Firms from rich countries are taking factories home: what this means for Africa

Adegboyega Oyedijo, a lecturer in operations and supply chain management at the University of Leicester in the UK, says that globalisation has benefitted Africa. But with value chains shifting, Africa's benefits from this may be compromised.

- Adegboyega Oyedijo

There is no doubt that globalisation has benefitted Africa greatly. This includes job creation, innovation, increased productivity, and foreign direct investment.

But global value chains are shifting in the wake of the COVID-19 pandemic and Russia’s ongoing invasion of Ukraine. These changes are informed by the decisions of various companies to shift or move their manufacturing or supply chain networks closer to their home countries. These decisions are being driven by a number of factors. They include a race to reduce exposure to disruptions, increase proximity, and reduce vulnerability to external shocks.

In light of this, Africa’s current benefits from globalisation will be jeopardised.

Can African countries build a resilient economic future post-COVID-19 that is less reliant on the current uncertain global value chain? I believe that they can.

To maximise the advantages of regional growth and markets, Africa must look inward and perhaps consider how to establish its own internal and national value chains. This may emerge from the recently enacted African Continental Free Trade Area agreement, which most African nations have already embraced.

Now is the time for African countries to start looking for African value chains or alternatives to the global value chain. Of course, this presents a myriad of challenges. Most African nations still don’t have the necessary transportation and road infrastructure to support logistical operations in regional markets.

Consequently, significant investment is required for this to work.

In addition, countries must look at developing home-grown solutions enabled by public and private sector collaboration.