Africa could become a major exporter of not only raw materials, but also manufactured goods, according to an August 16 report from the United Nations Conference on Trade and Development (UNCTAD). UNCTAD secretary general Rebecca Grynspan said that there is a massive opportunity for Africa in the trend of global companies seeking to diversify their supplier and trade partners, in an attempt to lessen supply chain risks and disruptions. 

Grynspan said Africa's technology ecosystem has already proved itself to be impressive with “hubs in artificial intelligence, 3D printing, blockchain, fintech and e-commerce" thriving in countries like Kenya. At the same time, regional agreements, like the one between the Democratic Republic of the Congo and Zambia, are leading to the creation of industrial zones intended to produce valuable goods, such as electric car batteries.

A separate report, published by the UN Environment Program (UNEP) August 17, also had an optimistic outlook on Africa’s commercial environment, as the continent continues to push for more green business opportunities. Digital technologies in Africa’s agri-business sector offer a $1 trillion market for feeding the continent’s growing population, which is expected to be 2.5 billion people by 2050. Also, nature restoration efforts could create $10 trillion of business value and 395 million jobs in Africa by 2030, the report said.

Grynspan noted that Africa has an advantage in the renewable energy market because of the continent's raw material reserves. She said that the surplus of raw materials could eventually make Africa a manufacturing destination, leading to the continent becoming an exporter of finished goods rather than just commodities.

Africa’s reserves of critical minerals, such as copper, graphite, lithium, molybdenum, nickel, zinc, bauxite, cobalt, manganese and platinum, make the continent essential for the development and success of the global EV market. China, which has been looking to expand its EV sector as well as its control of the global semiconductor market, has been one of the major financiers of infrastructure projects in sub-Saharan Africa, with a total investment of $155 billion over the past two decades, according to Nikkei Asia, mostly via its Belt & Road Initiative. 

China's investment in the region dropped by 55% to $7.5 billion in 2022. Despite the pullback, China is still Africa’s biggest trade partner with Sino-African trade exceeding $200 billion annually, according to the U.S. Foreign Affairs Committee. More than 10,000 Chinese businesses currently operate throughout Africa with $300 billion invested in the continent. 

There are still many unique challenges preventing the growth of African economies, such as limited investments, high transaction costs and inadequate scalability. Therefore, reducing upfront costs and finding new financing mechanisms is key to the UN’s growth plan for Africa. 

Although increased U.S. and European spending could reduce Africa’s need to rely on Beijing for funding, the question remains whether this is commercially attractive. The inability of many African governments to take on additional loans has dampened demand in the construction and infrastructure sectors, sending Chinese foreign investments to less risky and higher-yielding areas. U.S. and European financiers may follow suit. 

Grynspan said that Africa still needs more investment from other countries besides China, and will have to establish industrial development plans and get rid of certain regulatory barriers if it hopes to attract more large-scale investments. African countries will also need significant debt relief, because they are paying four times more for borrowing than the U.S. and eight times more than European countries. 

Grynspan praised UN Secretary-General António Guterres’ advocacy plan, which aims to change regulations and fix the “distorted” risk that investors hold when it comes to developing African economies. 

“This must change if Africa is to achieve its full economic potential and be a major actor in global supply chains,” Grynspan said.