The annual flagship report Africa’s Development Dynamics provides the latest information on economic policies on the African continent and its five regions. It proposes a new narrative assessing Africa’s economic, social and institutional performance in light of the targets set by the African Union’s Agenda 2063. This 2022 edition explores how operationalising the African Continental Free Trade Area (AfCFTA) can deepen regional value chains, and help African countries accelerate productive transformation and recover sustainably from the COVID-19 pandemic.

Incorporating the idea of “Regional value chains for a sustainable recovery” into Africa’s economies means developing production linkages across countries and regions to unleash stronger, more inclusive and sustainable green growth. Integrating value chains will accelerate productive transformation and create more quality jobs. An African value chains approach for productive transformation enables firms to grow through regional production networks.

The COVID-19 pandemic is delaying African economies’ convergence with the rest of the world. In 2022, African economic growth is projected to be a full percentage point below the global rate of 4.9%. Under current projections, it will take African countries more than five years to regain their pre-COVID share (about 5%) of the world’s gross domestic product (GDP). Weaker global demand for commodities, supply chain disruptions and necessary sanitary measures have constrained Africa’s production capacity. Our analysis of 127 African industrial clusters, based on night light intensity, suggests that their activities decreased by up to 7.2% between March and August 2020. The slow pace of COVID-19 vaccinations holds back recovery. In December 2021, only 7.7% of Africa’s population had received a vaccination, compared to 69.5% in high-income countries.

The COVID-19 pandemic is setting back Africa’s economic convergence with the world economy. African economic growth will reach 3.9% in 2022, one percentage point lower than the growth rate for the rest of the world, which stands at 4.9%. In 2022, Africa’s gross domestic product (GDP) as a share of the world GDP is expected to fall to 4.7%, the lowest level since 2002. This reverses the catching-up process that had been underway: between 2000 and 2010, Africa’s global economic weight steadily increased from 4.7% to 5.3% of the world’s output (). Africa will not regain its pre-COVID share of the world GDP in a foreseeable future. COVID-19 has also reversed progress in reducing poverty in Africa, pushing at least an additional 29 million people into extreme poverty (Mahler et al., 2021).

This chapter makes the case for policy makers in Africa to develop regional value chains in order to accelerate the continent’s productive transformation and create quality jobs. First, it explains the need to reshape Africa’s participation in global value chains as a way to increase local production and catch up with the global economic recovery from the COVID-19 pandemic. Second, it documents the potential of the African Continental Free Trade Area to strengthen regional value chains. The analysis highlights the key challenges in developing regional value chains and their risks for sustainable development. Finally, the chapter identifies three trends accelerated by the COVID-19 crisis that affect public policies for regional value chains: the changing investment landscape, Africa’s digital transformation and the global drive for sustainability.

This chapter identifies priority policies to facilitate regional value chains in the context of the COVID-19 pandemic and the African Continental Free Trade Area (AfCFTA). First, it reviews past efforts at continental and regional levels to develop regional value chains and highlights key lessons for implementing the AfCFTA. Second, it offers recommendations on how African policy makers can work with the private sector to accelerate digital adoption and reduce the costs of cross-border trading and production. Third, the chapter reviews public policies to create stronger linkages within African industrial networks. It focuses on policies related to skills development, public procurement and investment.

This chapter examines the prospects and challenges to the development of regional value chains in Southern Africa (Angola, Botswana, Eswatini, Lesotho, Malawi, Mozambique, Namibia, South Africa, Zambia and Zimbabwe). It sketches the economic and trade background in the region by describing existing value chains and patterns of trade, growth and financial flows. It subsequently explores a case study of value chain development with respect to the automotive sector in Southern Africa: the current status and recent history of automotive value chain development as well as the major constraints to further development. The analysis draws out recommendations for deepening value chain industrialisation in the Southern African region and relates this to the AfCFTA as well as the consequences of the COVID-19 pandemic.

This chapter discusses the extent to which Central Africa and its nine countries (Burundi, Cameroon, the Central African Republic, Chad, the Republic of the Congo (Congo), the Democratic Republic of the Congo (DRC), Equatorial Guinea, Gabon and São Tomé and Príncipe) are integrated into global value chains (GVCs). It provides an overview of the sub-region’s participation in GVCs, identifying strategic products and sectors. Focus then shifts to the wood value chain on account of its potential, its size and the restrictions imposed on it as a result of the COVID-19 pandemic. Finally, this chapter sets out proposals for public policies designed to drive the development of value chains in Central Africa, in particular the wood value chain, and discusses the need to improve the macroeconomic framework and the investment climate, address the lack of transport infrastructure and logistical infrastructure and develop professional skills in line with the needs of the market.

This chapter analyses the opportunities and challenges for the development of regional value chains in East Africa (Comoros, Djibouti, Eritrea, Ethiopia, Kenya, Madagascar, Mauritius, Rwanda, Seychelles, Somalia, South Sudan, Sudan, Tanzania and Uganda). It first examines existing participation in global value chains. The chapter then analyses East Africa’s agri-food value chains and discusses their growth potential, opportunities and constraints. Finally, it addresses three policy domains for strengthening value chain integration in East Africa. The first domain concerns regional co-ordination, especially via the East African Community, to reduce barriers to intra-regional trade. The second policy domain regards how investment and cluster policies can help develop regional capacity in key value chains such as agri-food. The third domain identifies the public policies necessary to realise the regional Single Digital Market.

This chapter analyses public policies to revitalise the energy value chain and thus speed up post-COVID economic recovery in North Africa (Algeria, Egypt, Libya, Mauritania, Morocco and Tunisia). These countries face institutional, logistical, infrastructural and technical constraints that prevent them from taking full advantage of the energy value chain despite their immense natural endowments. The chapter opens with an overview of the macroeconomic context and how it relates to North African countries’ level of integration in value chains. The focus then shifts to the region’s energy potential and the importance of energy both to macroeconomic stability and to promoting employment. Finally, the chapter identifies the challenges and opportunities of the post-COVID environment before putting forward public policies to develop the energy value chain (EVC) in North Africa.

This chapter focuses on the strategic importance of agri-food value chains in West Africa to a sustainable recovery and making the African Continental Free Trade Area (AfCFTA) operational. The first section gives an overview of regional integration into global value chains (GVCs). It shows how COVID-19 has impacted an economy that is not sufficiently embedded into upstream GVCs, although there are some stand-out industries, such as mining and quarries, and agri-food. The second section looks at the potential of agri-food value chains to capitalise on the region’s important agricultural resources and create quality jobs; and identifies constraints hindering their development. Finally, the third section sets out some strategic priorities for public policy to strengthen the region’s integration into agri-food value chains.

Data used in this edition of Africa’s Development Dynamics have been compiled and presented in tables available for free download on the Development Centre’s website (https://oe.cd/AFDD-2022) along with some additional social and economic indicators that add context to the report’s analysis.