African economies can become major participants in global supply chains by harnessing their vast resources of materials needed by high-technology sectors and their own growing consumer markets, the United Nations Conference on Trade and Development (UNCTAD) said in its Economic Development in Africa Report 2023.

"This is Africa's moment to bolster its position in global supply chains as diversification efforts continue. It's also an opportunity for the continent to strengthen its emerging industries, foster economic growth," said Rebeca Grynspan, secretary-general at UNCTAD.

The report noted that Africa's abundance of critical minerals and metals, including aluminium, cobalt, copper, lithium and manganese, vital components in technology-intensive industries, positions the continent as an attractive destination for manufacturing, as recent upheavals caused by trade turbulence, geopolitical events and economic uncertainty compel manufacturers to diversify their production locations.

Africa also offers advantages such as shorter and simpler access to primary inputs, a younger, technology-aware, and adaptable labour force and a burgeoning middle class known for its growing demand for more sophisticated goods and services.

UNCTAD noted that to unlock Africa's supply chain opportunities, investments in infrastructure, technology and financing are necessary.

"Africa needs significant investment in infrastructure to bolster its position as a supply chain destination," the report said.

It noted that 17 African countries, including Angola, Botswana, Ghana and South Africa, have already implemented local content regulations to support the growth of local supply chains, foster technology transfer, create jobs and add value within their borders.

Additionally, African countries should also secure better mining contracts and exploration licences for metals used in high-tech products and supply chains — which would strengthen domestic industries, enabling local firms to design, procure, manufacture and supply the necessary components.

The adoption of innovative digital technologies is also critical to optimizing supply chain processes.

UNCTAD said countries such as Kenya have made notable progress in this realm, with rising rates of digital skills adoption in Africa.

The UN trade and development body also reiterates its call for better financing solutions to offer African countries and businesses affordable capital and liquidity to invest in strengthening their supply chains.

The report says African small and medium-sized enterprises need more supply chain finance, which bridges the payment time gap between buyers and sellers, improves access to working capital and reduces financial strain.

According to the report, the value of the African supply chain finance market rose by 40% between 2021 and 2022, reaching US$41 billion. But this is not enough.