Global supply diversification is key to boosting African industrialisation

Arican countries are still relying on agriculture for economic growth and the export of their abundant supply of transitional minerals and metals, which are used to build renewable energy technologies such as solar plants, wind farms and electric vehicle raw materials. To the extent that eight nations in this continent are among the world’s 15 least economically diversified countries. Economic diversification would be a panacea for African economies. Yet, though they can’t afford not to industrialise, this goal appears out of reach, and the continent remains locked in endless cycles of poverty.      

But now African leaders are calling for better controls on the dash for the minerals and metals needed for a clean energy transition, and have expressed their determination to avoid repeating the ‘resource curse’ mistakes of the past. They believe that continuing to ship materials abroad in their original form is an unsustainable path of dependency.  To this end, they are willing to offer a new regional market for businesses and industries, providing an opportunity for the diversification and resilience of global supply chains while protecting their natural resources and moving up the processing value chain.       

Why shouldn’t the continent finally be industrialised through critical raw minerals, considering that billions of tonnes of transitional minerals will be needed in the next three decades if the world is to meet its climate goals? This is their point, and to mark it, 12 African nations have already restricted the export of critical raw materials (CRM) intermittently or banned them outright. 

Their aim is to oblige European and international companies to secure financial value for the local economy by promoting technology transfers and the much needed improvement of domestic capacities and workforce skills, a field in which the RES4Africa Foundation has been engaged in since its foundation.

For its part, the EU is seeking to diversify its CRMs sources to ensure a consistent supply of critical raw materials needed for green technologies and enhance supply chain resilience.

For a mutually beneficial outcome for Africa and the European Union, the latter can invest in local value addition through sustainable and ethical mining for upstream activities, processing and beneficiation plants within Africa for mid-stream activities, or manufacturing industries that use locally processed materials for downstream activities. An effective support to Africa’s industrialisation requires Europe to conclude agreements that recognise the needs of African countries to industrialise and achieve economic sovereignty. To achieve these goals the EU must be clear and specific about which segments of the critical raw materials value chain they want to focus on. 

Finally, Europe should support the creation of Special Economic Zones and the conclusion of trade agreements granting African value-added products preferential access to European markets. 

Regarding the latter, the African Continental Free Trade Area (AfCFTA) already facilitates regional value chains. However, the President of the African Development Bank, Dr Akinwumi Adesina, stated that “to unlock AfCFTA’s potential, we must not just trade. We must turn the zone into an industrial manufacturing zone.”

The EU can play a crucial role in supporting these ambitions by providing investment guarantees and political risk insurance, while applying blended finance mechanisms that combine public and private funding through the European Bank for Reconstruction and Development (EBRD).

Europe can also adopt a regional approach by connecting individual projects to broader systems, thereby creating integrated and sustainable development corridors. The Lobito Corridor, which links the Democratic Republic of Congo (DRC), Zambia, and Angola, serves as an excellent example of how this can be achieved. 

Lately, the EU has proposed a shift to rapid action by signing the Critical Mineral Act, which creates an opportunity to redesign the EU’s relationship with Africa, helping Africa become a crucial player in the global supply of critical minerals. 

With the CRM act, the EU defines a sub-set of CRMs as ‘strategic raw materials’ - including the main battery materials - and aims at strengthening their value chains in the EU, from their extraction to processing and recycling. 

The CRM act also intends to diversify the sourcing of CRMs from elsewhere by forging ‘strategic partnerships’ with third countries, including many in Africa. It will use the Global Gateway strategy to support infrastructure, connectivity, and CRM projects.

Strategic partnerships will entail more cooperation on skills, the improvement of regulatory frameworks and enforcement capacity, and infrastructure funding. These factors will contribute to improving the investment climate in Africa.

The EU can take concrete steps for structural change that will promote equitable benefit-sharing from extraction and ensure the future prosperity of Africa by supporting the move from raw material exports toward mineral value addition, planning for a near future in which critical components of its manufacturing industries are made in Africa. A continent that is no longer in a position of external dependency, but the centre of global manufacturing, adding value to its own materials. 

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