Regional Value Chains and Governance of Decent Work in Sub-Saharan Africa

Research on private governance in buyer-driven global value chains (GVCs) has mainly focused on products sourced from the global South by retailers in the global North. The last two decades, however, have seen rising South-South trade and the emergence of significant regional value chains (RVCs) and domestic value chains (DVCs). RVCs/DVCs are expanding in sub-Saharan Africa (SSA), coordinated and controlled by retailers within the region. These operate in parallel or intersect with GVCs. The SSA garment and horticulture sectors are cases in point. Trade that previously flowed mainly to the global North is now also diverting to the global South via RVCs, or within countries via DVCs.

In this context, our two-year joint research project has studied horticulture and garment value chains in Kenya and South Africa to (1) understand the implications of expanding DVCs and RVCs in SSA for public-private governance of decent work, and (2) explore the drivers of governance across DVCs and RVCs in SSA. Horticulture RVCs/DVCs in Kenya and South Africa are mainly governed by South African and Kenyan retailers. In the case of garment RVCs/DVCs, our focus was on South African retailers and/or their design houses sourcing from South Africa, Eswatini and Lesotho. Called ‘Regional Value Chains and Governance of Decent Work in Sub Saharan Africa (SSA)’, the project brings together academics, practitioners and policy makers.

Our research found private governance deficits of decent work (except for a few SSA retailers) in RVCs and DVCs, which manifest differently across sectors and country contexts. In horticulture, we observed that private governance of decent work, in the form of social standards – such as the Ethical Trading Initiative Base Code – spilled over from GVCs into RVC/DVCs, where there was overlap: large commercial farms supplying Northern lead firms have to be ethically certified as a condition of supply. As this certification cannot be ring-fenced to only some fruits on the farm, the ethically certified fruit that is not sold to Northern buyers is then sold into regional and domestic markets – where social standards (with very few exceptions) are not required by buyers. In garments, the story is more black and white. Supplier firms in Eswatini and Lesotho that supplied US buyers were different to those supplying SA retailers via RVCs. So, there was no overlap of GVCs and RVCs, compounded by the fact that South African retailers did not apply social standards (with very few exceptions). All of this amounted to a private governance deficit of decent work in RVCs/DVCs relative to GVCs, which was more pronounced in garments.

In terms of public governance, the levels of state regulatory protection for workers were uneven across sector and country contexts. In horticulture, we found a strong national regulatory framework across Kenya and South Africa on paper, but this was very weakly enforced by under-resourced state agencies. In garments, the key issue was the unevenness of protection across country contexts, and in particular, the steep regional labour cost differential between much higher-paid South African workers and much lower-paid workers in Lesotho and Eswatini, compounded by very weak levels of state enforcement in these contexts. But that is not to say that there were no compliance challenges in South Africa. In fact, the garments team found a growing underbelly of unregulated production in certain locations in South Africa, such as Newcastle, where low-cost production fell outside of the radar of public or private standard monitoring agencies, or trade union representation, with products made here destined for a growing number of hard discount-retailers. This resulted in considerable competition for established South African garment retailers and challenges to state authority and decent work.

To summarise, we essentially observed a series of private and public governance deficits for the most vulnerable low-cost smallholders and workers, that was compounded by a lack of trade union representation across the sectors and countries under study. 

However, stemming from these governance deficits, the research also observed an ‘incipient transition’ towards greater public governance of value chains at the national level in SSA. In Kenyan horticulture, we found that food safety – in the form of health and trade risks – had driven a significant response by the Kenyan state. A few years ago, unsafe horticultural product that exceeded EU maximum residue levels for pesticide use was found to be seeping from Kenyan domestic production into the EU global value chain. This caused a major reputational crisis for the horticultural industry and for the Kenyan government, who responded by drafting KS1758 – a public regulation that essentially mimicked private value chain standards such as GGAP, ETI Base Code, Rainforest Alliance. This public standard is now applicable to all domestic horticultural production in Kenya. 

In South African horticulture, the government has set up and convenes Value Chain Roundtables, involving the fruit industry, civil society and government representation. This was prompted by a widespread labour crisis in 2013 led by low-paid, insecure, flexibly-employed farmworkers demanding increased wages and better working conditions, and had major reputational and economic implications for the sector. A key purpose of the Value Chain Roundtables is to address decent work issues throughout the South African horticulture sector, irrespective of whether the end markets are global, regional or domestic. And in garments, the South African government has drafted a Masterplan for the sector – a multi-stakeholder compact to grow the sector and end the illegal value chain. However, this is limited by a national focus, not addressing the issue of migrant labour from Lesotho and Eswatini, and is voluntary. 

Overall, these national governance responses by states vary across different sectors and countries. The implications for decent work are not yet clear and require further empirical research. Similar policy trends are not occurring regionally, or through regional trade agreements in Africa. In light of this, the research makes recommendations for more proactive public governance of value chains at national and regional levels to promote decent work.

Matthew Alford is Senior Lecturer in International Business and Management at the Alliance Manchester Business School, University of Manchester.