From Selling to Building: How Rules of Origin Are Reshaping Italy-Africa Ties

By Danilo Desiderio

For decades, the Italy-Africa economic relationship has followed a familiar script: Italy sells machinery, technology and expertise; Africa buys. That script is now outdated, and the reason has less to do with diplomacy than with paperwork – specifically, the paperwork that determines where a product is legally deemed to have been “made.”

Africa no longer needs convincing as a growth story. The African Development Bank counted 12 of the world’s 20 fastest-growing economies on the continent in 2025, and the forecasts for 2026 hold up: continent-wide growth of 4.2 percent, with East Africa leading at a projected 5.9 percent. That growth is concentrated in sectors where Italian firms have spent generations building expertise – industrial machinery, agri-tech, food-processing equipment, construction gear, energy systems, water infrastructure, pharmaceuticals.

The opportunity, then, is not to sell more into these markets. It is to help build them – and to do so profitably, by weaving Italian, European, Mediterranean and African production into a single value chain. The instrument that could make this possible is not a new trade pact or diplomatic summit. It is a technical mechanism buried in an EU trade convention: cumulation of origin.

A Convention Built For Exactly This Problem

The Pan-Euro-Mediterranean (PEM) Convention, whose revised version took effect on January 1, 2025, governs how goods moving between the EU, its Mediterranean neighbors and various partner countries qualify for preferential tariffs. Its rules of origin determine something deceptively important: not just where a product was assembled, but where, legally, it was “made” – and therefore whether it earns duty-free or reduced-tariff access to the EU market.

This matters enormously for Italy. Italian manufacturing has never been a closed, domestic affair. It thrives on taking in materials, components and know-how from across the globe and adding the value that makes the finished product distinctly Italian. If that is the country’s competitive edge, then the ability to legally distribute stages of production across several countries – without forfeiting preferential access to the EU – is not a bureaucratic footnote. It is a strategic asset.

The Mechanism: Diagonal Cumulation, Explained Simply

The specific tool worth understanding is called diagonal cumulation. In plain terms, it allows materials and processing from multiple partner countries – not just two – to count toward a product’s “originating” status, as long as those countries are linked through a shared network of preferential agreements.

Picture an Italian company that weaves fabric and ships it to Tunisia, where it is cut and sewn into a garment, using additional materials sourced from Morocco. Under diagonal cumulation, provided the EU, Tunisia and Morocco meet the conditions set out in the PEM matrix, the Italian and Moroccan inputs can count toward the garment’s origin. The finished product, though manufactured in Tunisia from materials gathered across three countries, may still qualify for preferential tariffs when it enters the EU.

That is the essence of the mechanism: production can be scattered geographically without being penalized for it. A company simply needs to confirm, first, that cumulation is permitted between the countries involved (via the PEM matrix), and second, that the finished good satisfies the specific “list rule” for its tariff classification, set out in Annex II of the Convention. Depending on the product, that rule might require a change in tariff classification, a cap on non-originating materials, or a specified manufacturing process.

One caveat is essential: not every trade agreement automatically applies the revised 2025 rules. Companies must check, case by case, which version of the origin rules governs a given commercial relationship.

Where Africa Fits – and Where It Doesn’t, Yet

Here is the honest limitation: the PEM Convention’s cumulation system does not currently extend to sub-Saharan Africa. Its direct reach stops at the Mediterranean’s southern and eastern shores – North Africa, the Levant, the Balkans and EFTA countries.

But its indirect value to Africa may be just as significant. By deepening productive integration across the Mediterranean, the PEM framework strengthens one shore of a bridge that African economies are simultaneously building from the other side – through the African Continental Free Trade Area (AfCFTA).

The AfCFTA is steadily creating a more unified African market, one where investment, production and distribution can be planned continentally rather than country by country. For Italian firms, that changes the calculus entirely. Africa stops being 54 separate, isolated destinations and starts looking like a set of interconnected markets organized around regional hubs and cross-border production corridors.

Put the two frameworks side by side and a pattern emerges: the PEM Convention smooths production across the Euro-Mediterranean space; the AfCFTA smooths it across Africa. Neither, on its own, connects the two continents. But together, they create the regulatory scaffolding on which a genuinely transcontinental value chain could be built – if companies choose to use it.

Why This Should Reshape Italy’s Economic Diplomacy

None of this happens automatically. The PEM Convention cannot, by itself, create a Euro-African free trade area, and it certainly cannot fix the potholed roads, congested ports and customs delays that still slow goods down at African borders. Its role is narrower and more technical: it makes the cross-border organization of production legally feasible, when the commercial conditions are right.

That narrowness, though, is precisely why it deserves more attention than it gets. Italian economic diplomacy in Africa has long measured success by export figures – how many machines, how much equipment, how many contracts signed. That metric misses the bigger prize. The more consequential question is whether Italian firms are embedding themselves inside the productive systems Africa is now constructing for itself.

This calls for a different playbook: pairing export promotion with investment promotion, trade finance with industrial partnership, and technical training with market access. It means helping companies navigate origin rules as a strategic tool rather than a compliance headache, while working alongside African partners to raise production standards and technical capacity – the groundwork that lets local industry plug into regional and global value chains in the first place.

The distinction matters more than it sounds. An Italian export is a single transaction. An Italian investment – one that transfers technology, trains workers and builds durable industrial partnerships – creates an ecosystem. And ecosystems, unlike transactions, compound. They generate follow-on business, attract further investment and give Italian companies a lasting foothold in African markets, rather than a one-off sale.

The Bigger Idea: Origin Rules as Industrial Policy

It is tempting to file rules of origin under “customs administration” and move on. That would be a mistake. These rules do more than certify where a product came from. They effectively help decide where it makes economic sense to produce something, which stage of manufacturing belongs in which country, and how the resulting value gets shared along the chain. In that sense, origin rules are not a footnote to trade policy – they are a quiet form of industrial policy, shaping investment decisions long before a single container ships.

Seen this way, the choice facing Italy and Africa is not really about how much Italy can sell southward or how much Africa can export northward. It is about whether the two economies choose to become components of the same productive system – Italian technology and industrial know-how, African resources and labor, African regional markets and European demand, fused into one architecture rather than kept as separate transactions.

The PEM Convention will not write that future by itself, and neither will the AfCFTA. But together they hand companies on both sides of the Mediterranean a set of tools sophisticated enough to make it possible. Whether those tools get used is, as ever, a question of ambition rather than regulation.

Danilo Desiderio serves as the CEO of Desiderio Consultants Ltd in Nairobi, Kenya, specializing in African customs, trade, and transport policies and is a senior associate to the Horn Economic and Social Policy Institute (HESPI).