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Regional Value Chains: COVID-19 has opened doors towards solid and sustainable growth, after the negative shock

26 November, 2021
Regional Value Chains: COVID-19 has opened doors towards solid and sustainable growth, after the negative shock

Marrakech, 26 November 2021 (ECA) – The ECA Office for North Africa held on 24-25 November in Marrakech (Morocco) its 36th meeting of the Intergovernmental Committee of Senior Officials and Experts for North Africa (ICSOE) on “Strengthening regional integration in North Africa,” and an Expert group meeting on “Unlocking the Potential of Regional Value Chains in North Africa: Focus on the Pharmaceutical and Digital Finance Sectors.”

Both events provided an opportunity for officials and experts from Algeria, Egypt, Libya, Mauritania, Morocco, Sudan and Tunisia and elsewhere to assess North Africa’s current economic context and how it was impacted by the COVID-19 pandemic. The participants also reflected on policy priorities for a robust and job-intensive economic recovery, and how the sub-region can leverage the African Continental Free Trade Agreement (AfCFTA) to reach these goals.

Participants agreed that the ECA office for North Africa 2022 work programme should focus on employment creation and skills through economic diversification, structural transformation, as well as regional integration and global value chains. The office will also continue with its important project on economic impacts of migration, with a focus on building countries’ capacity to collect migration data and recognize migrants’ skills and qualifications.

This year’s meeting took place as North Africa is facing both major, multiple challenges and opportunities. Key current challenges include building forward better and greener from COVID-19 while turning the tide on persistently high youth unemployment. At the same time, the AfCFTA and accelerated digitalization are presenting the sub-region’s youth with new opportunities to enter higher-skilled and more productive, export-oriented sectors.

“To help our member countries put their economies on a high and sustainable growth path, we must look at the doors the pandemic has opened: COVID-19 has raised countries’ interest in productive opportunities closer to home. It has also given pharmaceutical industries a strategic dimension they didn’t have before and underscored Africa’s need to find alternative sources of financing for their development and health security needs. The pandemic has also accelerated several megatrends, including digitalization. African countries can build forward better, by investing in greener, more resilient sectors and inclusive economies”, said Zuzana Brixiova Schwidrowski, Director of the ECA Office for North Africa in an opening statement given on behalf of ECA Executive Secretary Vera Songwe.

The promotion of economic integration through value chains cannot be carried out in an effective manner without reforming the relevant sectors, especially the financial sector, so as to increase market freedom, develop financial and banking services and new financial tools. Digitalization and technology will be key driving forces of structural change, said Arab Maghreb Union Secretary General Taïeb Baccouche in his opening speech.

The ICSOE is a statutory, deliberative body which meets every year to assess the work of the ECA office for North Africa in the current year and contributes to its strategic directions for the year ahead. This edition saw last year’s President of the Bureau Kamel Meraghni, Director at the Ministry of Finance of Algeria hand over the chairmanship to Lihniash Saad Mohamed Abdullah, Undersecretary of the Ministry of economy and trade of Libya.

Experts and officials at the expert group meeting agreed on several recommendations for North Africa to achieve its potential for the creation of regional value chains in the pharmaceutical and digital finance sectors.

Key recommendations included the need to boost local production so as to respond to countries’ urgent needs for medicines to fight the pandemic and reduce the pressure on health systems. Participants agreed that North Africa can increase its own production of medicines by going beyond national borders and by developing value chains that would enable them to make the most of individual countries’ strong points while seizing opportunities for cross-border complementarities.

Participants agreed that it would be in North Africa’s interest to review activities of multinationals within their national pharmaceutical sectors, and adopt strategies and policies to ensure that these corporations act in line with national and regional health security needs. The ongoing pandemic has heightened importance of such approach.  

While North Africa’s digital finance sector developed rapidly in the wake of the pandemic, participants agreed on the need for its countries to step up efforts to foster an innovation ecosystem in this field and support start-ups through increased public investments in training. Another suggestion that arose from the exchange was to consider setting up a decentralized regional e-wallet to help fund start-ups in North Africa and further stimulate the region’s innovation ecosystems.

Experts stressed the importance for North African Central Banks to benefit from a transfer of knowledge and expertise from their European counterparts on digital currencies and noted that the Central Banks of Egypt, Morocco and Tunisia are already doing so.

North Africa remains one of the least integrated regions in Africa and globally, with intraregional trade accounting for less than 5% in 2019, and almost half of it being fuel and energy products. Yet the sub-region has a vast potential for effective regional integration (geographic and maritime continuity, border facilities, common language and culture) and for the development of complementarities with the rest of Africa in areas such as electronic automotive industries and aeronautics, agribusiness and fisheries, and renewable energies.

Building on these findings and needs of the region, the 37th ICSOE meeting in 2022 meeting will focus on greening the economies by incorporating climate change into North Africa’s recovery strategy.

Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Tel: +251 11 551 5826