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1、Global supply chains have come under considerable strain due to global shocks,trade turbulence and economic uncertainty,and many businesses and traders are seeking more sustainable ways to procure and supply goods and services.Effectively securing resilient and sustainable supply chains requires str

2、ategic diversification and business growth through geographic expansion.In Economic Development in Africa Report 2023,UNCTAD examines how certain strategic options could contribute to the diversification of global supply chains,by tapping into the large reserves in Africa of critical minerals and me

3、tals that are key in technology-intensive industries,including automotives,electronics,renewable energy,pharmaceuticals and medical devices.The report is aimed at reframing the narrative on the role and potential of Africa in diversifying global supply chains and identifying potential economic benef

4、its from tapping into the increasingly technology-aware consumer market.Key factors are identified in the report in driving deeper participation of African countries in global supply chains,through more impactful pathways towards stronger domestic economies and enhanced industrial competitiveness,by

5、 building on regional supply chains.UNCTAD recommends strategic and actionable policies that can help countries in Africa become the next frontier destination for companies reassessing geographic footprints in global supply chains.Unlocking the drivers and enablers of global supply chain diversifica

6、tion in technology-intensive industries can generate potential benefits in terms of greater economies of scale,integrated industries,private sector growth and enhanced productive and technological capabilities,as well as environmental sustainability.U N I T E D N AT I O N S C O N F E R E N C E O N T

7、 R A D E A N D D E V E L O P M E N TThe Potential of Africa toCapture Technology-IntensiveGlobal Supply ChainsEconomic Development in Africa Report2023EDAR 2023UNITED NATIONSUNCTADThe Potential of Africa to Capture Technology-Intensive Global Supply ChainsU N I T E D N AT I O N S C O N F E R E N C E

8、 O N T R A D E A N D D E V E L O P M E N TThe Potential of Africa toCapture Technology-IntensiveGlobal Supply ChainsEconomic Development in Africa Report2023EDAR 2023EMBARGOThe contents of this report must not be quoted or summarized in print,broadcast,electronic or social media before 16 august 202

9、3 at 12 p.m.Nairobi time,9 a.m.GMT,11 a.m.CEST.Africas role in technology-intensive global supply chains is expected to be increasingly important due to the growing demand for specialized materials and given their abundance on the continent.As recent crises continue to disrupt the global economy,rel

10、ocating some supply chains to Africa is expected to reduce transportation costs,promote environmental sustainability,and supply chain diversification.Thus,high-tech industries,in particular,the manufacture of electric vehicles and mobile telephones,which require a wide range of raw materials and int

11、ermediate inputs,can take advantage of the proximity of the African market,and benefit from opportunities for greater added value and job creation,all of which are advantages that help achieve the objectives of the African Unions Agenda 2063.I appeal to African decision-makers,governments,financial

12、partners and international organizations,the African private sector,to implement all appropriate means and supply chain network diversification strategies that will increase Africas competitiveness and attractiveness and will help convince global companies to make Africa a top destination.This is un

13、doubtedly an asset and a challenge in the deployment and implementation of the African Continental Free Trade Area(AfCFTA),with a significant impact on regional value chains.Mrs.Oulimata Sarr,Minister of Economy,Planning and Cooperation,SenegalU N I T E D N AT I O N S C O N F E R E N C E O N T R A D

14、 E A N D D E V E L O P M E N TThe Potential of Africa toCapture Technology-IntensiveGlobal Supply ChainsEconomic Development in Africa Report2023EDAR 2023Geneva,2023 2023,United NationsAll rights reserved worldwideThis work is available through open access,by complying with the Creative Commons lice

15、nce created for intergovernmental organizations,at http:/creativecommons.org/licenses/by/3.0/igo/.Photocopies and reproductions of excerpts are allowed with proper credits.All other queries on rights and licences,including subsidiary rights,should be addressed to:United Nations Publications405 East

16、42nd StreetNew York,New York 10017United States of AmericaEmail:publicationsun.orgWebsite:shop.un.orgThe designations employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status

17、of any country,territory,city or area or of its authorities,or concerning the delimitation of its frontiers or boundaries.Mention of any firm or licensed process does not imply the endorsement of the United Nations.This publication has been edited externally.United Nations publication issued by the

18、United Nations Conference on Trade and DevelopmentUNCTAD/ALDC/AFRICA/2023ISBN:978-92-1-300081-6eISBN:978-92-1-002851-6ISSN:1990-5114eISSN:1990-5122Sales No.E.23.II.D.22Economic Development in Africa Report 2023ivAcknowledgementsThe Economic Development in Africa Report 2023:The Potential of Africa t

19、o Capture Technology-intensive Global Supply Chains was prepared by UNCTAD.The report was written by Habiba Ben Barka(team leader),Christine Awiti,Anja Slany,Sine Tepe and Ali Yedan.The work was carried out under the overall supervision of Paul Akiwumi,Director of the UNCTAD Division for Africa,Leas

20、t Developed Countries and Special Programmes and Junior Davis,Head of the Policy Analysis and Research Branch.Research support was provided by Shutian Li,Blaire Ng,Stanislas Sanon,and Stefanie West.Evelyn Bentez and Elena Stroganova provided administrative support.A hybrid meeting was held on 14 Mar

21、ch 2023 to conduct a peer review of the report.It brought together specialists in the fields of trade and investments,global value and supply chains,industrial production,enterprise development,financial services and digital technologies.The participants were:Nora Aboushady(German Institute of Devel

22、opment and Sustainability),Adebayo Adeleke(Supply Chain Africa),Tilman Altenburg(German Institute of Development and Sustainability),Antonio Andreoni(SOAS University of London,United Kingdom),Gilberto Antonio(African Continental Free Trade Area,AfCFTA Secretariat),Guendalina Anzolin(Cambridge Univer

23、sity,United Kingdom),Elvis Avenyo(University of Johannesburg,South Africa),Karolien De Bruyne(KU Leuven,Belgium),Amirah El-Haddad(German Institute of Development and Sustainability),Romain Houssa(University of Namur,Belgium),Stephen Karingi(United Nations Economic Commission for Africa),David Luke(L

24、ondon School of Economics and Political Science,United Kingdom),Francis Mangeni (AfCFTA Secretariat),Sbastian Miroudot(OECD Trade and Agriculture Directorate),Simon Roberts(University of Johannesburg,South Africa),Konstantin Wacker(University of Groningen,The Netherlands),and Gainmore Zanamwe(Afrexi

25、mbank).The following UNCTAD staff members provided helpful inputs and comments during various review processes:Lisa Borgatti,Dimo Calovski,Theresa Carpenter,Stefanie Garry,Federico Manto,Amelia Santos Paulino,Marios Pournaris,Astrit Sulstarova,Giovanni Valensisi and Anida Yupari.The Documents Manage

26、ment Section of the Intergovernmental Outreach and Support Service of UNCTAD coordinated the production of the report.The Communication and External Relations section of UNCTAD provided support on report branding and publication.Overall layout,graphics and desktop publishing were undertaken by the D

27、ivision of Conference Management of the United Nations Office at Geneva.The Potential of Africa to Capture Technology-Intensive Global Supply ChainsvNotesBillion signifies 1,000 million.Dollars refers to United States of America dollars.Metric tons signifies tons.Use of a dash between years(for exam

28、ple,20002005)signifies the full period involved,including the initial and final years.The Potential of Africa to Capture Technology-Intensive Global Supply ChainsviiContentsAcknowledgements ivNotes vForeword xiiAbbreviations xvOVERVIEWGlobal supply chains:Turning disruption into opportunity 1New opp

29、ortunities for global supply chain diversity and sustainability:The comparative advantage of Africa 6High-technology-intensive supply chains and industries:Resetting African markets and businesses for mobility and scale 9Optimizing supply chain opportunities in Africa through enablers and incentives

30、 13Policy options for strengthening global supply chain diversification 15CHAPTER 1 Global supply chains:Turning disruption into opportunity 211.1 Introduction 211.2 Global supply chains 241.3 The spectre of the impact of global shocks on supply chains 271.4 Principles of supply chain diversificatio

31、n 321.5 What does supply chain diversification mean for Africa?35CHAPTER 2 New opportunities for global supply chain diversity and sustainability:The comparative advantage of Africa 392.1 Africa:Charting its way through turmoil and crisis 392.2 Opportunities for supply chain diversification:The comp

32、arative advantage of Africa 432.3 Opportunities for greening supply chains:Africa as a premium destination 722.4 Conclusion 78Economic Development in Africa Report 2023viiiCHAPTER 3 Technology-intensive supply chains and industries:Resetting African markets and businesses for mobility and scale 793.

33、1 Automotive industry:Leveraging increasing vehicle demand for regional supply chain localization 823.2 Electronics:Favourable prospects for mobile telephones supply chains 1013.3 Renewable energy technology:Prospects for solar panels supply chains 1053.4 Building resilience and improving public hea

34、lth by strengthening supply chains in pharmaceuticals and medical devices 1103.5 Making resource-based supply chain integration work for sustainable development 1223.6 Conclusion 130CHAPTER 4 Optimizing supply chain opportunities in Africa through enablers and incentives 1334.1 The value of technolo

35、gy-based enablers and firm innovation 1354.2 Financing solutions for market-creating innovations 1484.4 Conclusion 166CHAPTER 5 Conclusions and policy recommendations 1695.1 An opportune global situation 1695.2 A continent on the move 1715.3 Market opportunities in dynamic,high-knowledge and technol

36、ogy-intensive supply chains 1725.4 Unlocking capabilities to achieve value creation in supply chains 1755.5 Practical policy options for building resilient supply chains 176REFERENCES 189The Potential of Africa to Capture Technology-Intensive Global Supply ChainsixBOXESUnderstanding supply chain div

37、ersification 5Box 1.Distinguishing between supply chains and value chains 26Box 2.Africa:An opportunity to expand the automotive supply chain 45Box 3.Technical note:Calculating capital stock and technology 53Box 5.Mauritius:A strategic distribution hub for connectivity 67In focus:Applying inherent a

38、nd linkage factors to electric vehicle supply chain in Mozambique 75Box 6.Morocco:An exemplary domestic automotive industry 84Box 7.Methodology for identifying regional supply chain opportunities 87In focus:How the electric vehicle trend leads to new opportunities for African countries 93Box 8.Autom

39、otive industrial policies:Lessons from Thailand in the context of the Association of Southeast Asian Nations 99In focus:Opportunities for regional supply chains in precursor development 104Box 9.Kenya:Participation of domestic companies in solar panel supply chains 109In focus:Case study of the insu

40、lin supply chain in Egypt 113Box 10.Innovation in medical device solutions 116Box 11.Building research and development capacity and enhanced technology transfer through partnerships 120Box 12.South Africa:The mining equipment sector 123Box 13.Africa Mining Vision 126Box 14.Women in high-technology i

41、ndustries 128Box 15.South Africa:An example of successful diversification through supply chain networks 139Box 16.Supply chain finance and trade finance 151Box 17.Opportunities in the area of mergers and acquisitions 158Box 18.The potential of micro-,small and medium-sized enterprise ratings to impr

42、ove access to affordable supply chain financing 165Economic Development in Africa Report 2023xFIGURESSupply chain components 27Figure 1.Features of supply chain diversification 34Figure 2.Yearly gross domestic product growth by world region,20212022 41Figure 3.Africa:Gross domestic product growth by

43、 region,20222024 41Figure 4.Africa:Average current account balance,20142024 43Figure 5.Inherent and linkage factors of the supply chain 44Figure 6.Battery metals production 47Figure 7.Cobalt and manganese reserves in selected African countries 49Figure 8.Growth rate of factor inputs 52Figure 9.Contr

44、ibution to output growth 55Figure 10.Labour productivity growth in selected African countries,20012019 56Figure 11.(a)Logistics performance index score for selected African countries and(b)for Africa as a whole,2018 59Figure 12.Average monthly earnings in selected African countries and by gender,201

45、9 64Figure 13.Share of e-commerce users who plan to do less supermarket shopping after COVID-19 66Figure 14.Top trading partners of Africa,20182020 70Figure 15.Global increase in CO2 emissions,19902019 73Figure 16.Africa:Average CO2 emissions per capita compared with world average 74Figure 17.Growth

46、 of factor inputs in Mozambique 76Figure 18.Contribution of factor inputs to growth in Mozambique 77Figure 19.Foreign value added embedded in exports by domestic industry and country group 81Figure 20.Vehicle production trends in Africa,20002021 83Mapping of automotive parts and components,supportin

47、g services and equipment 88Figure 21.Number of countries currently supplying inputs,including new electric vehicle materials,to African markets:(a)tier 1,(b)tier 2 and(c)tier 3,20182020 average 91Figure 22.Share of critical electric vehicle materials in world exports,by region,20182022 average 94The

48、 Potential of Africa to Capture Technology-Intensive Global Supply ChainsxiFigure 23.Tariff advantage for sourcing inputs from Africa 97Figure 24.Raw materials used in the manufacture of mobile telephones 103Figure 25.Key stages of solar photovoltaic manufacturing 107Figure 26.Insulin supply chain i

49、n Egypt 114Figure 27.Medical devices supply chain and number of African countries with export supply to the world,by supply chain category 118Figure I.Overall logistics performance indices for countries in Africa,2018 141Figure II.Overall logistics performance indices for South Africa and selected w

50、orld regions,2018 142Figure 28.Share of low-,medium-and high-skill technology-intensive manufactures in(a)exports and(b)imports,20172021 144Figure 29.How supply chain finance works 153Figure 30.Global supply chain finance volume and growth,20152022 157Figure I.Africa:Investment in mergers and acquis

51、itions and private equity,third quarter 2019fourth quarter 2022 159Figure II.Investment in mergers and acquisitions by companies based in Africa,2022 160TABLESDifferences between a supply chain and a value chain 26Table 1.Industry exposure to shocks,selected industries 30Table 2.An overview of criti

52、cal metal reserves in Africa 48Table 3.Middle-class population in Africa 65Table 4.Import supply to Africa,by region and tier category,20182020 average exports 90Share of female workers in high-technology industries,various years 128Economic Development in Africa Report 2023xiiForewordMany companies

53、 across the world are rethinking their supply chain strategies in order to address gaps and mitigate risks.The disruption effects on global production and supply chains of recent global shocks and geopolitical dynamics such as the Covid-19 pandemic and the war in Ukraine,have fueled the need for com

54、panies to minimize exposure to global distresses and reduce reliance on geographically concentrated suppliers and buyers.We know that diversified supply chains generate significant economic benefits for the countries they connect,reduce inflationary pressures,contribute to increased stability and pr

55、osperity worldwide,and open new domestic and regional markets.We believe that such perspective for supply chain diversification provides new opportunities for African economies to position themselves as geographic alternatives and optimize their strategic value for future leading-edge supply chains.

56、In this years Economic Development in Africa Report:The Potential of Africa to Capture Technology-intensive Global Supply Chains,we unpack current global supply chain pressures and identify policies necessary for tapping into these opportunities,including creating a reliable African supplier marketp

57、lace for global supply chains.I would like to highlight some of the potential Africa can leverage to contribute to global supply chain diversification,especially in high-knowledge and technology-intensive industries.Africas growing population,increasingly large consumer markets and expanding busines

58、s opportunities are major sources of growth and prosperity for the world and key factors that position Africa as a strategic region in the drive for geographically diversified supply chains.Moreover,Africas large reserves of critical minerals that are vital for global supply chains of high technolog

59、y-intensive industries can turn African economies into key suppliers of parts and components in the automotive,electronics,renewable energy,and medical devices sectors.For instance,Africa accounts for 48 percent of global cobalt reserves and 47.6 percent of global manganese reserves,which are critic

60、al metals required to produce batteries and electrical vehicles.While the need for Africa to integrate global supply chains is not new,we urge African countries to avoid being locked into the provision of“just”raw materials,which results in very low-value integration into global supply chains.This n

61、ew opportunity for African countries to participate in high-value global supply chains cannot be realized without The Potential of Africa to Capture Technology-Intensive Global Supply Chainsxiiiequal terms of mining contracts and policies that can catalyze lateral linkages between large-scale mining

62、 and local productive industrial development.Additionally,most African countries can be attractive destination for the diversification of global supply chains if inherent challenges to linking African businesses are addressed.Creating enablers and leveraging incentives to facilitate financing,techno

63、logy transfer,research and development and access to production knowledge will be critical.I trust that you will find this publication to be an excellent resource that breaks new ground for a more effective participation of African economies and businesses in high-technology global supply chains.Reb

64、eca Grynspan Secretary-General of UNCTADEconomic Development in Africa Report 2023xivThe Potential of Africa to Capture Technology-Intensive Global Supply ChainsxvAbbreviationsBRICS:Brazil,Russian Federation,India,China,South Africae-commerce:electronic commerceGDP:gross domestic productGSMA:Global

65、System for Mobile Communications AssociationHS:Harmonized Commodity Description and Coding SystemOECD:Organisation for Economic Co-operation and DevelopmentUnited Nations Comtrade database:United Nations International Trade Statistics database UNCTAD:United Nations Conference on Trade and Developmen

66、tOverviewGlobal supply chains:Turning disruption into opportunityThe Economic Development in Africa Report 2023:The Potential of Africa to Capture Technology-intensive Global Supply Chains provides a unique insight into the potential for increased integration into the supply chains in Africa by brin

67、ging together knowledge on how Africa can strengthen supply chain diversification in high-knowledge-and technology-intensive sectors.In recent years,global supply chains have come under immense pressure as a result of unprecedented trade turbulence,economic uncertainty,geopolitical events and natura

68、l disasters.Consequently,these supply chains were severely disrupted.This has led key players,such as the series of manufacturers,distributors,consigners and so on involved in producing goods of a particular kind and bringing them to market,to re-examine ways to strengthen supply chain resilience.Al

69、though the integration of African economies into supply chains is relatively low compared with other regions,disruptions to supply chain operations have a more than proportionate adverse impact on their economies.The Potential of Africa to Capture Technology-Intensive Global Supply Chains3Key player

70、s and stakeholders are looking to strengthen the resilience of existing supply chains by diversifying their sources.This may create an opportunity for African economies to heighten their involvement in global supply chains.For instance,the semiconductor supply chain,which involves hundreds of suppli

71、ers and an intricate process of manufacturing microchips and other critical components in the electronics and automotive industries,was negatively affected during the 20082009 global financial and economic crisis,as well as the recent coronavirus disease(COVID-19)pandemic.Other industries that came

72、under supply chain pressure during previous global shocks and environmental disasters,with associated difficulties in trade and investment,will be the focus of this report.These include the automotive,electronics,renewable energy and pharmaceutical product and medical device industries,which are str

73、ategic,emerging industries that require the use of critical minerals and high-technology metals for manufacturing and services.Africa,which boasts an abundant supply of raw materials with utility in the energy,automotive and electronics sectors,could provide an opportunity for the diversification an

74、d resilience of global supply chains by offering a new regional market for businesses and industries in their quest to further expand their supply chain relationships.The box below provides a definition of supply chain diversification and what it entails for African countries.As multinational compan

75、ies seek to extend their supply chains into diverse regions,African countries could become potential sources of high-technology mineral resources along shorter and simpler supply chains,with the added effect of contributing to the stable development of emerging industries on the continent.More equal

76、 investorState agreements,or host government agreements,especially for the critical minerals and metals that are used in high-technology products and supply chains,will be necessary to develop domestic industries successfully and improve the capability of local firms to design,procure or manufacture

77、 necessary parts and components in high-technology-intensive supply chains.The unequal terms of mining contracts and exploration licences has led many Governments in Africa to review their mining laws and regulations to harness business opportunities for domestic enterprises and better reap the bene

78、fits of capital-intensive large-scale mining for inclusive and sustained development in their countries.To date,17 African countries have local content regulations in place,namely Angola,Botswana,Burkina Faso,Cameroon,Cte dIvoire,the Democratic Republic of the Congo,Ghana,Guinea,Mali,Mozambique,Nami

79、bia,the Niger,Sierra Leone,South Africa,the United Republic of Tanzania,Zambia and Zimbabwe.In Zambia,for example,foreign Economic Development in Africa Report 20234suppliers account for about 96 per cent of goods and services supplied to mines,whereas domestic suppliers contribute about 1 per cent,

80、mainly in services(catering,security and office maintenance).This is a case that illustrates the importance of sound local content policies in developing local supply chains and facilitating the creation of backward linkages in the mining sector,for example,generating value addition in domestic supp

81、ly sectors,creating local employment opportunities or transferring technology.Under such a scenario,the potential upgrading of industrialization,combined with the rapid wealth creation of the rising middle class in Africa,will start to offer opportunities to develop local supplier bases,broaden loca

82、l production and increase the African workforce and consumer market.As the interest of potential investors and global suppliers to deepen their footprint across the African continent is carved out,incentives to invest in and build partnership with local suppliers and customers will be key.Nonetheles

83、s,venturing into Africa as a supply chain destination will require enormous investment in adequate infrastructure,as well as the availability of human capital and technology.In many African countries,the state of infrastructure development transport,warehouse and other facilities which is not yet at

84、 a standard and quality comparable to other developing and emerging countries,is one of the main barriers to logistics and supply chains on the continent.However,national and regional initiatives to scale up financing for infrastructure development and improve logistics performance in Africa,such as

85、 the African Union Programme for Infrastructure Development in Africa,are promising and can strategically enhance the integration of African economies into regional and global supply chains.In spite of the current low levels of technology and human capital in many parts of Africa,which can be a hind

86、rance when gains in productivity and value added are considered decisive in furthering supply chains across the continent,opportunities are emerging that can overcome these lingering risk factors.The young and growing population of Africa,projected to reach 2.5 billion by 2050 a quarter of the world

87、s population is embracing technology and has many advantages that can entice firms seeking to expand their supplier and consumer relationships in Africa.The advancement of technology and innovation on the continent is being increasingly driven by young entrepreneurs.The Global System for Mobile Asso

88、ciation reported 618 active technology hubs in Africa in 2019,compared with 442 such hubs between 2016 and 2018.This growing technology ecosystem will leverage the innovation and entrepreneurial mindset and skills that will eventually attract investors and technology-based supply chain participating

89、 companies.By relocating some of their supply chains to Africa or by entering into a The Potential of Africa to Capture Technology-Intensive Global Supply Chains5partnership with local suppliers,these companies will then contribute to employment creation,especially in digital-and high-technology-int

90、ensive industries and,hence,to income growth.As technology-intensive industries tend to offer higher wages and can have a positive job-multiplier effect,the potential of generating more employment in those sectors will have undeniable benefits for the workforce and foster sustainable development in

91、Africa.In the United States of America,for example,workers in high-technology industries earn on average 101.8 per cent more than workers in non-high-technology industries.Facilitating a conducive environment for firms in those industries to establish or build new supplier relationships in African c

92、ountries can help raise wages in Africa,which are set at a minimum of$220 per month,compared with an average of$668 in the Americas.Understanding supply chain diversificationIn analysing supply chains and the potential for economies in Africa to integrate into supply chains,the report makes a clear

93、distinction between supply chains and value chains.For the purpose of the report,the use of the term supply chains is defined as follows:the system and resources required to move a good or service from a supplier to a customer.In comparison,the value chain concept builds on this to consider the way

94、value is added along the chain,both to the good or service and the actors involved.The report further outlines the following fundamental steps of a supply chain,which are product development,sourcing procurement,manufacturing,logistics,distribution and customer service.Thus,supply chain diversificat

95、ion takes into account two principal factors,that is,diversification of the direct supplier base and diversification of the customer base.Supply chain diversification is imperative to reinforce supply chain resilience.There are,therefore,plentiful opportunities for Africa to benefit from supply chai

96、n diversification through integration into both the supplier and customer bases.The potential benefits of the African Continental Free Trade Area through increased trading facilitated by the removal of tariff and non-tariff barriers,is poised to offer an advantage for supply chain diversification in

97、 Africa.Nonetheless,for African economies to benefit from supply chain diversification,it is important to manage existing supply chain vulnerabilities effectively.For instance,it would be urgent to implement policies to mitigate poor infrastructure(transport,warehouse and other facilities),informali

98、ty,weak institutions and regulations,fragmented markets,limited sources of capital,low levels of technology and political risks.Source:UNCTAD.Economic Development in Africa Report 20236New opportunities for global supply chain diversity and sustainability:The comparative advantage of AfricaThe recen

99、t crises have revealed that undiversified economies in Africa remain vulnerable.For instance,the lingering effects of the COVID-19 crisis,compounded by inflationary effects owing in part to the war in Ukraine,saw economic growth in Africa decline by 0.8 percentage points,from 4.5 per cent in 2021 to

100、 3.7 per cent in 2022.Integration into supply chains,and hence the diversification of African economies,would create an economy with better resilience to shocks.The comparative advantage of Africa for integration into global supply chains could be analysed through factors inherent to the supply chai

101、n,that is,procurement,production and distribution,with the third factor including consumer demand.ProcurementAs the global economy adapts to climate change,dynamic production processes will require alternative inputs,and low-carbon technologies are expected to flourish.Consequently,there will be a r

102、ise in the demand for specific metals with utility in the low-carbon transition and green mobility,for instance,aluminium,cobalt,copper,lithium and manganese.Given the abundance of these minerals,in particular key metals required for the low-carbon transition,the continent can reposition itself as a

103、 supplier of raw materials for global supply chains.In fact,48.1 per cent of global cobalt reserves and 47.6 per cent of global manganese reserves are located in Africa.Other metals and minerals that are important for the low-carbon transition are also produced in Africa:chromium,lithium,natural gra

104、phite,nickel,niobium,rare earth metals,silver,tellurium and titanium.In addition,African countries need not only supply raw materials for the low-carbon transition.They can also strengthen value chains by ensuring that raw materials are converted into intermediate products within the continent.For i

105、nstance,in 2022,the Democratic Republic of the Congo had the largest production of copper in Africa,1.8 million tons.But beyond exploration and extraction,the country is a potential destination for refining metal products,which would lower the costs of transporting bulky,low-value initial extracts.P

106、roductionThe cost of production is an important factor in the discussion of the integration of Africa into supply chains,and of the possibility for firms to move entire production processes The Potential of Africa to Capture Technology-Intensive Global Supply Chains7to the region.For example,since d

107、istance plays an important role in costs through transportation and other distribution infrastructure,the cost of production essentially must compensate for distance,and vice versa.Thus,a survey of current factor inputs into the production process provides a clear picture of where African countries

108、stand,what gaps exist and what needs to be done to bridge those gaps.The report analyses factors of production(capital,labour,human capital and total factor productivity)and finds that capital has been a key driver of output growth since 2003.Next comes labour,followed by human capital,whose contrib

109、ution has remained largely unchanged.By contrast,the contribution of total factor productivity to output growth during that time has been dismal,and in some cases has declined,signalling a gap in productivity and use of technology.Consequently,while labour is abundant,African countries should implem

110、ent policies that ensure increased skills and the ability to innovate and use technology in the production process,as well as in the overall supply chain system,which can also have a positive effect on wages and income.In addition,a productivity analysis carried out in the report shows that a reallo

111、cation of resources between and within sectors has not always been efficient for the African countries in the sample.Thus,policies that encourage efficient allocation of factor inputs should be implemented.DistributionWithin the supply chain,distribution is perhaps the most prolific and,therefore,dy

112、namic feature.The logistics aspect of distribution is also an important part of procurement and production.In 2018,for example,performance of African countries was considerably lower(2.46)than the global average(2.87),as measured by the World Bank logistics performance index on a scale of one to fiv

113、e,with one being the lowest,and five,the highest.Nonetheless,when compared with past performance,improvement has been marginal.In addition,the best performing categories were timeliness,and tracking and tracing,both an indication of increased investment in soft infrastructure,such as the Internet an

114、d mobile telephones.While it is important to invest in information and communications technology infrastructure,it is imperative that African countries maintain investments in hard infrastructure that reduce the cost of logistics in the supply chain.Hard infrastructure,such as ports,roads and rail,h

115、ave tended to lag behind.For instance,investment in African ports is often made on an as-needs-basis,which leads to operational inefficiency at the ports.There are less than 70 operational ports,many of which are poorly equipped and uneconomical,with delays two or three times above the Economic Deve

116、lopment in Africa Report 20238global average.It is therefore advisable that African countries encourage investments in hard infrastructure,including from the private sector,to improve efficiency and capacity that would ensure that more value is gained by trading and participating in supply chains in

117、 Africa.Trade policies and incentivesAfrican countries are engaged in various trade agreements aimed at strengthening trade and enhancing productivity and diversification.The African Continental Free Trade Area has the potential to meet these goals and to foster continental and regional integration,

118、stimulate intra-African trade and harmonize the heterogeneity of trade rules across regional economic communities and under regional trade agreements.In addition to the Agreement Establishing the African Continental Free Trade Area,African countries have joined preferential trade agreements with oth

119、er regions or countries.The African Growth and Opportunity Act,established by the United States,is such an agreement,and it can generate a complex dynamic gain by facilitating opportunities for new factors of production,including capital.Other preferential schemes and economic cooperation partnershi

120、ps in the context of SouthSouth cooperation,which are contributing to the growth of local industry and improving intra-African trade,can also boost global supply chains.One such cooperation initiative is the Silk Road Economic Belt and 21st Century Maritime Silk Road,also known as the Belt and Road

121、Initiative,which facilitates access to financing for public and regional infrastructure development projects in Africa and contributes to improving skills,innovation and technology through its various training and transfer of technology programmes.Opportunities for greening supply chainsWithin produ

122、ction and distribution processes,Africa offers several opportunities for greening supply chains and shrinking the carbon footprint of companies.For instance,the green hydrogen potential of Africa opens up opportunities for decarbonizing supply chains,which is becoming a requirement for companies to

123、curb their greenhouse gas emissions.A companys emissions can be significantly improved by choosing suppliers of lower-carbon materials or relocating its energy-intensive industries,such as steel and chemical industries,to low-cost countries for renewable and green hydrogen power.Other advantages of

124、supply chain expansion into Africa include opportunities to tap into its renewable energy potential,which can lower production costs and lessen reliance on The Potential of Africa to Capture Technology-Intensive Global Supply Chains9fuel-based energy.As one of the worlds largest untapped sources of

125、solar energy,Africa can,for example,lend advantages in the solar power supply chain,which can promote the development of renewable energy technologies on the continent and facilitate the integration of African economies into global supply chains.High-technology-intensive supply chains and industries

126、:Resetting African markets and businesses for mobility and scaleWhile supply chains have come under considerable strain owing to the aforementioned crises,some industries are more exposed to global shocks than others and are thus increasingly relevant for geographic diversification.This section focu

127、ses on the integration of Africa into medium-and high-technology-intensive supply chains by taking advantage of its natural endowments,with such global supply chain integration likely to pave the way for the regions industrialization and sustainable development.Emphasis is placed on the automotive,e

128、lectronics,renewable energy technology and medical device industries and supply chains,as these are sectors that can be vulnerable to global shocks(for example,the COVID-19 pandemic,trade disputes and geophysical events)and which require more diversified geographic footprints to ensure undisrupted a

129、ccess to suppliers and buyers.Africa can provide such alternative access to inputs and components for these technology-intensive supply chains.Automotive IndustryThe automotive industry is particularly vulnerable to supply chain disruptions,as witnessed during the COVID-19 crisis.While the registrat

130、ion of new vehicles remains low,with over 80 per cent of vehicle registrations pertaining to used vehicles,Africa has the potential to raise its vehicle demand nearly tenfold by 2030.Nonetheless,new vehicle production remains low,at about 1.2 per cent of the global total.Vehicle production is domina

131、ted by South Africa,Morocco,Algeria and Egypt in that order,while other African countries have relatively small assembly plants with minimal value addition(Angola,Ethiopia,Ghana,Kenya,Lesotho,Mozambique and Namibia).In Morocco,increased vehicle production has been underpinned by investment in infras

132、tructure,proximity to the European market and policies geared towards strengthening the vehicle manufacturing sector.Economic Development in Africa Report 202310A supply chain mapping approach shows that while African countries remain largely dependent on the import of automotive parts and component

133、s from outside the continent,there is room for greater regional supply chain integration.In particular,the manufacture of non-specific parts and components(so-called tier 2)provides the most viable production options for most African countries.They are less technology and knowledge intensive than ti

134、er 1 suppliers(manufacture and supply modules and systems ready for vehicle assembly),and often represent the next processing stage that requires abundant metals as inputs demanded by a range of manufacturing sectors.Hence these are essential components for achieving supply chain diversification.The

135、 identification of feasible export diversification opportunities that could fill recent gaps in the regional supply chain suggests that countries with already existing capabilities can take on the production of larger,more complex automotive parts and components.In addition,clustered production in s

136、pecial economic zones could strengthen economies of scale and benefit from joint infrastructure and financing.Mobile telephonesThe electronics industry,especially the mobile telephone supply chain can catch the eye of many potential investors and companies that are pursuing the diversification of th

137、eir supply chains and exploring Africa as a new or alternative destination.Most of the minerals and metals that go into the production of smartphones can be sourced within African countries.For instance,the continent has large reserves of cobalt,copper,graphite,lithium,manganese and nickel,which are

138、 used in the production of telephone batteries,circuit boards and other components.The abundance of these resources also provides vast opportunity for strengthening regional supply chains in mobile phone production from precursor production.The production of cathode precursors(nickel-manganese-cobal

139、t oxides),a main ingredient in the manufacture of battery components,can contribute to higher value capture in the battery industry and integration into the electronics and mobile telephone supply chain.It is estimated that building a 10,000-ton precursor facility in the Democratic Republic of the C

140、ongo,for instance,could cost$39 million,which is three times less than what it would cost for a similar plant in a country without the required natural resources or proximity to countries where those metals can be sourced.In addition to its large reserves of cobalt,representing about 70 per cent of

141、global supply,the Democratic Republic of the Congo could develop a precursor plant by procuring nickel from Madagascar and shipping it through Mozambique or the United Republic of Tanzania or procuring additional manganese from neighbouring country Gabon.The Potential of Africa to Capture Technology

142、-Intensive Global Supply Chains11These regional procurement and production opportunities will be facilitated under the African Continental Free Trade Area and strengthened by increased infrastructure investment.Several African companies,such as the Mara Group in Rwanda,Onyx in South Africa and VMK i

143、n the Republic of the Congo,have emerged in the precursor development market,in addition to Transsion,the leading Chinese mobile manufacturer in Africa.Developing mobile telephone supply chain capacities in Africa can unlock further potential in the electronics supply chain and open up market opport

144、unities towards the production of tablets,laptops and high-performance servers,and data storage solutions.These are key goods and services that are predicted to be in increasing demand by the growing consumer market in Africa,including electronic commerce and other technology-based services.Solar pa

145、nelsSolar panel module assembly is a lucrative area for investment,given the high growth of the renewable energy sector on the continent.Between 2000 and 2020,the level of renewables investment in Africa rose at an annual average rate of 96 per cent,owing to the regions vast solar energy potential.Y

146、et,the continent continues to suffer from significant investment gaps,receiving about 2 per cent of global investments in renewable energy.The production of solar photovoltaic panels is limited,with some opportunities materializing in Egypt,Morocco and South Africa.Despite the rapid growth of solar

147、home systems,systems in Africa are tiny compared with their counterparts in developed countries and require batteries and charge controllers to ensure stable output.Assembly of the solar field,which must be performed at the site,offers significant local manufacturing potential.As many component inpu

148、ts,such as ball joints,bearings and cables,are used by other industries,these parts offer opportunities for already established companies to achieve lateral diversification of customers.Not all countries in Africa might be able to produce solar panels for their market but the additional employment g

149、eneration through project development and advisory services,installation and repair services can be substantial and should attract greater attention throughout Africa.Local entrepreneurs are keenly aware of specific local needs,including language and culture,that are essential for the implementation

150、 of large-scale investment projects in renewable energy.Pharmaceutical products and medical devicesIn Africa,the pharmaceutical industry is concentrated in generic medicines characterized by simple production processes,limited production of intermediates and active product Economic Development in Af

151、rica Report 202312ingredients,and scant upstream research and development.The trade deficit in pharmaceutical products increased from-$2.3 billion in 2000 to-$12.5 billion in 2020.In addition to limited local production and dependence on imports of medicine,poor access to diagnostic equipment in Afr

152、ica,especially in rural areas,is also a main constraint to public health.Encouragingly,there have been strong advances in Africa in providing health care and diagnostics to people in rural areas through the implementation of technologies and innovative solutions.Nevertheless,despite some progress,Af

153、rican countries recorded a trade deficit of$2.6 billion in the medical device sector between 2018 and 2020.Apart from collaborating with multinationals to access knowledge and technology to make and supply medical products and devices,it would be important to enhance the local sourcing and manufactu

154、re of raw materials.For example,in Egypt,there are major local research initiatives under way to produce the most essential active pharmaceutical ingredients.Localization of mining equipment and supplying industry inputs Despite the vast mineral wealth in the region and significant foreign investmen

155、t that the sector has attracted throughout the years,many resource-rich countries in Africa have not been able to translate their resource wealth into sustainable economic,social and environmental development.Supporting African suppliers to the mining industry has perhaps the most potential among al

156、l the benefits countries can derive from mining.This can range from products,such as pick-up trucks,tyres,drills,conveyor belts and specific replacement parts,to services,such as catering,surveying and human resource management.In Zambia,however,foreign suppliers dominate the local market for the su

157、pply of goods and services across mining sites,mainly because of various constraints,such as a lack of access to long-term capital,restricted access to production technologies,high costs of production inputs and a lack of full quality control of production.Moreover,the absence of legislative provisi

158、ons does not encourage domestic production and sourcing.It is important for the mineral-rich countries of Africa to put in place sound local procurement policies based on clear local sourcing and local ownership criteria.Further,to tackle structural transformation in resource-dependent countries and

159、 improve the social benefits of mining,there is a need for a new global governance architecture.An example is the sustainable development licence to operate,which is a holistic multilevel and multi-stakeholder governance framework aimed at enhancing the contribution of the mining sector to sustainab

160、le development.The Potential of Africa to Capture Technology-Intensive Global Supply Chains13Optimizing supply chain opportunities in Africa through enablers and incentivesThe global economic crises have emphasized the need for the diversification of suppliers,goods and services to build resilience

161、and better mitigate risks,such as input shortages and soaring product prices.Diversifying and making supply chains more resilient is also associated with digitalization and the adoption of digital technologies through the supply chain.In complex,high-value products and supply chains with shorter lea

162、d times,such as medical devices and electrical equipment,the use of digital technologies advanced automation,machine learning,artificial intelligence and blockchain technologies,to name a few are a necessity for production,distribution,logistics and procurement efficiency.For instance,digital platfo

163、rms and technology-enabled services allow better integration and smooth coordination between different sectors and processes and across distant markets,thus facilitating supply chain diversification.Other technology-enabled services that can enable supply chain resilience and sustainability include

164、supply chain connectivity and logistics;supply chain digitalization;electronic data interchange;supply chain traceability software;and smart services.Supply chains are complex,spanning multiple interconnected countries.They serve numerous electronic commerce platforms and customers with high demand

165、and involve broad ranges of relationships and collaborations.Such complexity can lead to a race to the bottom for many firms,especially small and medium-sized enterprises.In Africa,many small and medium-sized enterprises operate outside the global supply chain network because of the limited use of d

166、igital technologies.Most local small and medium-sized enterprises rarely use technology due to a lack of skills,informality,infrastructure issues and funding gaps.The main technology-enabled services are almost nonexistent in most African countries.The lack of investment in technology and the low le

167、vel of human capital are major obstacles to exploiting these potentials.However,African firms can play a more significant role in supply chain diversification by integrating vertically or horizontally into the supply chain.For instance,by engaging into a business-to-business or business-to-customer

168、collaboration,large firms and small and medium-sized enterprises integrating through mergers and acquisitions can create complementary businesses and expand into upstream or downstream activities.This would enable the integrated companies to streamline their operations and supply chains Economic Dev

169、elopment in Africa Report 202314by acquiring or establishing their own suppliers,manufacturers,distributors,or retail locations instead of outsourcing or importing inputs or other supply chain components.A global supplier can also integrate with an African firm to expand its operations in Africa at

170、similar value or at the supply chain level and within the same industry,thus enabling the integrated companies to expand into new markets and diversify their product offerings.These two types of integration are better facilitated with the use of technology services at all stages,whether transactiona

171、l or operational.Countries in Africa should facilitate the adoption and use of these innovative digital technologies that can optimize supply chain practices.Some countries have already embarked on this path.This is the case of Kenya,for example,which has one of the highest adoption rates of digital

172、 skills in Africa.Some of the emerging technologies that are increasingly being deployed in that country and which can be leveraged to boost specific industries and supply chains(for example,innovation,product design,manufacturing,logistics and supply chain management)include artificial intelligence

173、,the Internet of things and cloud-computing technologies such as blockchain.This growing technology-oriented ecosystem,also known as the Silicon Savannah,has benefited from sound policies,an enabling regulatory environment and other government-led programmes that favour the upgrading of skills and a

174、doption of digital technology.Advanced technologies also serve as valuable tools and platforms that can address the financing needs of firms in Africa and potential suppliers or service providers in supply chains.For instance,banks and other credit providers can also use blockchain to improve supply

175、 chain financing,as the technology will enable them to make better lending decisions in a fast and cost-efficient manner by having access to real-time and verifiable transactions between the supplier and buyer without having to conduct physical audits or pay for financial reviews.Facilitating supply

176、 chain-related investments and finance is particularly important to unleash the potential of small and medium-sized enterprises and their participation in technology-intensive supply chains.Financing solutions,such as supply chain finance,could be opportunities for the integration of these enterpris

177、es into supply chains.Supply chain finance focuses on facilitating access to working capital,bridging the payment time gap between buyers and sellers to efficiently manage cash needs stemming from daily operations and reduce stress to the balance sheet.There are no internationally agreed supply chai

178、n finance standards for the following areas:the part of financial supply chain management that is integrated into physical supply chain activities,financing instruments to manage working capital and liquidity in the supply chain and payables finance or reverse factoring.The Potential of Africa to Ca

179、pture Technology-Intensive Global Supply Chains15In general,supply chain finance in Africa faces several barriers,such as know-your-customer or anti-money laundering regulations and buyer performance,which are related to supply chain finance default risk and profitability.In addition,firms in Africa

180、 must overcome barriers to conventional bank financing and capital.African countries are often confronted with a disproportionately higher risk perception by major global financial players,which hinders the expected and necessary financial flows into the continent and feeds into their currency risk.

181、Some countries in Africa are constrained by low or nonexistent country risk ratings,weak banking systems,regulatory challenges and a lack of credit information.Scaling innovative supply chain finance solutions could significantly improve the access of small and medium-sized enterprises to financing

182、and competitiveness in a well-integrated supply chain that could further increase employment,income,quality of life and economic growth in Africa.However,the level of involvement in supply chain finance is low.In 2022,Africa contributed to only 1.9 per cent of global supply chain finance volume($2.2

183、 trillion)and remains the most underdeveloped supply chain finance market across major regions.However,its growth is picking up speed,at about 40 per cent between 2021 and 2022.The availability of supply chain finance continues to be far less than what is demanded across the continent.African countr

184、ies should ensure that small and medium-sized enterprises have access to supply chain finance by removing certain barriers.These include the lack of technological infrastructure and technology-enabled services;inadequate legal and regulatory frameworks;high risk perception by local firms,owing to in

185、sufficient knowledge and education;a fragmented market;and challenging sustainability criteria applied by banks and other lending institutions.Moreover,women entrepreneurs in Africa face additional hurdles to accessing timely finance,compared with their male counterparts.Policy options for strengthe

186、ning global supply chain diversificationThe risks of concentrating manufacturing and supply chains in a few markets or sourcing and supplying sector-specific intermediate goods from a few locations can increase exposure to shocks and disruptions in production networks and supply chains.By diversifyi

187、ng or relocating to Africa,supply chain participating companies can source some of the inputs(raw materials and intermediate goods)from the continent,while reducing the costs of transportation and logistics and minimizing risks of supplier delivery delays and other challenges.Economic Development in

188、 Africa Report 202316African countries offer many advantages that can contribute to or drive the diversification of global supply chains for high-knowledge-and technology-intensive industries.Nonetheless,to attract supply chains,African countries will need to adopt certain policies that strengthen a

189、nd ensure an attractive environment for businesses to relocate to.The report provides a list of comprehensive policy options that,if implemented,could provide incentives for supply chains to relocate to African countries.Below is a selection of some of the policy options from the report.Automotive i

190、ndustryThere is a need for a more coordinated automotive strategy and regional automotive development plan to avoid the duplication of efforts.To facilitate continental vehicle sales and promote the domestic supply of parts and components and aftersales goods and services,harmonized and transparent

191、standards are necessary.The African Continental Free Trade Area can provide a platform to create linkages between automakers(for example,original equipment manufacturers),auto suppliers and local suppliers to access the necessary knowledge and technology to meet car-specific requirements.Electronics

192、:Mobile telephone supply chainThe enforcement of decent labour laws is paramount in an assembly industry that employs more women than men women are often more vulnerable to exploitation and health risks.It is necessary to invest in skills development and technical training to create a skilled workfo

193、rce for the mobile telephone industry.Countries that already have some mobile telephone assembly should develop research facilities to invest in next-generation battery technology.Renewable energy technology:Solar panel supply chainThere is a need for intensified collaboration to enhance knowledge a

194、nd technology transfer.This could take the form of mentoring programmes,in which successful,more established companies can exchange information and experience.Moreover,formal and informal intra-industry exchanges are essential to continuous learning.The Potential of Africa to Capture Technology-Inte

195、nsive Global Supply Chains17Health-care industry:Pharmaceutical product and medical device supply chainTo broaden demand and access to medicine,pooled procurement and financing should be further promoted.This can be achieved,for example,by platforms,such as the Africa Medical Supplies Platform,an on

196、line portal that enables the delivery of medical supplies to the Governments of Africa.Another important example can be found in a project launched by the Economic Commission for Africa,the African Continental Free Trade Area-based Pharmaceutical Initiative,which contains a centralized pooled procur

197、ement mechanism.Mining industryLocal content requirements or supplier programmes will not sufficiently promote domestic firms if the initial challenges of these firms lack of electricity and finance are not tackled at the same time.Supply chain finance and targeted support to these companies can be

198、negotiated ex ante with mining companies before licences are granted.Localization of supply chainsThe future of supply chain transformation in Africa,especially in technology-intensive industries in the automotive,electronics,renewable energy and pharmaceutical sectors,will require viable options fo

199、r creating domestic supply chains that are reliant and resilient.This can be achieved through localized supply chains,supplier development programmes and the establishment of local procurement requirements.Regional market opportunities under the African Continental Free Trade AreaThe implementation

200、of the African Continental Free Trade Area provides momentum to attract greater attention towards more high-technology sectors that generate local value addition and employment opportunities.As the African Continental Free Trade Area also aims to strengthen national and regional competitiveness by f

201、acilitating regional economic performance and industrial innovation,it will help enhance regional supply chain capabilities and contribute to the efforts of supply chain hubs to foster economic development in Africa.Economic Development in Africa Report 202318A push for technology and innovation in

202、supply chain transformationThe use of new technologies and digital solutions can provide comprehensive supply chain visibility and transparency and facilitate the ability of supply chain participating companies to respond more effectively to shifting global market dynamics.Identifying the potential

203、of individual countries in high-technology supply chains;assessing the technology and digital readiness of African firms;facilitating technology transfer,reverse engineering and domestic innovation;and developing and increasing the utilization of digitalization and technology in supply chain process

204、es and interactions will be vital for the transformation of supply chains in Africa.Technology-enabled service providers and supply chain financing for small and medium-sized enterprisesSmall and medium-sized enterprises can be strategic sources and key drivers of global supply chain diversification

205、 and supply chain transformation in Africa.Adopting digital solutions and models to their business performance,operating in a conducive technology-based supply chain environment or tapping into novel financial tools to increase the participation of these enterprises in supply chains will be necessar

206、y for those seeking to expand their markets and integrate into global supply chains.These enterprises could also reinforce their collaboration with larger firms or supply chain participating companies by establishing complementary businesses(vertical integration)or similar businesses in other locali

207、ties(horizontal integration).Large companies should seek to vertically or horizontally integrate start-ups and small and medium-sized enterprises to diversify and regionalize their supply chain.This is particularly important if regional integration through the African Continental Free Trade Area is

208、to be enhanced.To benefit from supply chain opportunities arising from global disruptions and emerging challenges,the Governments of African countries can count on the research and policy analysis,technical cooperation and consensus-building support of UNCTAD.Leveraging its expertise and experience

209、in providing on-the-ground technical assistance and innovative capacity-building tools,UNCTAD,in cooperation with the Governments of Africa and other relevant stakeholders,could develop bespoke training programmes and tools that can assist African industry leaders and small and medium-sized enterpri

210、ses to understand the opportunities to integrate global supply chains through increased access to new technologies,financing solutions and re-skilling programmes.By providing a forum for open and constructive dialogue for policymakers,financiers and The Potential of Africa to Capture Technology-Inte

211、nsive Global Supply Chains19development partners,UNCTAD could work with the Governments of Africa,domestic and global industry leaders,and domestic and foreign investors to facilitate,streamline and heighten visibility,transparency and impact in overall supply chain processes.Such collaboration coul

212、d lead to the adoption of policies and standards that would encourage more local content requirements,as well as to the strengthening of local capabilities that are essential to innovation and the production and delivery of goods and services across regional and global supply chains.Economic Develop

213、ment in Africa Report 202320CHAPTER 1Global supply chains:Turning disruption into opportunity1.1 Introduction Global supply chains,complex cross-border organizational structures and industry networks that are necessary to develop,produce,transport and deliver goods or services across the world,can b

214、e at high risk in the face of unexpected events and global pressures.In recent years,the global supply chains ecosystem has been disrupted by unprecedented trade turbulence,economic uncertainty,geopolitical events and natural disasters.In many parts of the world,these events have swayed networks of

215、suppliers and buyers that were built over years if not decades thus revealing their vulnerability and exposure to unforeseen global shocks.These shocks put businesses at operational and financial risks and triggered systemic volatility and instability within economies.Although African economies are

216、poorly integrated into global supply chains,the disruptive effects of unforeseen global events on supply chains can pose significant challenges to African businesses and traders in their ability to procure,manufacture,sell or export certain goods and services.Economic Development in Africa Report 20

217、2322This leads to the following key policy questions:Is there opportunity in crisis?Can reshoring and nearshoring1 offer an opportunity to build more diversified and resilient global supply chains?What are the prospects for African countries to integrate into and attract higher-value knowledge and t

218、echnology-intensive supply chain activities?Can the bountiful natural resources in Africa,which hold promise for a low-carbon future,abundant labour and green infrastructure,be incentives for creating a cascade of sustainable supply chains?How can mineral abundance be better leveraged?What enabling

219、factors are necessary to fulfil these opportunities?Which policies(industrial,investment,technology,skills and knowledge)can help strengthen incentives for supply chain diversification and expansion into Africa?How can regional integration and initiatives enable the participation of African firms in

220、 next-generation regional and global supply chains?The Economic Development in Africa Report 2023 brings together contemporary knowledge on supply chain resilience and describes how new strategies,policies and technological innovations can enable disruption-proofing of supply chains in Africa,while

221、boosting productivity and manufacturing capacity.This report aims to provide strategic guidance to decision-makers and policymakers in Africa in leveraging the potential of national and regional markets and businesses to foster domestic supply chains and create a trusted and reliable supplier market

222、place for global supply chains,thus helping expand the involvement of Africa in global trade and growth.It demonstrates the potential of African countries for integrating technology-intensive supply chains,such as automotive,electronics,machinery and pharmaceuticals,as suppliers of inputs(raw materi

223、als and intermediate goods)or sources of other factors that can contribute to making supply chains more resilient to external shocks.As recent supply chain disruptions put enormous pressure on both suppliers and firms,and financial institutions,limiting the scope for debt in financing supply chains,

224、the 1 Reshoring is when a company transfers part or all of its business operations and supply chains back to its home country.Nearshoring is when a company relocates part or all of its business operations and supply chains to a nearby country,often with a shared border.See www.weforum.org The Potent

225、ial of Africa to Capture Technology-Intensive Global Supply Chains23report explores emerging financial and technology solutions to help address such liquidity constraints,while improving operational efficiency and managing supply chain finance.The report proposes to bring together current knowledge

226、on supply chain diversification and resilience in some of these high-value and technology-intensive sectors.Reliable transport and utilities infrastructure,as well as adequate water and electricity supply,will contribute to increased production of local components,reduced reliance on imports and bet

227、ter opportunities for foreign businesses to establish or scale up operations on the continent.Further,sophisticated legal and regulatory frameworks that enable digital transactions,combined with the liberalization of trade in services that can allow improved access to technologies and other high-int

228、ensity services,will help overcome production and supply chain limitations that prevent many African countries from participating fully in regional and global trade.Enhancing access to supply chain finance and other alternative financing solutions,especially by smaller businesses that can play a lea

229、ding role in the innovation,manufacturing,packaging,branding and distribution of intermediates,will be essential for Africa to position itself as a strategic region and partner in the restructuring of global supply chains.Chapter 2 examines the comparative and competitive advantages of African count

230、ries to capture strategic business value and position themselves more strategically in key global supply chains.Economic,political,trade,investment,social and environmental factors can help African countries position themselves as an attractive destination in their efforts to achieve supply chain di

231、versification and resilience.Chapter 3 considers recent global and African trends and the outlook for the principal technology-intensive supply chains,for example,those related to the automotive,electronics,renewable energy and medical devices industries.It analyses the regions potential for higher

232、value capture in global and regional supply chains,including research and product design,components manufacturing,assembly or product integration,distribution,marketing and sales,consumption and buyers,and related services.The chapter concludes with a presentation of case studies on the potential of

233、 African countries to integrate such supply chains(for example,as suppliers of inputs raw materials and intermediate goods,or as a source of other factors that make supply chains resilient)and to leverage growth and social development opportunities under improved contracts and local content requirem

234、ent policies.Economic Development in Africa Report 202324Chapter 4 discusses the enablers and incentives needed to optimize supply chain opportunities for African countries.Designers,manufacturers,distributors,sellers and buyers can have a common constraint when entering and operating in a supply ch

235、ain:their access to liquidity and working capital.Recent supply chain disruptions and challenges have put pressure on suppliers or companies and financial institutions and have narrowed the scope of supply chain financing.Emerging financial and technology solutions can help address liquidity constra

236、ints,while improving operational efficiency and managing supply chain finance.Investing in a growing pool of skills and technologies that can digitize and facilitate smart manufacturing and services will also help achieve resilience and sustainability in supply chains.In conclusion,the report will s

237、ummarize the contribution of Africa to global growth and its potential for making valuable inputs to global supply chains.It will also provide strategic recommendations for transforming and upgrading African economies,while leveraging the potential of their national and regional markets and business

238、es.In addition,the successful implementation of the African Continental Free Trade Area will provide a major impetus to the integration of African economies in high-value global supply chains.Ultimately,the improved integration of Africa into high-value global supply chains will contribute to econom

239、ic growth and sustainable development through the associated benefits of productivity gains,specialization,knowledge and technology spillovers,value added exports,and employment generation(Research Network Sustainable Global Supply Chains,2022).The report recommends strategic and actionable policies

240、 that various stakeholders in Africa Governments,the private sector,regional institutions and trading and business partners can apply to better integrate African countries in the new disruptive landscapes of global trade,business and finance.1.2 Global supply chainsGiven that global supply chains ar

241、e composed of innovators,companies,suppliers and service providers from around the world that interact through complex dynamic systems and networks,many factors can affect the stability or robustness of these interwoven relationships,thus creating shortages of certain goods,increasing the cost of ce

242、rtain processes or reducing responsiveness to consumers demand.To counter supply chain risks and vulnerabilities,a holistic approach that involves diversified The Potential of Africa to Capture Technology-Intensive Global Supply Chains25sourcing and sustainable practices,such as production,distribut

243、ion,inventory and investment,could be considered.Some of these measures could represent opportunities for African countries to integrate higher-value global supply chains and position themselves to better accommodate the potential impact of unexpected events on global supply chains.However,showcasin

244、g the instrumentality of Africa in global supply chains will require rethinking the continents position in global trade and examining its potential role in principal industries that could especially benefit from supply chain diversification and resilience.For instance,in their quest to diversify the

245、ir network of suppliers and thus mitigate supply chain risk,leading companies could begin to target Africa as a new region with supply chain assets in resource-intensive,high-knowledge and technology-enabled industries,for example,in the automotive,electronics,renewable energy and medical devices se

246、ctors.Essential goods,such as mobile phones,are used globally on a daily basis.They involve a multitude of inputs and processes that will not work without the participation of Africa,where many of the critical materials are mined and sourced and where a growing consumer market can be delivered the f

247、inal goods.Understanding the types of global events that affect these industries and their supply chains and identifying the untapped market opportunities present in many African economies will be prerequisites for devising strategies or measures aimed at diversifying supply chains and building more

248、 reliable and resilient networks of suppliers and buyers across regions.The high geographic and sectoral concentration of global supply chains can involve risks,especially when it exposes companies to economic instability,price volatility,trade disputes,natural disasters and other exogenous effects

249、in a specific country or region upon which they rely heavily for their supply chains.To ensure effective supply chain risk management,companies participating in global supply chains will need to reduce supply chain concentration risks by broadening their geographic footprint and be in a better posit

250、ion to meet supply and demand needs by shifting and tapping into numerous networks across many regions,including Africa.This report profiles opportunities for African economies and businesses to join global supply chains relating to technology-intensive industries.Therefore,it is important to distin

251、guish between a supply chain and a value chain.Box 1 provides a brief analysis of that distinction.Economic Development in Africa Report 202326Box 1 Distinguishing between supply chains and value chainsA value chain is commonly acknowledged as effectively contributing to trade dynamism and competiti

252、veness.The University of Cambridge(2021)defines a supply chain as the system and resources required to move a good or service from a supplier to a customer,while the value chain concept builds on this approach to consider the way value is added along the chain to the good or service and the actors i

253、nvolved.SustainAbility et al.(2008)defines a supply chain in terms of the chain of suppliers making inputs to a final product,while a value chain focuses on the value created by the chain.According to ShipBob(2022)and Wallstreetmojo Team(2021),a supply chain refers to the network of vendors,resource

254、s,suppliers,customers,businesses,individuals,activities and technologies involved in every step of the chain,from sourcing raw materials to producing finished goods and ensuring timely delivery of their goods and services to customers.By contrast,a value chain refers to the same steps and network as

255、 those of a supply chain but emphasizes value addition or creation at each step.The table below summarizes the key differences between the two chains.Differences between a supply chain and a value chainCriteriaSupply chainValue chainDefinitionBusinesses,people and activities involved in the procurem

256、ent,logistics,transformation and delivery of finished goodsActivities involved in analysing customer needs,planning production and adding value at each step of the processGoalTo produce and distribute goods so as to increase customer satisfactionTo increase the value of a good so as to create compet

257、itive advantage ProcessOperational managementBusiness managementMain activityFacilitating production and distribution of a goodAdding value to a good during each step of the processStages Begins with a request from suppliers for a specific good and ends with its deliveryBegins with a customers reque

258、st and ends with the development of a specific goodSource:Edrawsoft,2023;ShipBob,2022;Tarver,2022;Wallstreetmojo Team,2021.Upon closer examination,a supply chain can be further defined as a network of individuals and companies across various countries and regions.Key steps in a supply chain include

259、the original sourcing by tier 3 suppliers of raw materials,which are refined or manufactured into basic parts by tier 2 suppliers,then assembled into finished products by tier 1 suppliers and sold to end-users or consumers through various delivery and market sale modes.These components are illustrat

260、ed in the following figure.The Potential of Africa to Capture Technology-Intensive Global Supply Chains27Supply chain componentsProduct developmentSourcing procurementManufacturingLogisticsDistributionCustomer serviceCustomersOrder fulfilment or sales and product deliveryDistributors,wholesalers,ret

261、ailersTransport and warehousesTier 1 suppliers combine them to create a productTier 2 suppliers refine them into basic partsTier 3 suppliers source raw materialsPublic or private research based on market needs1.3 The spectre of the impact of global shocks on supply chainsIt is important to understan

262、d the nature of recent systemic events and their impact on global supply chains(see table 1).The 20082009 global financial and economic crisis,which began with the collapse of large investment banks based in the United States(for example,Lehman Brothers)and an unprecedented deterioration of the worl

263、d economy,resulted in the tightening of credit and a fall in demand for certain goods and services around the world.The contraction in demand was high in industries such as transportation equipment,metals,machinery and electronics and electronic components.In the United States,for instance,consumer

264、orders for transportation equipment,primary metals and machinery dropped respectively by 42.3 per cent,40.3 per cent and 31.9 per cent between 2008 and 2009(Hoberg and Alicke,2014).Many firms operating in those manufacturing sectors found it difficult to consolidate the losses and decreasing margins

265、 incurred from the collapsing demand for their goods and services.Also,as suppliers and buyers of the goods and services affected by the fall in demand,many firms found it difficult to access affordable working capital or credit to finance their production,inventories,logistics and receivables.Most

266、suppliers and buyers were heavily dependent on the banks and securities markets that had experienced liquidity problems in 2008 as a result of the Source:UNCTAD.Note:Tier 1 suppliers are lead or anchor firms.Sources:UNCTAD,based on Edrawsoft(2023),ShipBob(2022),SustainAbility et al.(2008),Tarver(202

267、2),University of Cambridge(2021),Wallstreetmojo Team(2021).Economic Development in Africa Report 202328global financial and economic crisis(Mefford,2009).The disturbing effects of the crisis were particularly evident for the semiconductor supply chain,which involves hundreds of suppliers and an intr

268、icate process of manufacturing microchips and other critical components in the electronics and automotive industries.Because the interbank funds crisis of 20082009 brought deep financial distress for some companies and consumers,their respective investments in information technology and purchases of

269、 electronic devices or vehicles plummeted,affecting the demand and supply of memory chips,processor chips and silicon wafers.As original equipment manufacturers of electronic devices and vehicles responded to these demand-and-supply shifts by cutting back their orders and pushing inventory onto the

270、market,the price per bit of semiconductors for computers,such as dynamic random-access memory,decreased by almost 50 per cent(Tech Insights,2023).In the United States,for example,the financial and economic crisis resulted in an 8 per cent decline in demand for consumer electronics,which led to a 20

271、per cent fall in the demand for memory chips(Mefford,2009).In China,the crisis affected various industries and supply chains,with about 67,000 factories declaring bankruptcy(Mefford,2009).OPTION 1IN SEPTEMBER 2021$11,778 IN SEPTEMBER 2019$2,325 The cost of shipping a 40-foot container from Shangai t

272、o New York rosein just three years 5xGLOBAL SUPPLY CHAIN VULNERABILITIES CALL FOR MORE DIVERSIFIED SUPPLIERS AND CONSUMERSFROMTOTHIS RESULTED IN HIGHER PRICES FOR:Supplying and delivering goods to consumersSourcing inputs and materialsManufacturing productsThe coronavirus disease(COVID-19)pandemic f

273、urther disrupted the already complex global supply chains,with significant shifts in logistics and supply chain activities affecting the performance and profit margins of many businesses and industries worldwide.The pandemic-related lockdowns and border closings constrained the supply and delivery o

274、f raw materials,critical products and other consumables.These pandemic-related The Potential of Africa to Capture Technology-Intensive Global Supply Chains29implications,combined with a labour shortage(for example,in the manufacturing,transportation and warehouse sectors),resulted in manufacturing i

275、nefficiency or shutdowns;congestion on maritime,air and terrestrial routes;and a global shortage of key logistics components,such as shipping containers(Subban,2022).For instance,the effects of COVID-19 restrictions massive delays and higher air and ocean freight prices incited some companies to sta

276、rt looking for other ways to build more resilient supply chains and mitigate the risks of future shocks.According to UNCTAD(2022a),the cost of shipping a 40-foot container from Shanghai,China to New York,United States(AsiaNorth America East Coast route)rose fivefold from$2,325 in September 2019 to$1

277、1,778 in September 2021.On the route Shanghai-Durban(in South Africa),the cost of shipping a 440-foot container also rose,two-and-a-half-fold,from$2,521 to$6,450 between December 2020 and December 2021(UNCTAD,2022a).Soaring ocean freight costs,spanning various global supply chain routes,resulted in

278、higher prices of sourcing inputs and materials,manufacturing products,and supplying and delivering goods to consumers.In Europe and the United States,for example,companies in industries mostly affected by the 2021 supply crunch,such as automakers,computer and electronics manufacturers and medical te

279、chnology innovators,began incurring sales and revenue losses caused by shortages of inputs,high shipping costs and reduced manufacturing capabilities to respond to the backlog of orders from the resurgence of consumer demand for certain products,such as cars,electronics and pharmaceutical goods.Simi

280、larly,Apple lost about$6 billion in potential sales of iPhones and other products partly because of semiconductor supply chain disruptions in 2021(Siripurapu,2021).Global supply chains more recently became subject to additional vulnerabilities with the war in Ukraine,reinforcing the need for compani

281、es and countries to rapidly build more resilient and diversified supply chains.The effects of the war on the supply and price of crude oil,natural gas,metals and agricultural commodities contributed to further global supply chain disruptions.In an analysis on the effects of the war in Ukraine on mar

282、itime trade logistics,UNCTAD(2022b)found that trade restrictions applied to the Russian Federation,the worlds third-largest exporter of crude oil,resulted in higher energy costs(a 64 per cent fuel surcharge during the first quarter of 2022).This led to a spike in maritime shipping rates and caused s

283、ignificant inflationary pressures and an additional 1.6 per cent increase in consumer prices globally.Moreover,the destructive effect of the war on the manufacturing and transportation infrastructure in Ukraine upset operations,not only in that country,but also in other countries that traded with or

284、 relied on Ukraine for the supply and delivery of key materials and services.For instance,Ukraine accounts for 50 per cent of the global production of neon gas,a chemical element used to produce semiconductor chips.As a result of the threats posed by the war to the ability of Ukraine to supply this

285、Economic Development in Africa Report 202330noble gas,supply chain constraints have been exacerbated in the global semiconductor and chip-making industries(Simchi-Levi and Haren,2022).Innovations and high-knowledge and technology-intensive industries2 are vulnerable to global shocks,disrupting globa

286、l supply chains.To illustrate this,table 1 ranks the top 10 industries with a high level of exposure to pandemics,geophysical events and trade disputes.Table 1 Industry exposure to shocks,selected industriesCOVID-19 pandemicTrade disputesGeophysical eventsType of industryRankType of industryRankType

287、 of industryRankApparela1Semiconductors and componentsb1Semiconductors and componentsb1Aerospaceb2Communication equipmentb2Communication equipmentb2Furniturea3Medical devicesb3Miningc3Petroleum productsc4Pharmaceuticalb4Computers and electronicsb4Transportation equipmentb5Aerospaceb5Glass,cement and

288、 ceramicsd5Automotiveb6Automotiveb6Chemicalb6Textilesa7Machinery and equipmentb7Transportation equipmentb7Rubber and plasticsd8Chemicalb8Basic metalc8Machinery and equipmentb9Computers and electronicsb9Electrical equipmentb9Miningc10Electrical equipmentb10Petroleum productsc10Sources:UNCTAD calculat

289、ions,based on the McKinsey Global Institute shock exposure index and data from the INFORM database,Observatory of Economic Complexity database,United Nations International Trade Statistics(United Nations Comtrade)database,World Input-Output database,World Tourism Organization database.Note:This rank

290、ing is based on an index that measures the forward-looking exposures of value and supply chains in 23 key industries to pandemics,large-scale cyberattacks,geophysical events,heat stress,flooding and trade disputes.For instance,vulnerability exposure to pandemics is measured by the industry or value

291、chains geographic footprint,which is based on a countrys share of exports(United Nations Comtrade database),its exposure to pandemics(INFORM data),and people inflows(World Tourism Organization data).a Labour-intensive industryb Global innovation industryc Resource-intensive industryd Regional-proces

292、sing industryThe increased exposure to global shocks and a reduced ability to respond effectively to operational problems and supply chain disruptions led many economies and 2 Some high-knowledge and technology-intensive industries will be discussed in this report.The Potential of Africa to Capture

293、Technology-Intensive Global Supply Chains31businesses to adopt strategies aimed at stepping up the local manufacturing of certain products to react more quickly to local demand(Simchi-Levi and Haren,2022).Some Governments responded to global supply chain pressures by supporting their home-based comp

294、anies efforts to reshore or improve supply chain resilience.For instance,in the United States Inflation Reduction Act(2022),such supply chain programmes include a$110 billion plan to improve roads and bridges,a$50 billion plan to incentivize domestic semiconductor manufacturing and a$17 billion budg

295、et to upgrade port infrastructure in major cities in the United States(Siripurapu,2021).Many industry leaders acknowledge the importance of having multiple supply sources across various regions and the capacity to swiftly activate secondary supplier relationships(Kilpatrick,2022)as effective mechani

296、sms to mitigate the risks of supply shortages and other repercussions of shocks and vulnerabilities on supply chain efficiency.However,the decision to diversify supply chains by reshoring or expanding supply chain operations into other markets and regions depends on a host of factors.These include c

297、osts related to wages,transport and production;access to raw materials and intermediates;access or proximity to emerging markets and growing consumer markets;quality,environmental and regulatory standards;technology and innovation capabilities;and the securing of the supply of key strategic products

298、 and services.According to UNCTAD(2020a),reshoring may not necessarily build more resilient supply chains,as it can lead to a higher geographical concentration of value added and reduced investment,especially for higher-technology-intensive industries.In some economies,reshoring may require re-indus

299、trializing,calling for significant investment(for example,to build manufacturing and logistics infrastructure)and capacity adjustments(for example,reskilling).(See Simchi-Levi and Haren,2022).Supply chain diversification,which can broaden the distribution of economic activities and provide opportuni

300、ties for new companies to integrate supply chains(UNCTAD,2020a),thus becomes a more viable route for building resilience to global supply chain disruptions.Companies seeking to diversify their supply chains and build relationships with suppliers and customers in various regions will need to invest h

301、eavily in fixed costs,for example,by setting up production plants and related infrastructure.They will also need to ensure that the necessary human capital,skills and technologies are present in those regions and markets.Notwithstanding such costs,the risks of concentrating manufacturing and supply

302、chains in a few markets or sourcing materials and supplying sector-specific intermediate goods from a few locations can increase exposure to shocks and disruptions in production networks and supply chains and can threaten a companys survival.Economic Development in Africa Report 202332Although the c

303、urrent globalization of supply chains occurred when companies sought to lower production costs,for example by relocating to lower-cost markets,the heightening risk of global shocks and disruptions that can lead to greater material shortages,raise shipment costs or delay fulfilment and orders,are maj

304、or concerns for companies that are now aiming to cut costs by shortening their supply chains and sourcing at home or closer to home.The renewed paths towards supply chain diversification as strategies for building resilience to global shocks can create opportunities for African countries.For example

305、,high value added and capital-intensive supply chains in the automotive and electronics industries can explore broader geographic footprints,including Africa,and restructure their supplier ecosystems to reduce vulnerability and strengthen resilience.By diversifying to or relocating some of their sup

306、ply chain components to Africa,companies in technology-intensive sectors,for instance,can source some of the inputs(raw materials and intermediate goods)from the continent,while diminishing the costs of transportation and logistics and minimizing the risks related to supplier delivery delays and oth

307、er challenges.Moreover,the growing African consumer markets,characterized by a swelling demand for electronics goods and financial technology services,can provide incentives for market proximity.However,to become attractive options for companies seeking to diversify their supply chains,African count

308、ries will need to demonstrate reliable manufacturing,transport and logistics capabilities if firms are to relocate some of their supply chain components to the continent.Further,African countries will need to facilitate enabling policy and regulatory incentives to develop regional supply chains that

309、 can build the foundation for the full participation of African companies in global supply chains.A first step would be to better understand the importance of supply chain diversification and the potential benefits stemming from the continents resilience to global shocks and other related disruption

310、s.1.4 Principles of supply chain diversificationThe diversification of supply chains,which is based on diversification in all the components of the supply chain,includes supply base diversification(number of suppliers),customer base diversification(number of customers),supply chain flexibility and d

311、iversification of the goods and services produced.The suppliers and customers of a firm represent its relationships.Yin and Ran(2022)divide supply chain diversification into supply base diversification and customer base diversification,The Potential of Africa to Capture Technology-Intensive Global S

312、upply Chains33while Lin et al.(2021)conceptualize supply chain diversification(concentration)in terms of whether a firm concentrates its sourcing(sales)on a few large suppliers and customers.The first component of supply chain diversification is the firms supply base diversification.In the supply ch

313、ain,a supplier is a firm that provides goods and services to other organizations.A supplier can participate in business-to-business or business-to-consumer relationships in a supply chain.Supply base diversification can help firms avoid production shutdowns caused by supply interruptions(Adobor and

314、McMullen,2007;Yin and Ran,2022).Firms that participate in non-diversified supply chains are particularly vulnerable to external and internal shocks.Another important component of supply chain diversification is customer base diversification.As mentioned previously,in a supply chain,customers are fir

315、ms that purchase goods and services from other organizations.Customers depend on producers,distributors and retailers to meet their needs for goods and services.Customers play an essential role in creating supply chains,as their needs,values and opinions affect the suppliers decisions throughout the

316、 supply chain(Achilles,2014).A supplier of a firm can be a customer of another firm,and vice versa.For example,a customer may be a producer that purchases inputs to make goods and provide services for other customers.The concept of supply chain diversification also includes supply chain flexibility.

317、This concerns a supply chains responsiveness to changes in customers needs(Kaur and Kau,2022)and the ability to easily adjust production levels,raw material purchases and transport capacity(Wolters Kluwer,2021).Further,flexibility in the supply chain means a firm can scale to meet the needs of its c

318、onsumers and adapt to meet the natural ebb and flow of its business,rather than wasting resources due to the inability to make immediate changes(Wolters Kluwer,2021).Also,supply chain flexibility allows a supply chain to function by accommodating the day-to-day changes that occur naturally.The numbe

319、r of a companys facilities,including manufacturing,distribution,research and administrative facilities,could provide flexibility in a supply chain.Supply chain flexibility also allows the successful integration of just-in-time and just-in-case supply chain inventory systems to achieve efficient oper

320、ational processes.A just-in-time supply chain,also called the pull system of a supply chain,is a management strategy that aims to minimize inventory and increase efficiency.When adopting a just-in-time supply chain strategy,a company will order parts or services from suppliers solely on an as-needed

321、 basis or will manufacture specific units of products only when it receives an order from a buyer or customer.A just-in-case supply chain,or the push system in a supply chain,is an inventory strategy in which a company orders more goods or services than required from suppliers and produces Economic

322、Development in Africa Report 202334more goods or services than they are expected to sell(United We Care,2022).This management strategy aims to minimize the risk for a company to run out of stock of a specific product and be in a position to respond to consumer demand,even during unpredictable times,

323、such as during shocks or supply chain disruptions.As both strategies present advantages and risks,it is important to adopt a balanced approach.For example,in a hybrid push-pull inventory system,some of the supply chain processes employ a just-in-time strategy,while others operate under a just-in-cas

324、e system.This can be conducive to building a more flexible supply chain and optimizing inventories,that is,having a more accurate demand forecast than a just-in-case system but not aiming to keep standing inventory at zero,as in just-in-case systems(Jenkins,2021).Supply chain diversification has pro

325、ven an effective means of strengthening supply chain resilience while overcoming supply chain disruption and improving company profitability and demand flows.Supply chain resilience can be defined as follows:the ability of a supply chain to return to its original state or move to a more desirable st

326、ate after being disrupted(Barroso et al.,2010;Brandon-Jones et al.,2014;Carvalho et al.,2011;Christopher and Peck,2004;Christopher and Rutherford,2004),the ability of the production and distribution system to meet each customer demand for each product on time and to quantity(Priya Datta et al.,2007)

327、and the ability to quickly adapt and respond to changes(Erol et al.,2010).These definitions and others are recapitulated in Tukamuhabwa et al.(2015).With regard to supply chain resilience,the diversification of a supply chain allows firms to mitigate supply chain disruption.Diversification,through f

328、lexibility in activities,makes it possible to surmount the adverse effects of shocks and thus enable a supply chain to Figure 1 Features of supply chain diversificationDiversifed goods and servicesDiversifed customer base(customers)Diversifed supply base(suppliers)Improved supply chain resilience(ab

329、sorbing shocks)Ability to avoid supply chain disruptionImproved proftability and demand fowsUnlocked supply chainSupply chain diversifcationSupply chain fexibilitySource:UNCTAD.The Potential of Africa to Capture Technology-Intensive Global Supply Chains35return to its original state after a disrupti

330、ve event.By diversifying suppliers,and goods and services,firms can readily absorb shocks such as the shortage of entrants and soaring prices of a product,overcoming the complete disruption of activities(figure 1).1.5 What does supply chain diversification mean for Africa?Global supply chains were d

331、esigned to operate with high reliability and at the lowest possible cost(Gandhi,2022).Yet the impact of global shocks and other geopolitical dynamics the global financial and economic crisis,the pandemic and the war in Ukraine on the reliability,cost-effectiveness and resilience of supply chains res

332、ulted in many companies and Governments adopting measures aimed at securing the supply of components in critical industries and reducing their dependence on a few suppliers and source markets.Some of these measures include support programmes and incentives deployed by the United States and the Europ

333、ean Union to reshore the manufacturing supply chains for semiconductors,vaccines and medical equipment to ensure reliability,control and security.The increased interest in bringing back components of supply chains to home or closer to home by switching to or expanding relationships with suppliers closer to the market served or suppliers located in regions and countries with shared values,can open