This document discusses global value chains (GVCs) in sub-Saharan Africa. It notes that while GVCs allow for specialization and participation in international production networks, gains are not equally shared. Sub-Saharan Africa participates less in GVCs than other regions like North America and Europe. South Africa, Nigeria, and Angola contribute the most to GVCs in sub-Saharan Africa, though their participation is still lower than other regions and rising over time. The document concludes that sub-Saharan African countries need to strengthen institutions and develop skilled labor to better encourage GVC participation and the spillover benefits that come with it.

1. GVC in Sub-Shahara Africa
View in Power BI
Akanbi Oluwajuwon Mayomi
Trading for Development in the Age of Global Value Chains - WDR 2020

2. Introduction
• Adam Smith, in his book titled “The Inquiry into the Causes of the
Wealth of a Nation (1776)” argued that specialization and division of
labour lead to improved skills and better productivities. This theory
has been one of the essential foundations of most countries in the
past decades. This allows them to concentrate their effort in the
production of a single product in which they have a comparative
advantage over others. However, in recent times, countries no longer
specialize in the production of a single product but the production of
fragmented product’s which are produced in different nations. The
process whereby different countries undertake different stages of this
production processes is known as Global value chain (GVC).

3. • For example, the production of iPhone 6 in figure 1 is differentiated
into different parts which is undertaken five different countries
(China, Japan, Korea, California, and Taiwan). The battery, Wifi
modem and radio frequency are produced by China; the rare minerals
are sourced from China and California; the AP processor is produced
by Tiawan; the RAM is produced by Korea; and the display, camera,
and storage is produced by Japan. This production processes shows
how different production processes are undertaken by different
countries.

4. Source of figure: https://www.businessinsider.com/where-iphone-parts-come-from-2016-4?r=DE&IR=T
Figure 1

5. • GVC’s are important drivers of the economy; this is because GVC’s
allows different countries to specialize and participate in the
production processes. This process has important implication for the
economy. GVC’s serves as a major foreign exchange earner to many
countries, thereby increasing economic growth in such countries. This
increase is expected to be translated into the improvement of the
standard of living in such countries because people are employed by
GVC’s firms; this will help reduce poverty in countries involved in
GVC’s. GVC’s also allows spillovers of technological know how's to
host countries thereby increasing human capital development.

6. • GVC’s in Sub-Sahara African Countries
• Despite the gains from GVC’s enumerated above, the gains from
GVC’s are not equally shared among countries, countries contributes
and gain from GVC’s in different ways. According to Trading for
development in the age of GVC’s World Bank group report (2019),
large cooperation's that outsource parts and task to developing
countries have seen a rise in their profit and markups, suggesting that
growing shares of GVC’s are not been passed on to the consumers.

7. • Figure 2 shows the level of GVC
participation among countries. The level of
participation is more intense in North
America and EU countries when compared to
other countries.
• GVC’s participation in Asian countries and
South American countries are somehow
mixed between limited commodities, and
advanced manufacturing.
• While participation by Africa countries are
mixed between limited commodities, high
manufacturing, and limited manufacturing.
Figure 2
Source:Trading for development in the
age of GVC’s World Bank group report (2019)

8. • A further break down of GVC’s in sub-Sahara Africa nations shows
that South Africa contributes more to GVC in Africa, Followed by
Nigeria and Angola. These countries are followed by Cote’divore,
Kenya, Ghana, Mauritius, DR Congo, Cameroon and Gabon. Other
countries have lower share in GVC participation in Sub-Sahara African
countries.

9. Figure 3: Authurs figure;Source of Data UNTAD

10. • It will be seen from the figure that
South Africa contribution to GVC in
Africa has been rising overtime. Their
contribution from has incseased from
9 trillion US dollars between 1990-
1995 to 61 trillion US dollars between
2015 and 2018.
Figure 4: Authurs figure;Source of Data UNTAD

11. It will be seen from the figure that Nigeria
contribution to GVC in Africa has been rising
overtime. Their contribution from has
incseased from 2 trillion US dollars between
1990-1995 to 15 trillion US dollars between
2015 and 2018.
Figure 5: Authurs figure;Source of Data UNTAD

12. It will be seen from the figure that Angola
contribution to GVC in Africa has been rising
overtime. Their contribution from has
increased from 1 trillion US dollars between
1990-1995 to 15 trillion US dollars between
2015 and 2018.
Figure 6: Authurs figure;Source of Data UNTAD

13. Conclusion
• Despite the advantages of GVC’s, it can be seen from the above
figures that Sub-Sahara African countries are still lagging in
participation in the value chain. It has been stated by Trading for
development in the age of GVC’s World Bank group report (2019) that
some of the factors affecting GVC’s are institutions, better factor
endowments (low skilled labour and capital endownment), and a big
market size.
• Although factors like market size and low skilled labour might be in
existence in some of these sub-Sahara African countries, there is need
to strengthen the institutional qualities within the region and develop
high skilled labour that can help encourage the inflow of GVC’s into
the region.

14. • It should be noted from the above figures that Nigeria and Angola are
resource rich countries, and their participation might be resource
based. Therefore, there is need to strengthen economic policies in
these countries (other sub-African countries inclusive) to help
improve the region participation in GVC’s.

15. References
• Bloomberg (2016) Where iphone parts comes from. Retrieved from
https://www.businessinsider.com/where-iphone-parts-come-from-
2016-4?r=DE&IR=T on 21/09/2020
• Casella, B. , R. Bolwijn, D. Moran and K. Kanemoto. Improving the
analysis of global value chains: the UNCTAD-Eora Database.
2019. Transnational Corporations 26(3). New York and Geneva:
United Nations
• World Bank Group(2020): Trading for Development in the Age of
Global Value Chains. 0 International Bank for Reconstruction and
Development / The World Bank 1818 H Street NW, Washington, DC
20433