Opinion
Africa’s Untapped Power to Reshape Europe’s Supply Chains
By Danilo Desiderio
A groundbreaking study from the Kiel Institute for the World Economy, titled “Diversifying European Supply Chains: Can Africa Play a Role?“, argues that Africa’s untapped potential could be pivotal in Europe’s quest to reduce its reliance on Asian-dominated supply chains. As the European Union (EU) accelerates efforts to localize critical industries – from green technology to textiles – the report highlights Africa’s unique mix of natural resources, competitive labor markets, and geographic proximity as assets worth leveraging.
Yet, the continent’s ability to seize this moment hinges on urgent reforms to attract investment and build sustainable industrial ecosystems.
The Case for Africa: Resources, Proximity, and Legacy Ties
Europe’s push to “nearshore” production closer to home has largely focused on Eastern Europe and Southeast Asia. But Africa’s strategic advantages are increasingly hard to ignore.
The continent holds vast reserves of cobalt, lithium, and other critical minerals essential for renewable energy technologies – a cornerstone of the EU’s climate-neutral ambitions under the European Green Deal. Simultaneously, Africa’s lower labor costs and growing youth population position it as a potential hub for labor-intensive sectors like textiles and apparel.
Geographic proximity further amplifies the opportunity. At just 15 kilometers (9 miles) from Europe across the Strait of Gibraltar, North Africa offers logistical advantages over distant suppliers.
Moreover, historical and cultural ties – rooted in colonial legacies—could ease cross-border collaboration, particularly for French-, Portuguese-, and English-speaking firms navigating language barriers.
The Catch: Bridging the Investment Gap
Despite these strengths, the study notes a striking absence of concrete moves by European firms to relocate operations to Africa. Why?
The continent’s fragmented markets, inadequate infrastructure, and regulatory hurdles remain significant deterrents. Researchers emphasize that the African Continental Free Trade Area (AfCFTA), designed to unify markets and streamline regional trade, is a critical first step – but insufficient on its own.
“To compete globally, African nations must become more than raw material exporters,” the report states. “They need to build the infrastructure, workforce skills, and institutional stability to support value-added industries.”
Without progress in these three pillars, the continent risks missing a historic window to integrate into high-tech and manufacturing supply chains.
Three Imperatives for African Economies
- Infrastructure Overhaul: Reliable energy grids, transportation networks, and digital connectivity are non-negotiable for attracting large-scale manufacturing.
- Workforce Development: Training programs aligned with EU industry standards – particularly in engineering, logistics, and green technologies – are essential to create a pipeline of skilled labor.
- Institutional Reform: Transparent governance, predictable legal frameworks, and anti-corruption measures are crucial to building investor confidence.
Beyond Extraction: A Call for Value-Added Partnerships
The study’s authors caution that Europe’s evolving supply chain strategy cannot replicate colonial-era dynamics of resource extraction. Instead, they urge targeted policies to foster African industrialization, such as:
- Tax incentives for firms investing in processing and manufacturing, rather than raw material exports.
- Simplified licensing procedures to reduce bureaucratic delays for startups and SMEs.
- Public-private partnerships to help local businesses meet EU quality and sustainability standards.
“Africa’s role must evolve from ‘supplier’ to ‘partner,'” says the report. “This requires mutual investment – not just capital, but also technology transfer and capacity-building.”
The Path Forward: A Win-Win for Climate and Development?
As the EU races to secure supplies of green minerals and resilient textile supply chains, Africa stands at a crossroads. Success could catalyze job creation, economic diversification, and climate-aligned growth across the continent.
Failure, however, risks deepening dependency on volatile commodity markets.
For Europe, the stakes are equally high. Diversifying supply chains to Africa could bolster geopolitical resilience while advancing sustainability goals.
But as the Kiel Institute’s research underscores, this vision demands bold action – not just from policymakers in Brussels, but from African leaders and global partners committed to rewriting the rules of trade.
“The future of Europe’s supply chains – and Africa’s development – will be shaped by choices made today,” the authors conclude. “The question is whether both sides are ready to reimagine what’s possible.”
Danilo Desiderio serves as the CEO of Desiderio Consultants Ltd in Nairobi, Kenya, specializing in African customs, trade, and transport policies. He is a customs and trade expert at the World Bank and a senior associate to the Horn Economic and Social Policy Institute (HESPI).
