By Jennifer Freedman
Africa can position itself strategically and develop a regional response to avoid healthcare product shortages similar to those triggered by the Covid-19 crisis. That’s the main message of Medical Industries in Africa: A Regional Response to Supply Shortages, a new International Trade Centre (ITC) report.
The Covid-19 pandemic has severely burdened the global health system, driving a surge in demand for medical supplies such as masks, gowns and gloves. The World Health Organization warned in early March that international production of such goods – known as personal protective equipment – would have to ramp up by 40% to meet demand.
Africa sources just 8% of its health-related products from African suppliers. But the continent can become competitive in some of these goods while combating the crisis and building its own resilience to future pandemics, the ITC report finds. The African Continental Free Trade Agreement has a key role to play in supporting the regional medical industry, it adds.
“We examine the potential of the African medical supply industry and show how trade can be an important element of the continent’s health response, both in the short and long term,” says Dorothy Tembo, ITC’s ad interim Executive Director. “We suggest a strategic mix of open markets, diversified procurement and stronger regional value chains” to position Africa strategically in the future trade landscape of the global medical industry while safeguarding the health of Africans.
Keeping the regional market open for essential health products is critical, the report says. ITC business surveys on non-tariff measures have found that companies in Africa frequently struggle to import medical supplies because of inspections and customs charges. In addition, tariffs are relatively high: African countries apply a 10.3% average tariff on these items, compared with 7.9% in non-African developing economies and 2.9% in developed countries.
The report urges African governments to review import regulations and consider temporarily lifting tariffs, taxes and other restrictions that hinder access to these goods – especially as the continent has limited sources of such products.
Regional value chains would help diversify global supply
That’s why it’s also important to diversify suppliers, the report notes. Africa imports roughly 90% of its medical products from the European Union, China and India.
The report urges policymakers to consider regional suppliers with export growth potential. Diversifying would reduce the impact of export restrictions on essential goods and make the continent less dependent on just a handful of foreign suppliers. The report identifies Egypt, Ghana and South Africa as viable alternatives for products such as disinfectants and adhesive bandages.
Governments also should help build up Africa’s capacity to produce key medical supplies by developing regional value chains, the report says. Although the continent produces many of the inputs used to manufacture health-related products – such as rubber, fabrics and ethanol – these goods are often exported without any transformation.
Policymakers could support the development of regional value chains by channeling investments into these sectors, the report says. Furthermore, they could leverage negotiations in the context of the African Continental Free Trade Agreement (AfCFTA) to keep trade functioning smoothly along these value chains – for instance, making sure these vital goods trade duty-free within Africa and that other regulations are harmonized.
“Tariff cuts and trade facilitation measures to support the free flow of health products and their ingredients regionally will be an important step in supporting regional value chains in selected medical products,” the report says. “Such measures will help build the continent’s resilience to global health crises and diversify the global supply. It remains important for the AfCFTA negotiations and implementation to prioritize these aspects.”