Will Africa intensify industrialisation to fight poverty, unemployment?

Africa is home to enormous mineral, human and material resources. Huge deposits of gold, oil and natural gas, copper, zinc uranium, timber among others resources dot the landscape of the continent.

Unfortunately, these resources have not translated to the desired industrial transformation, wealth generation and economic empowerment.

“Africa is at the bottom of the global value chain with its share of global manufacturing at around only 1.9 percent.

“African economies still rely too heavily on raw commodities; between 2011-2013 manufactured goods made up only 18.5 percent of exports, while 62 percent of total imports were manufactured goods, a commercial imbalance that drains wealth away from the continent“, says an African Development Bank Group report.

Industrialisation is the process of transforming the economy of a nation or region from a focus on agriculture to a reliance on manufacturing on a wide scale.

According to economists, industrialisation leads to economic transformation, increased productivity, improved Gross Domestic Product (GDP) per capita, improved livelihoods, increased employment rate, high income and poverty reduction.

With huge unemployment rate but massive youth population, industrialisation process should therefore be at the forefront of Africa’s development initiatives.

“More than one in four young people in Africa – around 72 million – are not in employment, education or training“, according International Labour Organisation.

How does Africa take advantage of its young and growing population to push industrial growth and development?

Ethiopian president, Ms Sahle-Work Zewde, says that effective governance and political will remain key to an industrialised Africa.

According to the Ethiopian president, an industrialised Africa is not a luxury but critical for economic growth on the continent.

“Political will is at the heart of what we do, and policies must incorporate updated tools. Political frameworks should emphasise principles that promote improved productivity and competitiveness.

“There is the need to change Africa’s industrialisation narrative through inclusive and sustainable industrial development, ensuring none is left behind.

“Therefore, government institutions and structures must ensure that public policies, strategies, and national plans are gender-sensitive,” she told her audience at the African Economic Conference in November.

Mr Claver Gatete, Executive Secretary, United Nations Economic Commission for Africa (UNECA), says there was need for sustainable industrialisation, inclusive development, and structural transformation in the continent.

He said this was not possible without good policies and their effective implementation.

“We envision a prosperous Africa with sustainable development that maximises opportunities for income growth, local employment, poverty reduction, and social development.

“Industrialisation is the key to sustained growth and transformation, providing jobs, skills acquisition, innovation, and formal employment, especially for women and youth.

“Effective governance and development planning are crucial for industrialisation and structural transformation,” he said at the conference.

Gatete said that as the Sustainable Development Goals (SDGs) achievement target year (2030) approaches, member states must review progress and identify the remaining tasks.

“At the heart of our efforts to rescue and fulfil our commitment to Africa lies in our call for accelerated industrialisation for sustainable and inclusive development“, he told Africa’s economic eggheads.

Prof. Kevin Urama, Chief Economist and Vice-President, African Development Bank (AfDB) Group, reiterated that African governments should have the political will to leverage the vast opportunities available on the continent.

Urama said the pace of sustainable industrialisation and structural transformation in Africa had been slower than required to lift Africans out of poverty.

“We need to demonstrate strong political will to promote industrialisation and maintain a stable and predictable macro-economic policy environment that facilitates ease of entry, exit, and safety of capital.

“We should develop and consistently implement a strategic industrial policy encouraging local production, consumption, and domestic/regional value chain development.

“We must develop and implement a national education and skill development strategy fully embedded in the National Industrial Policy and Development Plan“, he said.

According to him, to succeed, African countries must think differently, adopt, and implement transformative policy actions that accelerate endogenous manufacturing capacity and encourage consultation of locally manufactured products”, he said.

Industrialisation in modern era requires long term planning, and as in the case of Africa with mass land mass and different governments and varying economies, inclusive economic integration that guarantees equity.

According to Director, Macro Economic Policy Division, Economic Commission for Africa (ECA), Adams Elhiraika, therefore needs to integrate to create regional value chains that support industrialisation.

“Now is the time for African policymakers and economists to move beyond orthodox, mainstream economics theories that used to tell us that we cannot integrate.

“Theories that say we cannot industrialise or finance our development and that we need aid for trade. We cannot continue to receive aid to produce primary commodities we export for processing elsewhere,” he said.

A Professor of Economics at the University of Ibadan, Olawale Ogunkola, called for policies and strategies that foster efficient industrialisation in Africa, such as Special Economic Zones (SEZs).

“Mass production is required to meet market demands, and this will not be profitable if trade costs are not reduced through infrastructure development.

“The case for infrastructure development is critical for regional value chains. If we do not address trade costs, making a profit will not be possible” he said.

Similarly, Grace Nshemeirwe, the Chief Executive Officer, Uganda Private Sector Federation, emphasised the need for national governments to address trade barriers and obstacles to financing businesses.

“Harmonising trade policies across the region is vital to facilitate trade and enable African countries to compete effectively.

“Access to finance and capacity building cannot be overemphasised; we must also do more in product standardisation and packaging in Africa”, he said.

Dr Hauwa Ibrahim, Department of Economics, Nassarawa State University, Nigeria, said Africa stood at the crossroads of opportunities and challenges.

“The demographic population is vital and should be considered because Africa has many young people; what they are learning now should matter to us.

“We need to recognise the role of technology and ensure it is applied at all levels.

“We cannot take out the role of education in defining technology because we do not want to industrialise and have to invest elsewhere, away from the continent, in certain labour forces.

“Therefore, while we invest in technology, we must also invest in the education of young people so they can help drive the technology,” she advanced.

Prof. Fiona Tregenna, University of Johannesburg and Chair of the Industrial Development, National Research Foundation (NRF) South Africa, said transformative industrialisation was crucial and would pave the way for the continent’s advancement.

While acknowledging some progress, she said several challenges that hindered efficient and effective industrialisation on the continent persisted, adding that: `getting the Africa we want is not business as usual`

Mr Ibrahim Sall, former Minister of Planning, Senegal, said engagement with various stakeholders would engender the continent’s sustainable industrial development.

“We need a flexible, agile, high-impact industrialisation that is robust. We need to implement industrial policies; there is no policy that cannot be selective.

“Otherwise, we will be sprinkling without impacting or wasting capital. Therefore, there must be a selective national champion.

“How do we build with major stakeholders? What matters most is to look at selectivity and information and inform the states to understand that policies are not made on the ground.

“The engagement of states is key, and they must pay attention to the industrial sector,” Sall said.

According to him, selective criteria are critical in achieving the goal.

“The vertical policy of African nations focuses on processing raw materials, and we also have horizontal and selective policies.

“This involves all actions: sustainability, infrastructure, human capital, and technology; with this, states do not need to be flexible but focus on sustainability,” he said.

Perhaps the position of African Development Bank (AfDB) President, Dr Akinwumi Adesina, more succintly points path to success.

“The door to poverty is from the export of raw materials; the highway to wealth is industrialisation. To industrialise, Africa must solve its major challenges’’, he said.

The choice between industrialisation and its attendant economic and social benefits; and poverty through corruption and wasteful spending is there for African leaders to make.