Yaounde, 24 February 2024 (ECA) - "The success of the import-substitution policy in Central Africa will necessarily involve the development of local content, putting SMEs at the heart of the ambition to go beyond value creation and achieve value retention" this is the major idea that emerged at the end of the conversation between Jean Luc Mastaki, SMEs and researchers during the 2024 edition of Promote (the enterprise, SME and partnership international fair) in Yaounde.
On February 24, 2024, at the Promote’s United Nations stand, the Director of ECA's Sub-Regional Office for Central Africa discussed with SMEs, agro-industry researchers and medias on the theme "Import-substitution, Special Economic Zones and local content in Central Africa: keys to accelerating industrialization and economic diversification by SMEs".
The full participation of SMEs in import-substitution through the development of value chains is guaranteed by the establishment of special economic zones. 80% to 85% of enterprises in the sub-region are SMEs and MSEs. They cannot resist the shady business climate. However, the involvement of SMEs in industry enables them to contribute to processing clusters.
To boost the competitiveness of SMEs, special economic zones have been set up to overcome the challenges of administrative formalities for setting up a business, energy (cost, quality and permanence of electricity), the isolation of production areas and tax pressure. As special economic zones are enclaves for the development of industry, the facilities offered will substantially reduce operating costs and lower the cost price of products, thus boosting the local, sub-regional and regional competitiveness of SMEs. In addition, as an extension of capacity building, SMEs will develop the skills and know-how of their staff, facilitating the domestication of technology.
Within SEZs, SMEs have the opportunity to improve their know-how. The partnership between local SMEs and multinational firms within SEZs guarantees capacity-building for local entrepreneurs. This is particularly the case for the automation and standardization of industrial processes. More broadly, within SEZs, SMEs will incorporate the pillars of quality infrastructure into the manufacturing process in order to achieve the quality competitiveness that is becoming a requirement of African markets, which are increasingly made up of a large African middle class. This means complying with norms and standards, respecting legal and industrial metrology, and improving packaging, which is a marketing element for manufacturing and a guarantee of traceability. Products produced by local SMEs must not be a thorn in the side of consumer health or environmental protection.
In line with its mandate to develop sustainable industry, the CEA sees new-generation SEZs and the contribution of SMEs to them as frameworks for value retention. In addition to creating direct and indirect jobs and developing skills through the link between industry and technical and vocational training, SEZs and SMEs must help to boost local content. This is only possible if multinational firms are committed to forging business partnerships with local companies, employing local workers and paying their wages, and mobilizing local savings in banks to invest in industry, so that locals become shareholders in SEZs.
United Nations statistics show that by 2037, more than half of Africa's population will be urban. Meeting the needs of this population in terms of high-quality, competitive local manufactured products calls for an update in the way African businesses operate. This is all the more necessary as the CEMAC Heads of State adopted an import-substitution strategy in March 2023. In 2018, the 6 CEMAC countries imported CFAF 2,780 billion worth of essential products (meat, fish, rice, hydrocarbons). This dependence on the international market is hurting local consumers through inflation resulting from international imbalances. In 2023, according to the ECA's report on the state of economic diversification in Central Africa, inflation stood at 11% in the sub-region, and is expected to reach 7% in 2024. In other words, a steady increase.
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Zacharie Roger MBARGA - Communications Officer
United Nations Economic Commission for Africa
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Email: zacharie.mbargayene@un.org