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Business Reporter

The coronavirus pandemic and the subsequent economic lockdowns that have seen countries struggling with exporting and importing critical goods and inputs should be seen as an opportunity to reshape African manufacturing, with a focus on self-reliance.

The Covid-19 crisis has shown that globalisation may have led African countries to over-rely on global supply chains and disruptions have left many unable to import critical supplies.

An Africa-wide economic impact analysis, conducted by management consulting firm McKinsey suggests that the continent’s manufacturing sector output will contract by at least 10 percent (more than $50 billion) in 2020 — with many manufacturers facing much more severe outlooks.

The crisis could also lead to a reshaped and more resilient manufacturing sector provided that governments and businesses tackle long-standing barriers to industrialisation and co-operate to seize new opportunities.

In Zimbabwe for example, the immediate crisis has seen some local manufacturers, universities, colleges and schools stepping up to produce essential medical supplies.

James North is one such company that has stepped up and is now producing Covid-19 related medical gowns, PVC overall/reaction suits, PVC shoe covers as well as reusable masks.

These were all local solutions to the problem of medical PPE, according to James North managing director Sifelani Jabangwe.

He reckons this is a demonstration of local entrepreneurialism and innovative capacity.

“There are opportunities for self-reliance because these are products we can manufacturer but were not manufacturing before, so we should take this as an opportunity,” said Mr Jabangwe.

In the long run, African manufacturing can take advantage of opportunities in intra-African trade and global supply-chain realignments spurred by the crisis, according to McKinsey.

The consulting firm estimate that, for every dollar of manufactured product, Africa imports approximately 40 cents in inputs from outside the continent—higher than most other regions in the world.

“Over five years, a serious push to reduce reliance on global supply chains could add an initial US$10–20 billion to the continent’s manufacturing output if 5 to 10 percent of imported intermediate goods can be produced within the region.

“In addition to supply-chain resilience, the shift could also benefit exporters in countries experiencing devaluation, if they could capture the upside of increased export attractiveness with less burden of more expensive imported inputs.”

Zimbabwe is currently struggling with currency devaluation, but according to this research by Mckinsey the country can be export competitive if it can use local inputs.

Mckinsey sees accelerated implementation of the African Continental Free Trade Area as a springboard for export-oriented growth, particularly to geographically proximate regions.

Improving ease of doing business across borders should also be a focus area according to McKinsey.

“Catalysing intra-African commerce will also require other enablers of business and investment. For example, logistics facilitation is a key enabler of productivity, and harmonised standards and regulations are required for trade of products such as pharmaceuticals,” reads part of the research paper titled reshaping African manufacturing, with a focus on self-reliance.