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Title:	Africa, Trade and Jobs-Creating decent jobs through trade and value addition
Authors:	Kenya Human Rights Commission
Keywords:	Africa Trade Jobs
Issue Date:	1-Aug-2013
Publisher:	Africa, Trade and Jobs-Creating decent jobs through trade and value addition
Description:	The African continent is endowed with immense natural resources. Between 2002 and 2012, oil, metals and other mineral exports accounted for more than two-third of export growth in Africa; crude oil alone accounted for more than 50 per cent of Africa’s merchandise exports in 20121. Despite increase in the share of exports in the world market, the contribution the world’s trade remains at 2.6 per cent of total world share. This shows that Africa in integrated wrongly in the global value chain as a supplier of raw materials to the developed countries. Indeed, Africa’s labour force added 91 million people but only 37 million jobs were created in wage earnings over the past 10 years. Almost one half of Africans (48 per cent) are in extreme poverty2; almost three quarters of the youth population is poor, as 72 per cent of them live on less than 2 dollars a day; the percentage of working people is very high at 46.5 per cent3. The 2013 report4 by WTO, OECD and UNCTAD dubbed implications of global value chains for trade, investment, development and jobs noted that global value chains have become profound feature in the global trade and investment arena, offering new prospects for growth, development and jobs. Effective participation in GVCs will require significant further investment in technology dissemination, skill building and upgrading. This report bases the level of value added from domestic economies to the size of the country, the economic structure and export composition. For countries where the domestic content has increased, this can generally be explained by a composition effect. For African countries, the structure and composition of their economy are characterised by huge trade deficit where most countries are net importers of finished products from developed countries and exporters of raw materials and semi-processed products (both agriculture and industrial). At the industry level, there is a high foreign content observed especially in electronics and machinery. Due to their high level and sophisticated production processes, the production of major parts and components has been offshored. In the latest race for raw materials, China, EU and the US have aggressively led the deal making in Sub-Saharan Africa. China has specifically boosted its economic footprint in Africa in exports with 2,216%, US with 420% and the EU with 139%. The IMF Direction of Trade Statistics evidently shows that the geographical composition of sub-Saharan Africa’s trade is from the EU, US and the BRICS. Sub-Saharan African economies have not managed to diversify their economies due to challenges such as supply-side constraints, low levels of skills and technology. Sub-Saharan African depends on the export of primary products. According to Collier and Dollar (2001) in Collier (2002), three quarters of developing country exports in 1980, were primary commodities but at the time of writing, about 80 percent were manufactures. Sadly, Africa had not been part of the transformation. Between 2000 and 2008, primary commodities continued to dominate Africa’s merchandise exports, compared with South East Asia-another developing region of the world. Also, while Africa’s share of world merchandise exports has been declining the share of fuels and mining products in primary exports and total merchandise trade has been increasing. Least Developed African countries are becoming more commodity-dependent than before. Out of 49 countries classified by the United Nations as least developed, 33 are in Africa. Of concern is the 1 Africa Economic Report 2014, draft version, 2013. Addis Ababa: UNECA. 2 This poverty rate (people living on less than $1.25 per day) is as of 2008. UN 2013. 3 This data is as of 2012. Source is (ILO. 2013) 4 WTO, OECD, UNCTAD 2013 increasing nature of their dependence on commodity exports. Gayi (2010) shows that least developed countries (LDCs) in Africa have become more commodity-dependant over the 2000-2008 periods. As a share of merchandise exports, in 2008 primary commodities made up 82 percent, up from 69 percent in 2000. Also, while the concentration index from 2000-2008, for African LDCs, increased by 73 per cent, that of Asian LDC’s decreased by 39 percent (Gayi 2010). The increasing dependence has implications for the country’s ability to cope with negative macroeconomic shocks arising from volatile commodity prices worsening the already existing low standard of living. Africa has experienced deindustrialization in the past two decades as evidenced by the fact that the share of manufacturing in total value added fell from 13 per cent in 1990 to 12 per cent in 2000 and 10 per cent in 2011. Nevertheless, for most countries in the continent, it is low-productivity activities such as informal tradable services that account for the bulk of the recent boom in the service sector and so it is not surprising that it has not had the expected impact on economic transformation. Because of the enclave nature of the resource sector, it cannot be relied upon to create enough jobs to absorb the 15 million youths who enter the labour market each year. In this context, there is need to diversify the sources of growth to create employment, reduce vulnerabilities and also lay more robust foundation for sustained growth. (UNCTAD 2013) The questions to be answered in this session will be the following: 1. How can African enterprises be integrated in the global value chains valuable to create employment opportunities? 2.What lessons can Africa learn from experiences to leverage decent employment and livelihood opportunities for its youthful population within a framework of World Trade? 3.How can equity and trade justice be integrated into the world trade to offer opportunities for African small scale producers? 4.How can business community and multilateral companies leverage their investments to create decent employment and promote inclusive growth in Africa?
URI:	http://hdl.handle.net/123456789/191
Appears in Collections:	PRACTICAL INFORMATION

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