Unlocking the potential of regional value chains in North Africa: focus on the financial services and digital finance sector

Abstract

In the past two decades global value chains (GVCs), which account for a large share of international trade, have benefited from the unprecedented drop in transport costs, a lowering of customs barriers and a deeper integration of economies. These trends, hand in hand with the rapid development of information technology (IT), have led to the breakdown of production processes in countries with different levels of development. It has resulted in particular in the vertical fragmentation of stages of production. Financial services and digital finance thus offer a real potential for recovery in the region. Within this framework, the convergence of degrees of development of payment systems and technical platforms in the region should help to give a fresh impetus to the new tools of technological finance (fintech) and central bank digital currency. Such a digital transition, which would also serve to inject new dynamism into financial integration in the region, is dependent on the lifting of constraints linked to the infrastructure of payment systems, including as regards the interoperability of mobile payment services. This study which aims to analyse ways and means of accelerating the process of regional integration in North Africa, propose pathways for building regional value chains in the financial services and digital finance sector and, on that basis, assess their potential for development. Accordingly, the following discussion is in three parts. The first analyses the potential of North African countries on the map of global value chains and impacts for regional development. The second is predicated on a consolidated analysis of financial value chains as a basis for successful regional integration. The third attempts to identify prospects for building regional value chains in the financial services and digital finance sector.