In spite of ongoing initiatives aimed at improving regional trade, African countries are still interacting more with the global economy than with each other. To tackle this imbalance, strategic investments in cross-border value chains across essential sectors on the continent are necessary, according to Joy Kategekwa, director of the regional integration coordination office at the African Development Bank.

“Regional value chains provide a way to democratize involvement in intra-African trade. We are moving away from a model where products must be entirely manufactured within a single nation to one that prioritizes trading components,” she explains in an interview with African Business during the African Economic Conference held in Gaborone, Botswana.

Kategekwa underscores that businesses investing across multiple jurisdictions can benefit from financial incentives for their initiatives.

“With the AfCFTA, we’re stating that if you add value within Africa using locally sourced products, they will be considered locally made for preferential tariff treatment. This sends a strong market signal to producers: create it, and we will buy it,” she states.

“In essence, this is the promise of the AfCFTA, which ultimately ties back to job creation, income growth, structural economic transformation, and a new chapter for Africa,” she adds.

Kategekwa identifies agriculture as a particularly promising sector for advancing regional value chains.

“The WTO’s list of net food-importing countries shows that many African nations are involved, illustrating a contradiction,” she observes. “The Bank is heavily invested in developing special agricultural processing zones.”

Additionally, she points out the pharmaceutical sector as another area ripe with potential, especially following recent pandemics like Covid-19 and Mpox, which have highlighted Africa’s need to improve its own vaccine production capabilities.

“The Bank is investing significantly in the African Pharmaceutical Manufacturing Initiative based in Kigali, Rwanda, to enhance Africa’s capacity to manufacture essential pharmaceutical products,” she notes.

While the Bank can aid in laying the groundwork, Kategekwa asserts that the private sector plays a vital role in promoting cross-border value chains.

“The state does not engage in trade. These opportunities belong to the private sector. The private sector propels industrialization, creates jobs, and fosters innovation. We must see the private sector as the catalyst for growth in Africa,” she emphasizes.

Need for Policy Enhancements

However, Kategekwa stresses that for investments in multi-country value chains to thrive, policymakers must ease restrictions on the movement of individuals.

Travel across Africa is notoriously difficult, with high expenses and complex visa regulations that discourage cross-border movement. The need for reform in this area is pressing, she asserts.

“It’s one of the greatest contradictions to the continent’s regional integration goals that most Africans need visas to visit other African countries,” she remarked during the launch of the ninth edition of the Africa Visa Openness Index, in partnership with the African Union.

“Consider tourism; each country aims to tap into tourism revenue given Africa’s wealth of historical attractions. Yet, visa restrictions prevent Africans from enhancing each other’s tourism income.”

Ethiopian Airlines Expands Cross-Border Network

Samson Arega, group vice president of customer experience at Ethiopian Airlines, acknowledges the significant opportunities cross-border integration presents for the aviation industry.

“The AfCFTA has the potential to greatly increase air travel by enhancing demand for passenger and cargo services. Improved mobility will drive economic growth, generate jobs, and foster regional integration,” Arega tells African Business.

However, he notes that the airline encounters challenges such as restrictive bilateral air transport agreements, insufficient infrastructure, and protectionist policies. The absence of harmonized aviation policies across different regions is also a major obstacle to the industry’s growth, he adds.

Nonetheless, Arega shares that Ethiopian Airlines has established joint ventures with other African airlines to broaden its reach and leverage economies of scale—reflecting the cross-border cooperation that Kategekwa champions.

“Our partnerships with airlines such as Asky Airlines, Zambia Airways, and Malawi Airlines illustrate our pan-African vision. These collaborations not only extend our network but also elevate aviation standards across the continent by sharing our operational know-how. This approach enhances regional connectivity, supports local economies, and aligns with the AfCFTA’s goals by facilitating trade and mobility,” he concludes.