised groups e.g., women and ethnic minorities, and the present economic elites.
Le Dragon Déchaîné 