Paper short abstract:

Using input-output data for Africa, with a case study on EAC, this paper argues for increasing value-addition in SS trade as a key aspect of building back better from Covid-19. It further explores the role of South- South digital cooperation in achieving this.

Paper long abstract:

Covid-19 has exposed Africa’s reliance on GVCs for access to essential products in a major way, leading to a now increased focus on South-South trade and regional VCs for economic recovery. This paper focuses on value-added in SS trade as a key aspect for development. While EU accounts for 42% of Africa’s total exports, it represents 62.8% of Africa’s value-added exports (VAX), with China and India together accounting for just 5% of Africa’s VAX. Even within Africa, countries exporting outside their regional economic community (REC) are doing better in VAX. The paper use input output data from UNCTAD EORA and finds that EAC countries’ value addition is higher in extra-regional exports than intra-regional exports, particularly in services sectors of hotels and restaurants, transport services and post and telecommunications. The average domestic value-added share of post and telecommunications in extra-EAC trade is 48.5% but only 9.4% intra-EAC. The lower domestic value-addition in SS trade maybe linked to industrialization and harmonisation challenges and lower digitalisation. The paper scopes out the role of boosting domestic value addition by digital services across sectors for boosting SS trade in Africa, and further identifies priorities for South-South digital cooperation for a win-win situation and collaboration across the global South.