Participation in global value chains (GVCs) by developing countries is limited but holds substantial growth prospects. South Africa and Kenya have the potential to steer regional integration opportunities and act as gateways to favourable investment grounds for multinational corporations (MNCs). This brings with it opportunities for GVC development that small and medium enterprises (SMEs) can take advantage of. SMEs play a significant role in the formal and informal sector, both of which are crucial to the two countries’, and their neighbours’, economies. Integrating them into GVCs thus holds potential developmental gains in the form of job creation, economic growth and poverty reduction.
We consider the challenges Kenyan and South African SMEs face when integrating into GVCs, with particular focus on voluntary sustainability standards (VSS) as potential enablers of, or barriers to, MNC incorporation of SMEs. We also provide a series of related recommendations for G20 leaders’ consideration.
Authors: Anna Ngarachu and Peter Draper