The AfCFTA and Transformative Industrialisation • WORKING PAPER
In summary, the AfCFTA holds substantial promise for addressing Africa’s dual-energy problem of poor energy access and fossil-dependent energy system. It is worth emphasizing, however, that not all of the outlined benefits are guaranteed or assured as they depend on the successful implementation of AfCFTA. In effect, the green energy transition implies that the possible momentum and support that can be gained through AfCFTA are dependent on the concerted implementation of the agreement by member countries (Apiko, et al., 2020).
5.2 Prospects and requirements evolving renewable energy regional value chains The development of green industries can be a core part of energy transition efforts in Africa, driving structural economic transformation and reducing various forms of (structural, technological and single commodity trade-related) dependencies (IRENA, 2015). In fact, to realise the full socio-economic benefits of the energy transition, far-sighted policies will be necessary to broaden and strengthen Africa’s currently limited industrial base as part of a broader effort to diversify economies and reduce dependence on the export of unprocessed commodities (IRENA, 2022). Africa is home to many of the mineral resources that are critical in driving global energy transitions – including manganese, copper, lithium, cobalt, chromium and platinum. The Democratic Republic of the Congo, for instance, is one of the world’s largest cobalt producers, accounting for two-thirds of global cobalt production, while South Africa is the world’s largest producer of platinum and manganese – producing 70% of the world’s platinum (IEA, 2019; IRENA, 2022).
Box 3:Africa’s reserves and production of RE technology-relevant minerals Bauxite: Guinea Copper: DRC, Zambia Cobalt: DRC, Madagascar, South Africa Graphite: Mozambique, Tanzania, Madagascar Iron ore: South Africa Lithium: Zimbabwe Manganese: South Africa, Gabon Nickel: South Africa, Zimbabwe, Botswana Phosphate rock: Morocco, Algeria, South Africa, Egypt Titanium: South Africa, Mozambique, Madagascar
Global demand for these essential components of renewable energy technologies is already rising fast and will soon snowball, but the degree to which African countries will benefit from this emerging demand will depend on the extent to which countries can develop processing capacity further up the value chain. It is only when economic activity moves from the mere export of raw materials to higher-value products that countries can maximise the potential for local job creation and improved livelihoods. Currently, local manufacturing of equipment like wind turbines and solar panels is less prominent on the continent and will continue to be so. African countries can develop suitable industrial policies, support skill-building and find ways to localise value creation domestically or regionally. In fact, considering the limited domestic market of most African economies, regional value chains will be required to achieve needed economies of scale in renewable energy and associated industries. As the African Development Bank notes, the continent’s industrialisation does not only depend on its capacity to produce efficiently and in large volumes but also on its trade linkages within the region and with other regions of the world (AfDB, 2015). For instance, the SADC region, despite being rich in a vast array of energy resources, has failed to fast-track progress towards electricity sustainability and regional industrialisation mainly due to a lack of regional integration (TIPS, 2017; as cited in TIPS, 2019). The Covid-19 crisis, which severely disrupted cross-border supply chains, has underscored the importance of diversifying and regionalising renewable energy supply chains to
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