00:00:00: Welcome to shaping sustainable Supply chains podcast where we discussed Supply chains worldwide and provide Solutions on how to make them more sustainable.

00:00:09: Today we will focus on Supply chains disruptions and african-european relations my name is Nicholas Martin thank you for listening.

00:00:17: Music.

00:00:30: The covid-19 pandemic has uncovered the weakness of Global Supply chains it also put a heavy Spotlight on the international dependence on China.

00:00:39: The sudden Halt and Supply in the People's Republic and the early days of the pandemic has caused trouble for many Industries.

00:00:46: Some products specially in the medical sectors were scarce like when she later is or masks.

00:00:52: The prices of many others increased heavily some governments were shocked by these developments so they asked and even gave incentives to bring production home

00:01:00: that's the best earned version of the pandemics effects on Supply chains but what about the African view on the developments today

00:01:09: we can discuss that with Bernice McClain she's a supervisor of the industrialization division at nippert.

00:01:16: The development agency of the African Union

00:01:19: she's talking to us from the city of Johannesburg in South Africa thank you for being with us thank you very much Happy happy to be here thanks for the invitation.

00:01:27: And joining the discussion from Berlin is dr. Melanie Miller she's a senior associate with a focus on Southern Africa.

00:01:34: And head of a research project on transnational approaches.

00:01:38: For sustainable commodity Supply chains at the German Institute for international and security Affairs thank you for joining us good morning thank you for having me.

00:01:48: Bernice you have been working in the area of development and industrialization for more than 20 years

00:01:55: in different agencies such as the World Bank as well now you working at nape at the development agency of the African Union

00:02:02: Nepal is trying to push projects on industrialization economic integration environmental sustainability and other areas for the member states of the African Union.

00:02:13: When you experience this massive first shock of the pandemic on trade and Supply chains.

00:02:19: Did you fear that this could rapidly undo years of the organization's work

00:02:25: yeah the impact on trade and Supply change so far has been very very heavy so some of these these impact obviously included

00:02:33: the shutdowns of travel of movement of people and goods to try to mitigate some of the the spread of the pandemic and this is really had a vast impact not only on the on the formal

00:02:47: Supply chains but sometimes more significantly on the informal Supply chains which has had more of an impact on.

00:02:56: Populations who have slightly more vulnerable than some of the others

00:03:15: in the early days of the pandemic many countries started calling for manufacturing to be brought back home.

00:03:21: These countries were triggered by supply chain bottlenecks and shortages of medical equipment.

00:03:27: Nearshoring describes the relocation of production to nearby countries reshoring goes even further.

00:03:34: Reshoring seeks to reverse the globalization of Supply chains all together bringing the entire manufacturing chain back to the domestic Market.

00:03:43: Both concept aim at making Supply chains more resilient and able to withstand Regional and Global shopping.

00:03:50: And they aim to reduce dependency on foreign markets and countries.

00:03:55: Such as China Bernie's some governments actually even promised incentives to shift the production back home.

00:04:02: Could you tell us more about the debate of reshoring in nearshoring within the African Union.

00:04:09: I think within within Africa specifically I think they

00:04:13: the awareness of our dependence on external Supply chains and the impact of the interactions of those Supply chains has really stimulated more thinking around you reassuring and assuring I think this

00:04:28: this conversation has been going on

00:04:30: and would have been going on anyway with the intended operationalization of the African continent or Free Trade Agreement

00:04:40: where we recognize the need to build.

00:04:43: Local markets Regional markets and to supply those markets to increase our resilience as a continent and specifically increase the resilience of certain countries

00:04:56: that's really do rely heavily on external

00:05:00: good to operate and I think the the main idea or the main thoughts at this stage are are really for Africa to try and diversify rather than either relying on you know purely on globalization and on global markets or purely unusual ring

00:05:16: reassuring but rather to to have a combination that is appropriate for the continent and for the countries and the regional Corridor specifically.

00:05:26: And to diversify its offerings its markets and its trade links

00:05:31: so let's bring in the European perspective Melanie you are specialized on the African continent but you're also observing the political reactions to the pandemic from the middle of Europe in Berlin

00:05:43: where do you see that discussion of Neo Shoring and reshoring in Europe going right now.

00:05:49: I can observe a debate which is focusing on four different aspects first of all it's the possibility of multi-sourcing which means to obtain resources from different.

00:05:59: So this is what different regions then diversification of Supply chains that's what Bernice just mentioned also the potential that.

00:06:09: Rewritten realization of the economy a debate that is happening in the European Union at the moment and also the relocation of strategic production.

00:06:19: And I think it's important to understand that there are geopolitics behind it I mean there's the trade conflict between China and the US

00:06:27: and also for the European Union brexit and the negotiations between the EU and the UK

00:06:34: you know also play into that debate so I would also say that we would have had this debate anyway.

00:06:42: But the pandemic has enforced it you just mentioned the political debate but.

00:06:48: When you look at the industries I mean there is a lot of rhetoric say about reshoring in nearshoring but do you see that reshoring is already happening in Europe.

00:06:58: Where we theaters in India or in Japan at the moment these are countries which are trying to create incentives for companies that produced in China

00:07:07: and so the relocation of their Industries like creating incentives for the industries to relocate that store that's the proper description

00:07:16: could reduce the strong dependence on China in the Asian context.

00:07:21: I mean I would say in Europe we could not observe such developments to very large extent

00:07:26: but the debate is there and that means you know it remains to be seen what is going to happen in the next

00:07:32: years there's one example I would like to point out and it's the example of the health sector

00:07:38: France has an action plan for reassuring research projects and Manufacturing sites for Health Products in France and Europe and so the ideas to support the European health production in general

00:07:52: because the majority of the pharmaceutical products consumed in Europe where produced and Asia so this is one area

00:07:59: where we see it happen we ready and I mean.

00:08:04: Depend emic you know still ongoing I think it makes sense to talk about the strategic relocation of these industries.

00:08:13: If you look at Europe again and the debate on reshoring a niche nearshoring do you think a strategy of reshoring is actually possible and realistic for the European Union.

00:08:23: I think for Europe it's not really realistic I mean we can talk about.

00:08:28: I'm relocating certain sectors in order to become more resilient and you know have.

00:08:34: Have Industries bringing Industries closer to home so to say so that we are not

00:08:41: that dependent on disruptions and other regions that at the same time if you look at the European Union and its certain sectors we simply can't relocate I'll give you one example Germany as an export-oriented economy is highly dependent on the import of minerals and metals

00:08:59: and the demand for raw materials such as copper or platinum for example

00:09:05: will increase in the next years because of the digitization strategies and the energy transition that is ongoing already here so that means we need more minerals and metals.

00:09:17: Most of them are sourced in countries of the so-called Global south I mean South Africa for example is one of the biggest exporters of platinum we simply don't have that in Europe and that means.

00:09:31: In those areas we won't be able to restore on your show so we have to import

00:09:36: metals and that's why I think you know we also have to have this debate about sectors and dependencies and certain sectors not only talking about regions.

00:09:47: We do observe that a similar idea to reshoring and nearshoring is also becoming stronger among African politicians and the pit.

00:09:56: Has made this school of thought with the name building back better and more relevant than ever before.

00:10:02: Let's have a listen building back better means increasing the resilience of communities against disasters and shot.

00:10:11: It does so by strengthening local infrastructure and capacity it was first introduced in 2004 following the Indian Ocean tsunami.

00:10:21: The idea is that the period following a natural disaster presents a unique window of opportunity to introduce resilience

00:10:28: and to eliminate the root causes of vulnerability within a community.

00:10:32: The concept has gained significant Traction in recent years particularly in light of the covid-19 pandemic.

00:10:39: Policy measures actually fall under the term building back better is still up for debate and highly context.

00:10:47: Bernice highly context-specific the African Union has often referred to the concept of building back better what does this mean in an African context

00:10:56: so freaking context of building back beta can be seen through the impacts that we've observed from the pandemic.

00:11:03: I mean obviously the conversation has started previous to this pandemic where we realized that certain sectors of the population or not.

00:11:10: I'm not supported to the extent of being able to contribute meaningfully

00:11:16: in a sustainable and Equitable way to the economies and are facing greater challenges to livelihood and so on so that awareness has as I said before has really been exacerbated by viewing the impact of the.

00:11:31: Of the pandemic and the shutdowns and drop the supply chains and so on

00:11:37: so the building back better really focuses on a more sustainable and more Equitable approach to development on the continent where by our policies or responding to.

00:11:49: The needs that are felt

00:11:51: by not only big business obviously very important but also responds to informal markets and informal Traders lower-income actors

00:12:05: and I'll speak primarily from the perspective of industrialization here you know we have many many lessons and best practices coming

00:12:14: from other areas of the world and from decades past in industrialization but those are not necessarily appropriate for Africa in the current context the current really diverse and dynamic context of

00:12:28: the different African countries not

00:12:30: all countries are at the same economic level we have a lot of iniquity and gaps and you know in our Economic Development so we need to look at building back better in terms of

00:12:44: I'm looking at alternative opportunities that may be offered

00:12:48: I'm through Pathways for industrialization like you know this is a nation or the fourth Industrial Revolution.

00:12:55: And to see how we can best participate in these upcoming Pathways that are appropriate for specific African context and really respond to the needs and the.

00:13:07: Comparative advantages that we have on the continent.

00:13:10: Melanie now that you hear that perspective what do you think that you could and also maybe should do to support the African Union to build back better

00:13:18: well I think the European Union has to carefully observe the debates and discussions that are going on in the African Union at the moment

00:13:27: and I very often observe like a mismatch of perception so to say because like Bernie said in many countries

00:13:36: job creation you know asset to Sender of the concerns

00:13:40: and I think covid-19 you know and the effects that it will have has.

00:13:47: Or will accelerate these demands because many African countries are in the middle of the debt crisis and

00:13:55: many people lost their jobs some countries were not able to create Financial stimulus packages during the commit pandemic so I think.

00:14:05: It's very likely and we see it already happening that social inequality will increase be seated

00:14:10: you know in a global level we even observed that in Europe and I think for some African countries the situation is much more dramatic.

00:14:18: So I think even though they are.

00:14:20: Like good concept for European African cooperation that are being developed between the EU and the Au I think it is very important to keep in mind that everything that we develop.

00:14:32: Has to take into account these necessities

00:14:36: on the African continent in the demands that are there and I do think that we have to observe these developments not only.

00:14:44: At the Mau level but really on a local level like you know looking at.

00:14:49: Developments in certain countries and maybe also certain regions and I think there still homework to do for European decision make this book because we

00:14:58: and Europe tend to look at the African continent as you know one continent and be very often neglect the differences within regions and also between countries

00:15:10: Bernice.

00:15:11: Looking at the needs once again one of the current need is obviously the access to vaccines and The Economist recently reported that

00:15:20: many African countries might not be able to access covid-19 vaccines before spring 2022

00:15:27: in Europe and the US the majority of the people might then have already received the vaccine

00:15:32: given this scenario of this very unequal distribution is there a you still perceived as a reliable partner in the African Union.

00:15:41: You know as you said there's been an unequal distribution a lot of the high income countries have thought or secured

00:15:49: more doses than have been required you know some countries have secured more than than three doses per capita well you know many countries in Africa have only managed to secure less than one dose per capita

00:16:03: so I think we are viewing the global context of vaccine demand and supply

00:16:09: with trepidation we view this as a global challenges faced by everybody that should actually be.

00:16:16: Addressed globally in an equitable way so I think whatever support.

00:16:22: And whatever assistance can be provided by our partners such as Europe us UK will obviously be welcome.

00:16:30: I think we need to look at this as a as a Cooperative approach to dealing with this pandemic well you can't go about it on an individual basis it needs to have a global solution to it

00:16:42: Melanie what do you think is the use sidelining itself with this very eurocentric approach on the other hand we have China.

00:16:51: Was one of the first players to actually deliver protective equipment to Africa now they're also delivering vaccines.

00:16:58: Do you think the do is sidelining itself well I think at least we can say that you was very much concerned with itself and it also has a lot to deal with at the moment

00:17:12: I think the question for me is now if Europe will be able to also look at the bigger picture like

00:17:19: Bernie set not only focusing on individual country strategies or like a regional strategy but rather to think of

00:17:27: what does it mean for the global economy and globalization and global trade relations if we produce like inequitable

00:17:35: access to the scenes and thus maybe exclude certain regions from from access to two vaccinations there and of course is it's very important to look at the bigger picture.

00:17:48: I mean I would say there is there was also a competition almost going on between and it is always happening between China us Europe.

00:17:58: With regard to the question who is a reliable partner to African countries and to African economies so I think if

00:18:07: Europe wants to be an attractive partner it also has to deliver and it also has to acknowledge that it needs to support different regions and also the African Union

00:18:17: I wouldn't say that Europe is necessarily sidelining itself and I think one has to be fair and acknowledged that a lot has happened on the bilateral level also the European Union has supported

00:18:28: the African Union also would regard to the implementation of the African free Continental trade area.

00:18:33: So I think there is a lot going on I just think it's sometimes not as visible.

00:18:40: As it could be also when you compare it to China's mask diplomacy Europe there is going back to the topic of Supply chains

00:18:48: there is a debate going on on Supply chains laws this means that companies could be held responsible if they do not comply with human rights in their supply chains.

00:19:00: Let's have a listen in April of 20/20 the EU Justice commissioner announced the European Union's will to work towards a mandatory system.

00:19:10: Requiring companies to adhere to Human Rights due diligence and environmental standards along their supply chains.

00:19:17: The initiative was lauded by large parts of parliament civil society and business associations.

00:19:23: Still there are many critical questions that remain unanswered how will the law be enforced which companies will be.

00:19:31: And who will be made responsible in the event of human rights violations or environmental damage.

00:19:37: Germany just announced to pass such a law this summer it could then be applied in 2023

00:19:44: how do you observe the European discussion Bernie's on making Supply chains more responsible with respect to human and environmental rights

00:19:53: it's a critical issue I think this is a positive step forward from the perspective of Africa you know a significant part of our agenda 2063 is linked to Human Rights standards.

00:20:06: And specific parts of it are explicitly grounded in specific human rights treaties

00:20:11: and thereby linked to Human Rights mechanisms that supervise the implementation of those treaties it also emphasizes to a large degree Environmental Protection so so we completely aligned with with it

00:20:23: as mentioned before you know that African Union seized diverse sourcing and digitization as key to building back stronger and smarter.

00:20:31: More resilient and Equitable Supply chains and I think the the human and environmental rights protections are a key part of this to ensure a lasting recovery and building back better.

00:20:43: Melanie in this podcast we focus on sustainable Supply chains one of the self-proclaimed two goals of European cooperation with Africa is sustainability.

00:20:54: Where do you see potential areas for cooperation and challenges in this matter.

00:20:59: I think it would be a very strong signal if European companies would be held accountable for the violation of Social and environmental rights across the entire production chain.

00:21:10: And I think it's very important to include the perspective of other regions and also you know good to hear it that.

00:21:18: You know this is important for the African Union as well and aligned with African priorities so that's one important aspect.

00:21:27: I think there is one.

00:21:29: Key question even on a European level but also with regard to trading partners at the end implementation is key

00:21:39: I mean we can have many great Concepts but companies you know need to be able.

00:21:45: To do Dario like human rights impact assessments for example but also in certain countries and

00:21:53: like sudden trading partners they need to be able to implement higher standards

00:21:59: some might be others are not so familiar question as how to capacitate those core help capacity to help countries to improve their social and environmental performance because if that doesn't happen then it would mean that.

00:22:11: They might be excluded from certain Supply chains because they are not attractive trading partners

00:22:17: so I think this will open up a whole new area also for development cooperation in order to capacitate countries but also certain industry to be able to meet these standards

00:22:27: if we look at Supply chains once again and making them more resilient Bernie sweaty you see common interests of the European and the African Union's.

00:22:37: I think you live are many many opportunities I think the the free-trade area also provides opportunity for looking at the issues of standards and I think absolutely agree they that

00:22:47: increasing capacity and resources to our national standards authorities as well as the

00:22:54: the bodies and the processes that are trying to loosen a regional trade.

00:23:02: I think is a really critical area that needs some some further assistance and is a critical area for collaboration you know on

00:23:11: in Africa we have an organization that is dealing primarily with standards harmonization and time this freaking Organization for standardization and they were working very hard to try to facilitate the operationalization of the free trade area

00:23:25: in terms of Regional Supply Chain so I think you know working with the national authorities and the regional economic communities to achieve that

00:23:33: so I think these are these are critical areas where we can collaborate further on.

00:23:38: And as I said we just we just need to articulate clearly what we need and where we see.

00:23:44: Potential for Investments not only through you know development funding but specific investments into our Industries and not only the large Industries but right across the the broad spectrum

00:23:56: Melanie Bernice just mentioned African Continental free trade area AF c-- FTA which started this year after it was first postponed due to the pandemic

00:24:06: from the European perspective on looking at Supply chains making them more resilient is there a fc FTA a chance.

00:24:15: Yes of course I think it is and I also observed that many European decision makers observed implementation of the FTA with interest.

00:24:27: To be honest I think it might be too early you not sure if Bernie's would agree but I think it might be too early to talk about.

00:24:35: The chances for Europe

00:24:37: because I think there's still a lot going on on the African continent with regard to the implementation of the AFC FTA but I see a lot of potential and like we said it's also the question of

00:24:49: for example social and environmental standards and both regions and how this can be aligned but also looking at

00:24:54: different sectors I would could facilitate trade between two regions I think there are many opportunities and I think

00:25:03: it would of course be easier

00:25:05: to have like two regional trade areas product the European Union and the African Union that could tell negotiate negotiate this on a regional level rather than on the country to Country level.

00:25:19: So I see various opportunities but we also might.

00:25:23: Have to wait a little until you know just development also unfolds a little more what do you think Bernie's.

00:25:30: Yeah you know I think from from the perspective of having to wait a while I wouldn't necessarily agree with it I think there are a number of initiatives that are underway that are contributing to.

00:25:42: To building local markets looking at regional trade corridors.

00:25:47: Many examples coming from Europe many many lessons coming from the EU that we can learn from

00:25:54: and see how to apply to Africa or see what we can take from those lessons in Africa and I think that's.

00:26:02: That's underway already there are projects that the EU supporting and in specific sectors

00:26:09: for example fisheries and aquaculture that think you know really are addressing some of the key issues

00:26:17: in terms of not only

00:26:20: governance of our resources in Africa you know improved governance of our natural resources and an improved utilization of on a sustainable basis but also the trade aspect so

00:26:31: you know I think I think we just need to be aware of looking at the existing activities with a with a certain lens to see how we can

00:26:42: best contribute to the to the operationalization of the AF c-- FTA

00:26:47: thank you so much for giving us this Insight supply chain disruptions and african-european relations that was our topic today with me from South Africa was Bernice McClain.

00:26:58: Supervisor of the industrialization division at nippert the development agency of the African Union.

00:27:06: Thank you for your time and dr. Melanie Miller from the German Institute for international and security Affairs thank you for joining us.

00:27:14: This podcast is brought to you by the research Network sustainable Global Supply chains which brings together up to 70 leading researchers from around the globe and is hosted by for German Institutes.

00:27:27: And the next episode we will have a deeper look at inter African Supply chains in the agricultural sector.

00:27:33: I'm Nicholas Martin thank you for joining us stay tuned and stay safe.

00:27:39: Music.