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Metals Exporters
Figure 4.9 Links to Manufacturing GVCs, by Industry: Minerals and Metals Exporters
100
GVC integration (%) 90 80 70 60 50 40 30 20 10 0 22 45 45 84
53 71
52 45
–10 Food and beveragesTextiles and apparelWood and paperPetroleum, chemical andnon-metallic mineralproductsMetal productsElectrical and machineryTransport equipmentAll manufacturing
Backward integration 2015 Forward integration 2015 ∆ GVC participation 2015–1995 ∆ Backward integration 2015–1995 ∆ Forward integration 2015–1995 GVC participation 2015
Source: Abreha et al. 2019. Note: GVC = global value chain.
100 or more employees, have been in business for five years or longer, and are more likely to have foreign equity or possess a foreign technology license.
Participants in GVCs that are importers of intermediate inputs and exporters are more likely to be owned by foreign investors (or more likely to receive foreign direct investment) than other manufacturers, particularly in countries such as Kenya, Senegal, and Uganda among the non-resource-rich group; Ghana and Zambia among the minerals- and metals-rich group; and Cameroon and Nigeria among oil exporters. This is also the case in the key comparator countries, including Indonesia and Vietnam. Such establishments are more likely than other establishments to operate under a foreign technology license in countries such as Uganda in the non-resource-rich group, South Africa in the minerals- and metals-rich group, and Cameroon and Nigeria in the oil exporters, as is the case in Vietnam.
Comparison of Establishments in Sub-Saharan Africa and Benchmark Countries
Establishments with backward and forward links are present in different industries across the different country groups in Sub-Saharan Africa and are comparable to their counterparts in the benchmark countries.
Within the textiles and apparel industry, establishments tend to export outputs that have imported input content, similar to textiles and apparel manufacturers in the four external comparators. This is particularly the case in Kenya and Senegal (non-resource-rich group). In the metal products industry, establishments are linked to manufacturing GVCs via backward and forward links, and thus they export goods with imported input content. This is the case for countries such as Kenya (non-resource rich); Cameroon (oil exporter); and Ghana, South Africa, and Zambia (minerals and metals exporters). Along manufacturing GVCs in chemicals and non-metallic minerals industries, establishments in Côte d’Ivoire and Kenya (non-resource rich); Ghana, South Africa, and Zambia (minerals and metals exporters); and Cameroon (oil exporter) manufacture goods for export using imported intermediate goods. There are no establishments with this profile in metal products and chemicals and non-metallic minerals industries among the comparators. By contrast, establishments in the transport equipment industry in Vietnam have backward and forward links to manufacturing GVCs, as do establishments in the electrical goods and machinery industry in Indonesia. There are no establishments in Sub-Saharan Africa that export goods with input content in these two industries.
Three broad characteristics emerge pertaining to Sub-Saharan Africa’s links to manufacturing GVCs. First, resource-rich economies exhibit higher forward links fueled by commodity exports. Second, non-resource-rich countries have higher backward links. Third, participation rates have been rising in minerals- and metals-rich countries but declining significantly in non-resource-rich countries and oil exporters. However, there is variation in GVC participation rates within each group, such that the prospects for industrialization are bright for some countries in every group.
Firms participating in GVCs that only import or only export tend to be midsize enterprises with at least 20 workers, are younger, and are more likely to have foreign equity and hold a foreign technology license.
Operating under a foreign technology license and foreign equity are important factors affecting participation in manufacturing GVCs. Moreover, younger, midsize enterprises that are connected to GVCs are likely to exhibit backward or forward links but not necessarily both. Therefore, policies that are favorable to the operations of multinationals in the region should serve to facilitate the integration of firms into manufacturing GVCs.
Establishments in Sub-Saharan Africa with forward or backward links in manufacturing GVCs and that are likely to have foreign equity (as in Indonesia and Vietnam) are mainly located in Malawi and Uganda (non-resource rich), the Democratic Republic of Congo and Zambia (minerals and metals exporters), and Cameroon and Nigeria (oil exporters). Countries in which such
