Global supply chains are the lifeblood of the modern economy, facilitating the movement of goods, services, and capital across borders. Disruptions in these supply chains have deep impacts on economies worldwide. In Africa, these disruptions have worsened existing vulnerabilities and created new challenges, affecting everything from trade and manufacturing to food security and economic stability.
Some of the supply chain disruptions include pandemics, geopolitical tensions, and natural disasters. Rooted in the collapse of the subprime mortgage market in the United States, which cascaded into a global financial crisis, the Great Recession resulted in a severe downturn in global trade. Many industries faced reduced production and layoffs. Africa experienced reduced demand for its exports, particularly commodities like minerals and agricultural products, as global trade contracted. This led to lower export revenues, decreased foreign investment, and slower economic growth in many African countries.
The COVID-19 pandemic, in particular, highlighted the fragility of global supply chains, leading to factory shutdowns, port congestions, and shortages of raw materials and finished goods. The United Nations Conference on Trade and Development (UNCTAD) estimates that global trade contracted by approximately 9% in 2020 due to the pandemic.
Efforts to improve trade logistics were undermined by the pandemic. Port closures and shipping delays disrupted trade flows. UNCTAD reported a 50% increase in shipping costs from China to Africa between 2019 and 2021. Supply chain disruptions slowed Sub-Saharan Africa’s GDP growth to 3.1% in 2022, down from 4.5% in 2021 (World Bank). Unemployment in sectors like manufacturing and agriculture rose, with South Africa’s unemployment rate reaching 34.9% in late 2021.
The Oil crisis of 1973 triggered by the OPEC oil embargo in response to political tensions in the Middle East, involving Israel and its neighboring Arab states led to skyrocketing oil prices globally, causing inflation, economic recession in oil-dependent economies, and significant disruptions in industries reliant on petroleum-based products, such as transportation and manufacturing.
Africa’s manufacturing sector relies heavily on imported raw materials. Supply chain bottlenecks led to a 10% decline in manufacturing output in 2022, per the ITC. Countries like South Africa, Nigeria, and Kenya faced increased production costs and delays, impacting both domestic consumption and exports. Relying on a single source for critical components is risky. Diversifying suppliers across different regions will mitigate the impact of localized disruptions.
Agriculture contributes about 23% to the GDP of African economies and employs over 60% of the workforce. Supply chain disruptions have increased costs for inputs like fertilizers and seeds, and logistical challenges have hindered exports, impacting farmers’ incomes. A 2023 FAO report showed a 15% decrease in agricultural exports, affecting food security and rural livelihoods.
READ ALSO: Ghana’s Debt Redemption: From Crisis to Calculated Restructuring
Global disruptions have brought about opportunities to build resilient, diversified supply chains. Digitization is a fundamental enabler of supply chain resilience; technologies are improving visibility, traceability, and predictive analytics.
Nations across Africa are promoting local production and sourcing. Ethiopia and Rwanda are investing in local production to reduce reliance on imports. Ethiopia’s Hawassa Industrial Park’s successful local production is attracting international companies and creating jobs.
