As COVID-19 spread around the world, it became clear that all economies would be affected by it. However, it was also evident that all economies would not be affected to the same extent. Some were better prepared for the combination of risks and challenges that the pandemic presented. One of the characteristics that enabled economies to avert some of the damage that the pandemic wrought was through broad-based, active adoption of technology. Examples of this were how more digitally-inclined firms achieved greater supply chain visibility, enabling the avoidance of bottlenecks and had enhanced capability to activate different supply bases relatively quickly, retaining their ability to remain active.
China has been a central node of global supply chain systems because of its comprehensive industrial base and development of highly integrated supply chain infrastructure. Well before the Covid-19 pandemic, it became apparent to public and private sector players that continued competitiveness would depend on an active adoption of digitalization. This took the shape of an unprecedented migration to e-commerce, increasingly automated warehouses, the incorporation of artificial intelligence (AI) and the internet of things (IoT) technology, and the adoption of a range of tools enabling greater visibility across the supply chain. This benefitted players across the business spectrum in China, from the largest companies to the trader on the street corner, boding well for sustained economic growth, particularly over the last decade. The overall impact has been a drastic improvement in efficiency and supply chain security, two critical attributes in the post-Covid-19 world. The already pervasive digitalization enabled continuity in many core industries when movement of personnel was restricted, translating into a high degree of resilience that was not achieved in many other economies.
Developing the infrastructure and systems to carry an increasingly digitalized supply chain is a significant undertaking, requiring significant capital outlay and a greater emphasis on developing digital skills. But, what can be learned from the China example is that this is a wholly worthwhile exercise and will most likely become inevitable. Investing in infrastructure, skills and innovations that support a more digitalized supply chain should become an imperative among business leaders and both governmental and non-governmental development agencies in Africa. To enable more broad-based participation in the digital economy, continued efforts to expand internet penetration and digital inclusion in general, are important.
In this context of proliferating risk, the most vulnerable economies, such as those in Africa, must adopt an attitude of agility combined with preemptive interventions. This is the way to considerably minimize the impact of unexpected shocks, which tend to affect these economies most severely. Within the current climate, an active adoption of technology and digitalization is crucial. With trade being a core pillar of economic vitality, leveraging technology to improve efficiency and security of supply chains is essential. China’s success in the wake of the Covid-19 pandemic is evidence of this.
“This article is produced by Axis Group and is published in The Econometer section of ChinAfrica magazine (February 2021), an English and French language monthly publication that provides news, views and analysis on all things China, Africa and China-Africa relations.”