Connecting to the global industrialization chains has become an important feature in today’s global economy. However, mere participation does not bring significant economic transformation says the 2015 economic report of Africa. The continent needs to focus on improving its underdeveloped trade integration so that the share of value added exports can expand and link with other parts of the economy.
Although primary products account for the bulk of Africa’s resources, its exports remain dominated by mining outputs and resource-based manufactures. On the other hand, Africa sources 88% of its imported inputs from outside the continent. Despite its small size, intra-African trade is far more diversified than the corresponding trade with the rest of the world. Yet, the scope for initial emergence of a regional collaboration particularly in manufacturing, is largely untapped due to a collection of operational and policy constraints. Improving on this can help African countries use their joint capabilities and boost competitiveness.
Similarly, the service sector plays a key role in the competitiveness of manufacturing firms that represent a key source of value added services which could help diversify the economy. Service sectors such as the hotel industry and digital booking ventures such as Jovago.com can also be an avenue for economic transformation, particularly for the tourism sector. Currently, the service sector plays a fundamental role in adding value at each link along the supply chain while foreign direct investment (FDI) helps drive international trade expansion.
Such evolution in international trade brings about new opportunities as well as challenges to spur industrialization and development in Africa. On the positive side, the splintering of the invention process allows firms to benefit from various countries’ comparative advantages, outsourcing and offshoring activities. On the negative side, there is a risk that the emerging global division of labour will lock in Africa’s specialization in primary commodities without it gaining much from the last decade’s growth, which was characterized by a growing concentration of exports in primary products.
Integration into the global market could allow African businesses to reach a more efficient production scale and this could translate into cheaper access to production with ensuing competitiveness. It will also increases the exposure of firms to new technology, skills and technical capabilities which foster productivity gains. These allow firms to upgrade their activities and climb up the value chain.
Jovago.com is a leading online hotel booking service with offices spread across Africa. The company is founded by Africa Internet Holding and has MTN as one of the investors. Jovago.com, Africa’s No.1 booking portal, facilitates the booking process for its users to provide them with the best hotel booking experience with fast, transparent and easy-to-use services. Jovago.com has over 500 local hotel listings across Ethiopia and over 200,000 hotels around the world.