Concrete Steps to Reduce Import Reliance and Build Local Industries-

The vision of African heads of state for reducing reliance on imported goods is primarily enshrined in the African Continental Free Trade Area (AfCFTA) and the AU’s Agenda 2063, specifically its focus on inclusive industrialization and economic transformation.

This vision is a multi-sectoral, multi-decade undertaking that moves beyond political commitments to focus on technical and infrastructural integration.

The overarching goal is to shift the continent from being a net exporter of raw commodities and an importer of finished goods to a global manufacturing and processing hub with resilient, continent-wide supply chains.

Following are the proposed strategies under the following five pillars:

1. The AfCFTA: Creating the Market and Policy Space.

2. Sectoral Industrialization Strategies.

3. Financing and Investment Mobilization.

4. Infrastructural and Connectivity Development.

5. Human Capital and Technological Capacity Building.

I. The AfCFTA: Creating the Market and Policy Space

The operationalization of the AfCFTA is the single most important action proposed by African heads of state to facilitate import substitution and industrial growth. The AfCFTA creates a single continental market of approximately 1.4 billion people and a combined GDP of around $3.4 trillion.

1. Phased Elimination of Trade Barriers

The foundational step is the removal of the very barriers that previously forced reliance on external markets:

• Tariff Liberalization: The core proposal is to eliminate 90% of tariffs on goods traded among member states over a period of 5 to 10 years, with special consideration for Least Developed Countries (LDCs). This makes finished goods produced within Africa significantly cheaper and more competitive than imported alternatives.

• Non-Tariff Barriers (NTBs) Mechanism: Recognizing that NTBs (like cumbersome customs procedures, quotas, and restrictive standards) often impede intra-African trade more than tariffs, a mechanism for identifying, monitoring, and resolving NTBs has been established. Heads of state envision this as a tool to rapidly unblock internal supply chains.

2. Deepening Rules of Origin (RoO)

The AfCFTA uses Rules of Origin as a strategic industrial policy tool to prevent "trade deflection" (where non-African goods enter via the easiest port and claim continental origin).

• Encouraging Value Addition: The agreed-upon RoO are intentionally designed to require substantial local value addition or change in tariff classification for a product to be considered “Made in Africa.” This directly compels investors—both local and foreign—to establish manufacturing and processing operations on the continent, rather than simply packaging imported components.

• Boosting Intermediate Goods: By setting strict origin criteria, the AfCFTA aims to spur the domestic production of intermediate goods (e.g., textile fibers, steel, vehicle components) that are essential inputs for regional supply chains.

3. Creating a Continent-Wide Regulatory Environment

Beyond goods, the vision extends to the regulatory environment through negotiations on Phase II protocols:

• Protocol on Investment: Aims to harmonize investment laws, provide continent-wide protection for investors, and promote investment into strategic, import-substituting sectors.

• Protocol on Competition Policy: Designed to prevent monopolies and anti-competitive practices that could stifle nascent African industries and disadvantage smaller enterprises entering the new regional markets.

• Protocol on Intellectual Property Rights (IPRs): Seeks to balance the protection of new innovations with the need for affordable access to technology, particularly for local manufacturing and pharmaceutical production.

II. Sectoral Industrialization Strategies

African leaders have identified specific sectors for targeted development, recognizing that general trade liberalization alone is insufficient to build complex supply chains. This is articulated through flagship programs under Agenda 2063: The Africa We Want.

1. Boosting Agro-Processing and Food Security

Reducing dependence on imported food is a critical priority, addressed by the Comprehensive Africa Agriculture Development Programme (CAADP) and the Declaration on Food Security:

• Value Chain Integration: The focus is on moving beyond exporting raw commodities (e.g., cocoa beans, coffee beans, cotton) to local processing, packaging, and branding of food products. This requires investments in milling, bottling, canning, and cold chain infrastructure.

• Fertilizer and Input Production: A key vulnerability is the reliance on imported fertilizers and agricultural chemicals. Strategies include building large-scale, regional fertilizer plants (often utilizing local natural gas reserves) and promoting local seed development to insulate food production from global supply shocks.

2. Pharmaceutical Manufacturing and Health Security

The COVID-19 pandemic severely exposed Africa’s dependence on imported medicines and vaccines.

• Local Manufacturing Hubs: The AU and RECs are coordinating to establish regional pharmaceutical manufacturing hubs (e.g., in Rwanda, South Africa, and Senegal) for active pharmaceutical ingredients (APIs), finished medicines, and vaccines.

• Harmonized Regulation: A major step is the establishment of the African Medicines Agency (AMA), which aims to harmonize drug regulation and registration across the continent. This will allow locally produced medicines to be easily certified and traded across borders, creating a predictable market for local producers.

3. Automotive and Vehicle Assembly

The African automotive sector strategy is a key industrial policy proposal to absorb high-volume imports.

• Regional Value Chains: The vision involves establishing a continental ecosystem where different countries specialize in various components (e.g., wiring harnesses in Morocco, vehicle assembly in Ghana, rubber parts in Côte d’Ivoire). The AfCFTA’s liberalized RoO for vehicles specifically promotes this cross-border sourcing.

• Policy Incentives: Heads of state are proposing coordinated national policies, such as tax breaks for local assemblers and the phasing out of imports of old, used vehicles, to create sufficient demand for African-assembled vehicles.

4. Textiles and Garments (T&G)

This strategy seeks to recapture the value lost by exporting raw cotton.

• "Farm-to-Fashion" Supply Chain: The goal is to move up the value chain from cotton farming to spinning, weaving, dyeing, and finally, finished garment manufacturing. This strategy is highly job-intensive and uses the AfCFTA to link cotton-growing regions with manufacturing hubs in East and Southern Africa.

III. Financing and Investment Mobilization

Building local industries requires massive, patient capital. Heads of state propose specific financial instruments and policy shifts:

1. Mobilizing Domestic Resources

• Sovereign Wealth Funds (SWFs): Utilizing SWFs and state pension funds to actively invest in domestic, strategic industries and infrastructure projects (e.g., ports, railways, power generation).

• De-Risking Private Sector Investment: Governments are using partial credit guarantees, special economic zones (SEZs), and industrial parks to reduce the risk profile for private sector investment in manufacturing and local processing.

• Strengthening African Financial Institutions: Actively supporting and capitalizing continental banks and funds, such as the African Export-Import Bank (Afreximbank), which has committed billions of dollars to AfCFTA-related financing, including industrial capacity building and trade finance.

2. Attracting Foreign Direct Investment (FDI)

The key proposal to attract FDI is presenting the AfCFTA as a single, predictable investment destination.

• Continental Investment Policy: The AfCFTA Investment Protocol aims to create a harmonized regulatory environment, allowing investors to set up shop in one African country and access the entire continental market without navigating 54 different regulatory regimes.

• Industrial Clusters: The strategy involves developing regional industrial hubs (e.g., the Lagos-Abidjan Corridor, the Djibouti-Addis Ababa Corridor) that provide reliable energy, transport, and customs services, making African locations competitive with Asian manufacturing centers.

IV. Infrastructural and Connectivity Development

Supply chains are only as strong as the infrastructure that connects them. The African leaders' vision emphasizes continental integration through massive infrastructural projects.

1. The Programme for Infrastructure Development in Africa (PIDA)

PIDA is the long-term, AU-endorsed blueprint for connecting Africa's markets:

• Corridor Development: Focusing on developing multi-modal transport corridors (road, rail, and maritime links) that connect landlocked countries to ports and link productive industrial centers with major consumption markets across regions (e.g., the North-South Corridor linking Zambia, Zimbabwe, and South Africa).

• "Hard" and "Soft" Infrastructure: Alongside building roads and ports (hard infrastructure), the vision includes soft infrastructure—harmonizing customs procedures, implementing single-window systems, and adopting digital trade facilitation tools to ensure goods move quickly and efficiently.

2. Energy and Power Generation

Reliable, affordable energy is non-negotiable for competitive manufacturing.

• Regional Power Pools: The establishment and strengthening of Regional Power Pools (e.g., WAPP, EAPP, SAPP) is a crucial step towards ensuring stable, pooled energy access. This allows energy-poor countries to import surplus power from energy-rich neighbors, stabilizing the grid for industrial use.

• Green Industrialization: Increasingly, proposals focus on utilizing Africa’s vast renewable energy potential (solar, wind, geothermal) to power new industries, ensuring that African-produced goods are not only cost-competitive but also sustainably manufactured.

V. Human Capital and Technological Capacity Building

The final pillar addresses the workforce and knowledge base required to sustain a complex industrial economy.

1. Education and Skills Alignment

• TVET Revitalization: A major proposal involves revitalizing and reorienting Technical and Vocational Education and Training (TVET) to specifically train the workforce needed for the new industrial sectors (e.g., welding, mechatronics, logistics, quality control).

• Continental Skills Strategy: Promoting the mutual recognition of professional qualifications across AfCFTA member states to allow for the free movement of skilled labor and address skills deficits in specific industrial hubs.

2. Innovation and Digital Transformation

• Science, Technology, and Innovation Strategy for Africa (STISA 2024): This strategy guides investments in research and development (R&D) to promote local innovation and adaptation of technology for industrial use.

• Digitalization for Supply Chains: Heads of state are pushing for the adoption of blockchain and digital logistics platforms to improve transparency, reduce costs, and increase the efficiency of continental supply chains, making them less reliant on manual, imported management systems.

In summary, the African heads of state envision reducing import reliance not through isolationist policies, but through a strategy of continental economic integration. The AfCFTA provides the necessary market size and policy discipline, while Agenda 2063 directs targeted industrial investment in strategic, high-impact sectors (agro-processing, pharmaceuticals, automotive).

This strategy relies heavily on the mobilization of capital through African financial institutions and the integration of physical and soft infrastructure through programs like PIDA to turn the continent into a single, cohesive, and self-reliant production hub.

This comprehensive and integrated approach is the fundamental mechanism designed to achieve substantial import substitution over the next few decades.