The importance of value addition for developing countries

Africa is packed with natural and mineral resources, but it’s mostly just selling raw materials to the world without really adding any value. So, they end up buying back the same stuff they exported, but at a much higher price. What they send out unprocessed comes back at ten times the cost of what they originally sold it for. Take oil and gas, for example. Countries like Nigeria and Chad are rich in these resources but have no refineries, so they end up importing processed petroleum products like gasoline and cooking gas. Then, consider the rare earth minerals like lithium, cobalt, copper, diamonds, gold, and more. Countries such as Angola, Burundi, Chad, and others are dealing with these valuable materials but still pay way more for processed goods than what they initially sold. This whole situation clearly shows that developing nations need to start adding value to their products. There’s a big gap between developing and developed countries when it comes to this. Until developing countries quit exporting raw minerals and stop relying on pricey imports of processed products which is pretty much the norm for many African nations they won’t be able to compete on a global scale. The world is competitive, and unless these countries start making moves to change the game, they’ll just keep falling behind.

Are you sure if your business can run smooth without get attacked by mafias? The problem in developing countries are much more complex than just your idea to improve the country, your risk aren't only bankrupt, but you're risking your life too. What you see now is like a system, where there are many people depend on that to feed their families. If you want to change the system, you have to deal with people who work on the previous system, they will see you as a threat to their life.

There is a degree of added value being created in places, but unfortunately Africa has many faults that are yet to be corrected. You need effective transportation networks to move goods around, often these resources have a hard enough time just making it to port. Then you need all the legal structures and related facilities that are trusted (not to take bribes among other things) which are in a weak state in many countries on this continent, otherwise successful businesses can end up getting hijacked and crumble back to nothing. These are just the foundations, if you can work your way to getting those right then you can start to formulate a wider supply chain - advanced tech requires all sorts of components to be sourced and assembled in a cost effective manner, so ideally you have lots of small producers in a tight geographic area for key components and can import the rest. In summary it's too simple to say that they have the raw ingredients so should be able to create everything. Places like China made huge leaps in just a few decades, but that required a plan with a lot of effort and sacrifice.

This is an old discussion especially for Africa and it is highly overdue. The sole reasons why African leaders are not even interested in exporting finished products is definitely laxity and corruption, they want as fast money as they can lay their hands on to be able to recoup the investment they made during elections which is usually monetized. The election budget of one of the political party of my country the last time we had a general elections was over $1b, money they definitely borrowed overseas to fund the elections to be repaid with natural resources. This was part of the reason they made some economic blunders foisted on them by IMF, and have crashed our economy thereby sending people to poverty. As long as Africa continue to practice democracy, forget about development and industrialization because the Chinese mistake cannot be allowed to happen in Africa. In other words, our elections will continue to be manipulated and the worst of Africans chosen to lead them to death and there is hardly anything anybody can do about it.

The fact that those countries supply raw materials to developed countries is necessary for the system to keep running. Because as long as those countries are exploited, developed countries can live in prosperity. Cocoa workers do not even earn as much as the price of one chocolate bar per day.

There is no room for 'what the future will bring' in my country, we have all the resources but the leaders in power are all clueless and yet they are termites, they want money pretty faster and whatever can look like future investments they would rather change it for cash in hand today. They are hopeless and clueless piece of trash, if these so called leaders can just see how powerful Bitcoin could have become they would have mined thousands of it because there is gas/dam and others to get the job done, but they don't believe in future, not to talk of something like Bitcoin. Fast forward to today, Bitcoin have create it name for itself, adoption everywhere, how many Africa countries are you seeing that are adopting Bitcoin? It's only the citizens that are buying Bitcoin, is that not a big shame? If I have to put UK side by side to my country, we are still 50years in the past.

So open a LTD elsewhere and start working. To stick your head in the sand won't bring any positive change. I bet there are at least 5 countries who are worse off.

yeah they should add. but what about if the dictators that leading the country doesnt want it. they generally enough wealthy and they are against their citizens to have better income and better life.

Limited knowledge and limited infrastructure to innovate and pressure from the system that was created, the price of raw materials is suppressed in such a way that farmers do not get returns that give them big profits, this does not happen to cocoa but other natural resources, such as mining both earth minerals and oil, developing countries only become suppliers of raw materials, then processed by producing countries and then returned with finished goods at a higher price, most developing countries are trapped by developed countries from the side of cooperation signed by corrupt officials in developing countries.

Universal truths are toxic because current system is engaging in illegal things for decades its never been easy for anyone to stand against this peoples suffering even they are having enough sources. Developed countries buying their leadership and enjoying their system with our sources which are going cheaply to them because they are giving commission to our corrupt leadership which is taking their share and giving us just which is enough for living minds are controlled, but few things are surely going to happen nature will take revenge, and they will face consequences. Developing countries have enough sources, but sadly they fail to bring latest technology which change their ways and give them better lives which are their right fewest peoples try to stand but due to poor support they fall down.

Nobody is stopping Africa from producing not just only raw materials but refined materials as well, what is so hard that the African countries cannot buy the machines that are required to produce finished goods, hence you know that the value for a finish goods is much more than that of raw material, then start producing finish goods and export them to the west. In Nigeria my country, there are refineries that were built by the government but so far those refineries are not functioning, so what we do is to sell the raw materials which is the crude oil, however nobody has stopped us from making our refineries to function and having those finished materials for our local consumption and also exportation, so I wouldn't want to blame any western country if they buy a raw materials from Africa, nobody has stopped Africa from producing finish products.

Sometimes I don't want to discussed about Africa because is as if we don't know what we want, the truth is, African leaders don't think well, they just think about how to manipulate the people on how to rig themselves into power, the economy is not actually their business, what matters to them this at all time is their selfishness and how to loot their own countries where they are leaders very dry, how will Africa grow when what the president of my country do is politics and nothing else, I just wish the western and other developed countries will ban them from coming to their countries but that's not possible because we will.boroow foolishly from them to finance something that's not worth it, when ever i write about my country, I feel very bad and for that reason I will have to end this here.

First developing countries doesn't comprise of African countries alone there are lots of developing countries in Asia, south/North America, even in Europe and other places. Well the same reason why developing countries is giving out their natural resources cheap and crude Only to buy the usable version expensive is the same reason this developing countries are in the situation they find themselves in the first place. The major reason for all this is bad government. These bad government are already enriching themselves selling this resources crude and they won't want to use any money from the government to set up refineries or factories where raw materials can be converted to usable goods.

I will say it again that the problem of Africa, is poor leadership and the Western influences that will never allow for true development, most African leaders are corrupt and the developed countries that milks their resources likes it the way it is. There are people that can change the economies of most African countries but the corrupt systems and their foreign allies will make sure that they don't succeed. Corrupt and clueless leaders succeeds their government when they involuntarily leaves power or dies on it. People who are tired of their government but cannot do anything about it are migrating to developed countries, even that is not easy for most of them. Unfortunately the continent will continue to be backward if things continues business as usual. It will not benefit most developed countries if underdeveloped countries where to become developed like them.

In fact, in many of these developing or non developed countries, big companies establish factories to additionally take advantage of their cheap labor and then sell the final products back to them. These companies are supported by governments with the justification that they provide employment.

There is hardly any reliable statistic in the developing world. Investment is a mixture of faith and data. Unfortunately, as we have seen in the panama papers, there is little willingness to place data online. Even lately the messenger is the one blamed for data which won't show those values the administration wishes to display.

It is about establishing the necessary infrastructures to promote local production/manufacture. These governments should also provide support, in the form of low-interest loans to local businesses, doing this will also boost local production. Take Nigeria for example, we are a major producer of oil, but we lack the capacity to refine enough petroleum finished products to meet our needs, hence we import to complement what we produce. That said, some of these problems is down to corruption, which stems from bad leaders. It is always better to challenge a problem from its root cause. If some of these countries had good leaders in the last two decades or so, their current situation will be better than what it is now.

I expect the issue is much more complex than that. For developing countries to be able to add value to their production, they need to own manufacturing, I mean the manufacture of heavy equipment for large industries such as oil and gas and others. For example, here in my country, there was a serious attempt to refine oil and gas locally. They thought they had succeeded but in reality, they failed. They still need to import spare parts from industrialized countries, which sell them at very high prices, costing them huge sums. They also still need foreign experts in complex maintenance. So, what's the point of all this?

The point is to develop. Look at China, some countries in Africa, they develop. It a tough and slow process. With an attitude of what's the point of course Netflix is much better.

To create added value from the raw products produced, a significant amount of investment is required, as the processing process demands specialized equipment, product research and development, investors, infrastructure, security stability, and several other factors. Not to mention that the country needs a market for its products and must ensure that these products meet international quality standards to be accepted in the global market. Therefore, it is a long road and not as easy as it sounds. While everyone hopes that developing countries can gain more profit from the raw products they produce, the reality is that it is not an easy task, especially in the African region, where many countries still face structural challenges, corruption, and political instability, making the downstream process difficult to implement.