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Digital Control in Value Chains: Challenges of Connectivity for East African Firms

Author: Foster, C., Graham, M., Waema, T., Mann, L., & Friederici, N.
Published in: Economic Geography, 94(1), 68-86
Year: 2018
Type: Academic articles
DOI: 10.1080/00130095.2017.1350104

In recent years, Internet connectivity has greatly im- proved across the African continent. This article examines the consequences that this shift has had for East African firms that are part of global value chains (GVCs). Prior work yielded contradictory expecta- tions: firms might benefit from connectivity through increased efficiencies and improved access to mar- kets, although they might also be further marginalized through increasing control of lead firms. Drawing on extensive qualitative research in Kenya and Rwanda, including 264 interviews, we examine 3 sectors (tea, tourism, and business process outsourcing) exploring overarching, cross-cutting themes. The findings sup- port more pessimistic expectations: small African pro- ducers are only thinly digitally integrated in GVCs. Moreover, shifting modes of value chain governance, supported by lead firms and facilitated by digital information platforms and data standards are leading to new challenges for firms looking to digitally inte- grate. Nevertheless, we also find examples in these sectors of opportunities where small firms are able to cater to emerging niche customers, and local or re- gional markets. Overall, the study shows that improv- ing connectivity does not inherently benefit African firms in GVCs without support for complementary capacity and competitive advantages.

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