Rajkumar Mayank Singh, Tony Blair Institute (TBI) Strategic Advisor to the Government of Rwanda, Antoine Huss, Regional Lead, Francophone West Africa, TBI, Jonathan Said, Head of Inclusive Economic Growth, Africa, TBI, and Kekeli Ahiable, West Africa Analyst, TBI
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
The World Health Organization (WHO) predicts that around 22% of Africa’s population will be infected by COVID-19 within a year, possibly resulting in 150,000 deaths. In a recent forecast by Kearney, even in a suppressed pandemic progression scenario, demand for medical gowns, gloves, masks, swabs, and hand sanitizers will surge by ~1,600 percent from the baseline. In such circumstances, weak health systems and a lack of essential medical supplies leave countries in Africa particularly vulnerable.
Governments around the world have been panic buying essential medical supplies, while the World Trade Organization recently reported eighty countries that have introduced export prohibitions restricting the global supply of medical equipment. In 2018, as depicted in figure 1, industrialised countries like the U.S.A. and Germany had the largest market share in global export of ventilators and testing kits, while China led exports of face masks globally. With African countries importing most of their medical needs, panic buying and supply chain disruptions will significantly undermine the ability of African countries – and hence the world – to defeat COVID-19.
Figure 1: Global Export of medical equipment in 2018
Source: TBI Analysis, World Trade Organization
Apart from sourcing essential medical supplies through imports and donations, several African governments have turned to domestic production through a mix of foreign investment and repurposing or scaling up parts of their manufacturing sector. In Africa, repurposing may not only help address immediate shortages in medical supplies but may also help ensure a revenue source for factories to keep workers employed while paving the way to accelerate the continent’s industrialisation agenda.
Manufacturing subsectors with scope to repurpose
The Tony Blair Institute for Global Change (TBI) recently published a guide for African governments on how to repurpose their manufacturing sector. Several subsectors, as per figure 2, can be repurposed to produce medical equipment, whether temporarily or otherwise, the time for which varies based on the level of complexity involved.
Figure 2. Guide for repurposing manufacturing
Source: TBI Analysis, World Economic Forum, Kearney
Repurposing production lines in the beverages, oil, distillers, and perfume subsectors (to produce liquid disinfectants such as hand-sanitizers) and in the garment and textile industry (to produce personal protective equipment, commonly called PPE, such as face masks) is relatively easier. However, shortages of raw materials and arduous regulations can create difficulties and cause delays in production. Other subsectors such as electronic, chemical, technology, and automotive are generally more adept in repurposing their manufacturing capacity to produce diagnostic and clinical care equipment like testing kits and oxygen cylinders. The process, however, is relatively complex and requires more time, co-operation and regulatory adjustments. Producing clinical care equipment such as ventilators and drugs requires the most complex level of repurposing, needing several weeks, if not months, and a lot more internal, cross company and government support, as well as regulatory approvals.
African repurposing initiatives
Currently the only African country south of the Sahara that has a sizeable market share in global exports of medical equipment is South Africa. From the onset of the pandemic, South Africa was quick to mobilise local manufacturers to produce ventilators through its National Ventilator Project, which aims to produce 10,000 units by the end of June this year.
Other countries that are encouraging repurposing initiatives include Kenya, Ethiopia, Ghana, and Senegal. Based on our analysis (shown in figure 3 and 4) most repurposing initiatives on the continent focus on producing PPEs and sanitizers, with only two initiatives manufacturing testing kits, in Kenya and Senegal. Educational institutes as well as textile and beverage companies are emerging as key drivers of these repurposing efforts, with PPEs like masks and gowns in large-scale production phase and ventilators in the prototype phase. A case in point, Mologic, a UK diagnostics company, is partnering with Institut Pasteur’s new diatropix facility based in Dakar, a local research institute and manufacturer, to develop and produce eight million rapid testing kits. This aims to significantly ramp up testing capacity and in turn enable Senegal and possibly neighbouring countries to conduct mass testing and screening. Such joint ventures between international and local manufacturers and institutes have the potential to boost African countries’ ability to rapidly scale up medical equipment production.
Figure 3: Number of repurposing initiatives, per focus country
Figure 4: Subsectors repurposing to medical equipment, per focus country
Source: TBI Analysis, Forbes, QZ, Washington Post
What can governments do to facilitate repurposing?
Manufacturing companies in Africa that are repurposing or scaling up production face several constraints in scaling production, including procuring raw materials, technical expertise, and equipment financing. African governments – backed by their development partners, and in particular development finance institutions (DFIs) – should take a comprehensive view such that ministries and agencies can play a key facilitation role in addressing major bottlenecks across the manufacturing value chain. Practical actions governments can prioritise span three key areas:
- Supply chains
- Address immediate forex requirements with central, local and international banks.
- Assess and facilitate input financing or working capital required by the companies, for example via dedicated credit lines.
- Facilitate discussion and support negotiations with global suppliers of raw materials, primarily via the WHO and its partners.
- Production lines:
- Set minimum skills requirements and run recruitment and training programs.
- Develop standards and regulations to ensure safety, functionality, efficacy, and product quality.
- Set up working groups with manufacturers to gather regular feedback, learn and adapt.
- Implement streamlined and accelerated certification processes.
- Facilitate purchasing intents and agreements necessary for investments needed in scaling up production.
- Support fundraising efforts with investors and DFIs to ramp up production.
- Distribution channels:
- Provide government-owned storage, transport and equipment required to distribute products.
- Enhance digital platforms to place orders as well as online and mobile banking to make payments.
With targeted support from government and partners, repurposing initiatives have the potential to mass produce essential medical equipment and reduce average unit costs, thus enabling African countries to better equip and protect their healthcare workers and citizens against the current pandemic and future health crises. They also help reduce job losses in the manufacturing sector, saving forgone revenues for local SMEs in the value chain, while enhancing longer-term industrial capacity and export potential. Depending on projected demand as well as current policy choices as part of emerging national and regional health and economic recovery plans, repurposing may also become an attractive, longer-term value proposition for global manufacturers looking for investment opportunities in Africa’s growing consumer and innovation market – thus spurring Africa’s industrialisation.