Why Regional Value Chains in Africa Need to go Digital

The authors advocate for the transition from global to regional value chains in Africa, emphasizing that digital transformation—specifically through blockchain, AI, and IoT—is essential to overcome high trade costs, poor infrastructure, and inefficient customs procedures. The paper highlights the AfCFTA as a critical framework for this shift, noting that while Africa currently exports raw materials with little value addition (e.g., coffee and cocoa), digital tools can enable MSMEs and women-led businesses to scale and integrate into more productive regional networks.

• Intra-regional trade in Africa is significantly lower than in other major regions, with only about 16–18% of the continent's trade being intra-African, compared to 59% in Asia and 69% in Europe.
• Africa suffers from 'negative value chains' where primary products are exported raw and the vast majority of value is captured abroad; for example, coffee exported from Africa valued at $6 billion was sold as final products abroad for $100 billion.
• Digital technologies, particularly blockchain, can address critical supply chain inefficiencies in Africa, including a lack of transparency in pricing, poor connectivity between buyers and producers, and a lack of trust.
• The COVID-19 pandemic exposed Africa's dangerous reliance on external imports, as over 82% of foods and 95% of medicines consumed on the continent in 2018 originated from outside Africa, primarily the EU, India, and Switzerland.
• Digitalisation of customs and the use of smart contracts can drastically reduce the time and cost of cross-border trade, which is currently a major barrier for micro, small and medium enterprises (MSMEs).
• MSMEs, which employ 70% of the population and make up 70-80% of African businesses, are central to RVCs, but women-led MSMEs face steeper barriers, including limited digital skills and restricted access to finance.
• The AfCFTA aims to reduce 90% of tariffs on traded goods within five years (ten years for less-developed countries) to stimulate re-industrialisation.
• The authors argue that pursuing regional value chains is safer for Africa than jumping directly into global value chains, as the latter can create unhealthy rivalry between African nations and increase the risk of lower-skilled workers being replaced by automation.
• Cross-border e-commerce is hindered by national regulations on foreign currencies and a lack of integrated payment systems, suggesting a need for central bank digital currencies (CBDC) and open banking.

APA

CHIVUNGA, M., & TEMPEST, A. (2021). Why Regional Value Chains in Africa Need to go Digital. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2021/10/Occasional-Paper-331-chivunga-tempest.pdf

Chicago

CHIVUNGA, MICHELLE, and ALISTAIR TEMPEST. Why Regional Value Chains in Africa Need to go Digital. South African Institute of International Affairs, 2021. https://saiia.org.za/wp-content/uploads/2021/10/Occasional-Paper-331-chivunga-tempest.pdf.

Wikipedia

{{cite report |last1=CHIVUNGA |first1=MICHELLE |last2=TEMPEST |first2=ALISTAIR |title=Why Regional Value Chains in Africa Need to go Digital |publisher=South African Institute of International Affairs |date=September 2021 |url=https://saiia.org.za/wp-content/uploads/2021/10/Occasional-Paper-331-chivunga-tempest.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{chivunga2021why, author = {CHIVUNGA, MICHELLE and TEMPEST, ALISTAIR}, title = {{Why Regional Value Chains in Africa Need to go Digital}}, institution = {South African Institute of International Affairs}, year = {2021}, month = sep, url = {https://saiia.org.za/wp-content/uploads/2021/10/Occasional-Paper-331-chivunga-tempest.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }