United Nations Conference on Trade and Development has underscored the need for debt relief to offer African countries fiscal space to invest in strengthening their supply chains.
Speaking Thursday during the launch of the Economic Development in Africa Report 2023 in Nairobi, UNCTAD Secretary General Rebecca Grynspan called for reforms to the global financial system.
Grynspan says on average African countries pay four times more for borrowing than the United States and eight times more than European economies.
According to the Economic Development in Africa Report 2023, African small and medium-sized enterprises need more supply chain finance, which bridges the payment time gap between buyers and sellers, improves access to working capital and reduces financial strain.
The report says the value of the African supply chain finance market rose by 40pc between 2021 and 2022, reaching $41 billion. But this is not enough.
Africa needs significant investment in infrastructure to bolster its position as a supply chain destination.
The Secretary General said seventeen African countries, including Angola, Botswana, Ghana and South Africa, have already implemented local content regulations to support the growth of local supply chains, foster technology transfer, create jobs and add value within their borders.
Additionally, African countries should also secure better mining contracts and exploration licences for metals used in high-tech products and supply chains. This would strengthen domestic industries, enabling local firms to design, procure, manufacture and supply the necessary components.
The adoption of innovative digital technologies is also critical to optimizing supply chain processes. Countries such as Kenya have made notable progress in this realm, with rising rates of digital skills adoption in Africa.
UNCTAD urges governments to create sound policies, foster an enabling regulatory environment and scale up programmes to promote the widespread adoption of these technologies.
The UN trade and development body also reiterates its call for better financing solutions to offer African countries and businesses affordable capital and liquidity to invest in strengthening their supply chains.