Africa earned $ 6 billion from coffee exports while final products sold abroad after processing reached $ 100 billion
Africa’s underdevelopment has been largely attributed to the horrific slave trade, unfair trade practices and the lack of added value of its raw materials.
The continent is well endowed with resources such as gold, cocoa, coffee, diamonds, bauxite, among others. However, in monetary value, the continent does not earn more compared to the countries that buy these resources and add value to them.
For centuries, the African economy has remained export-oriented, and the resources exported from the continent are mostly in their raw state. This means that the continent is losing millions of dollars in the value chain.
According to a former South African Minister of Trade and Industry, Rob Davies, Africa exported coffee valued at $ 6 billion in 2014, but after the coffee was roasted, blended, packaged and marked, the end products sold abroad brought in $ 100 billion.
“In other words, 94% of the value chain of a primary product made on this continent has been captured overseas,” Davis said, citing a 2014 KPMG study. The former minister delivered the 2021 Adebayo Adedeji commemorative lectures.
He said the numbers are even more striking in the case of knowledge-intensive products. “Take the case of the iPhone 6, which costs $ 649 in the United States. The cost of the mineral products used in its manufacture is only $ 1.03 (0.16%),” he said. declared.
Citing Addedeji’s seminal work, African Alternative Framework to Structural Adjustment Programs for Socio-Economic Recovery and Transformation (AAF PAS), Davis said the AAF SAP has become an important beacon. for many, doubting that structural adjustment programs imposed from outside were the best. , or only, the way forward.
According to Davis, AAF SAP identified what he saw as the structural weaknesses of most African economies, including a “weak productive base characterized by low productivity and productive activities dominated by the production of primary subsistence or oriented products. export ”.
From there, AAF SAP identified the central task as being the structural transformation of African economies, he said, adding that Africa must “break the chains of structural and relational dependence on the production of a limited number of inexpensive primary products for export ”.
Davies noted that poor countries that have become industrialized nations have followed the path of earlier industrializers.
“Whether it was the newly industrialized economies of East Asia in the 1960s and 1970s (South Korea, Taiwan, Malaysia) or, more recently, China, their governments have pursued active industrial policies. which encouraged, nurtured and protected infant industries, ”he said.
According to him, the industrialization they experienced has resulted in greater production and higher incomes for those involved in manufacturing and a multitude of related service activities that have created better, better paid and better jobs. of better quality than those that existed before.
He therefore urged African economies to break dependency ties with industrialized countries and start adding value to their resources by industrializing their economies.
Referring to the Continental Free Trade Agreement (AfCFTA) which combines African economies into a single market of 1.2 billion people, Davies said the real price of the AfCFTA would be if it supports the emergence of channels regional value chains involved in the production of products with higher added value. goods and services.
“Such an outcome might expect components and other intermediate inputs to be produced in a number of countries before being assembled into ‘products of Africa’ consumed by the citizens of the continent and also exported,” did he declare.
“In such a scenario, we might expect to see not only a quantitative increase in intra-regional trade, but a qualitative change in its character. This would imply greater intra-absolute and relative trade in components and intermediates – which is in fact the largest and fastest growing part of world merchandise trade. “