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Industrialisation in Africa: Beyond the Bling Chase-Abimbola Akosile

Abimbola Akosile examines the need for enhanced instrialisation of Africa, in a bid to position the continent properly to benefit from the emerging new world order, showcased by the new 17 Sustainable Development Goals (SDGs)

 

Africa is not a developed continent, many are wont to say. And despite the obvious strides of a few economies on the continent, the need for overall industrialisation and economic emancipation of the more than one billion inhabitants cannot be over-emphasised.
Improved industrialisation, adequate provision of continent-wide infrastructure and agriculture to feed the teeming population of the member countries have been identified as some of the most crucial panaceas to lift Africa to its expected level among other continents.
Incidentally, the above-mentioned pivotal factors for Africa’s development are encapsulated in the new 17 global Sustainable Development Goals (SDGs), which were adopted by more than 190 member-states at the United Nations General Assembly (UNGA) recently in New York, USA.
Likewise, agriculture, which has the potential to boost intra and inter-continental trade aside feeding and creating employment for hundreds of millions of Africans, is a familiar terrain to the new President of the African Development Bank, Dr. Akinwumi Adesina, who was formerly Minister of Agriculture in Nigeria.
However, there are cultural, physical, language and other challenges facing the industrialsation process of Africa, and these, alongside some recommendations would be examined in this report.
Africa, the world’s youngest continent, is currently undergoing a powerful demographic transition. Its working-age population, which is currently 54 per cent of the continent’s total, will climb to 62 per cent by 2050. In contrast, Europe’s 15-64 year-olds will shrink from 63 per cent in 2010 to 58 per cent, according to reports.
During this time, Africa’s labour force will surpass China’s and will potentially play a huge role in global consumption and production. Fortunately, unlike other regions, Africa will neither face a shortage in domestic labour nor worry about the economic burden of an increasingly ageing population for most of the 21st century.
Rhetoric and Reality
According to a presentation by two expert analysts, Ron Sandrey and Hannah Edinger, industrialisation has become the buzzword for Africa of late, which must be set against the reality of the present situation.
Ron Sandrey is a Professor Extraordinaire at the Department of Agricultural Economics, University of Stellenbosch, and an Adjunct Associate Professor at the Agribusiness and Economics Research Unit at Lincoln University (New Zealand). Hannah Edinger, is Director and Head of Research & Strategy, Frontier Advisory (Pty) Ltd.
According to the duo, in recent times much has been said about industrialisation in Africa. Sadly, as often is the case for the continent, when all has been said and done, much more has been said than done. Africa, and in particular South Africa, has missed this industrialisation bus.
To them, there are three consequences of missing the bus. The first is that East Asia (read China in particular but not exclusively) has dominated the global markets – especially for manufacturing and increasingly services.
They examined the thesis that China is making it harder for Africa to diversify away from its natural resource-based export profile, and that China is also a key financier of the continent’s development with cumulative Chinese FDI reported at $21 billion, which includes $3.43 billion investments in manufacturing.
To the duo, African policymakers should be actively seeking to attract Chinese factors of production in sectors, such as industry, assembly and agro-processing by drawing Chinese capital, skills and technology, either through joint ventures or partnerships.
As domestic structural changes in China accelerate – with the country moving away from being a leading exporter to becoming a key consumer and an important source of investment – this could bolster the industrialisation prospects of African countries that recognise this opportunity and position themselves accordingly, the analysts noted.
According to them, Africa needs to significantly focus more on building and expanding upon this base of ‘good governance’ rather than grandiose plans and pronouncements that are devoid of any linkages to such a base.
Executive Advocacy
Speaking at the High-Level Event on Industrialisation during the recent UN General Assembly (UNGA) in September in New York, President of the African Development Bank Group, Akinwumi Adesina admitted that the reality today is that Africa is not industrialising.
“Indeed, Africa is de-industrialising. Its share of global manufacturing exports is a meagre 1.9%, compared to over 16% for East Asia and Latin America. Africa’s economies may be growing, but they are relying on the export of primary commodities, leaving them vulnerable to swings in global commodity prices. That is a bad deal. It’s a bad deal because Africa stays at the bottom of global value chains. By exporting raw commodities, Africa exports its jobs – jobs which are critically needed at home.”
To him, “For agricultural products, for minerals and metals, for oil and gas, Africa must add value. Today, Africa has over $82 trillion in discovered natural resources. Africa must add value to these resources, so that the wealth will stay on our continent.
“Africa needs a stable trajectory for economic growth and prosperity. To achieve that, Africa must industrialise. But this cannot be done without solving Africa’s energy crisis. Without power, industrialisation is simply a dream. That’s why the African Development Bank has made the New Deal for Energy its top priority. Because Africa must power itself in order to power its industries.
“Africa also desperately needs more infrastructure investments in order to support industrialisation. We need roads, rail and ports to enhance our competitiveness and open up access to regional and global markets. To address this, the Bank created Africa 50, a new delivery vehicle to help mobilise $10 billion in infrastructural financing for Africa”.
The former agriculture minister in Nigeria added that industrialisation also requires that Africa build the necessary skills and entrepreneurship capacity to be able to support industries.
“We must ensure that our young people are prepared for the jobs that Africa’s industrialisation will create. We must also take advantage of science, technology and innovations, to support industrial growth on the continent. We need transformative partnerships to drive Africa’s industrialisation: partnerships with private sector, governments, and international financial institutions. We must now work together and mobilise financing for action”, he added.
To Adesina, the AfDB stands fully ready to work closely with the African Union, the United Nations Industrial Development Organisation, and the Economic Commission for Africa to advance Africa’s industrialisation agenda.
“This is why we have called for the establishment of an African Industrialisation Financing Facility, to help turn our dreams into reality for Africa”, he added.
Adesina also sought to forge partnerships with people and building alliances with nations. He applauded Japan’s commitment to growth in Africa and the $32 billion of support that the Japanese Government made available through the Tokyo International Conference on African Development (TICAD) V in 2013.
The support helps Adesina move forward with his bold, five-point agenda that addresses power, food security, industrialisation, integration and quality of life across the continent.

Empowering Women in Agriculture
The office of the Special Envoy on Gender (SEOG) and the Department for Agriculture and Agro-industry (OSAN) of the African Development Bank (AfDB) recently commissioned a report, “Economic Empowerment of African Women through Equitable Participation in Agricultural Value Chains”.
The study, which was launched in Abidjan, Côte d’Ivoire, in August 2015, identified opportunities for women in four subsectors including cocoa, coffee, cotton, and cassava sectors in Côte d’Ivoire, Ethiopia, Burkina Faso and Nigeria, respectively.
According to the report, Nigeria represents Africa’s top producer of cassava with 53 million tonnes in 2013 – about 20 per cent of global cassava (approximately $16 billion in value); however, the country only exported $1 million worth of the staple. The global production of cassava was valued at $51 billion in 2013 – the highest production value ($35 billion) of the four sub-sectors featured in the report, but signifying the lowest export value (approximately $1-2 million).

The Nigeria launch of the report took place in Abuja on October 19, 2015, with the AfDB’s Country Director for Nigeria, Ousmane Dore, calling on partners to act on the findings.
“Our objective for commissioning the study was for the African Development Bank to play a decisive role in contributing to the economic empowerment of African women in agriculture,” said Dore. “This event is a call for all our esteemed stakeholders to join forces in a discussion on to how to take this work forward.”
There are approximately 6 million smallhold cassava farmers in Nigeria alone, and women account for a quarter of these smallholders, but earn only 17 per cent of their male counterparts’ income because their productivity is lower than that of men.
According to the AfDB’s Special Envoy on Gender, Geraldine Fraser-Moleketi, “African women feed the continent and they can feed the world, too. But we must close the wide gap in wages and agricultural yields between men and women if Africa is to achieve full economic transformation.”
The report highlighted five major constraints that can limit women’s productivity and full inclusion into the agricultural economy, namely: lack of access to assets such as land and modern equipment, limited access to financing, limited training, government policies that fail to address the specific issues faced by women in the sector, and time constraints due to heavy domestic responsibilities.
The report highlighted three broad areas for action that could begin to address the specific constraints women face in each focus country.
These include growing the number of large-scale agribusiness entrepreneurs by providing access to financing and training, and improving regional and global market links; making sure women are remunerated by setting them up as co-owners, improving productivity, and providing training in core business skills; and increasing women’s access to niche markets by producing and marketing women-only products.
The report helped identify areas that the AfDB and its partners can target to empower women economically through agriculture as the Bank implements its Gender Strategy (2014-2018).
Seeking Enhanced Industrialisation
Participants at a high-level event held at the United Nations headquarters in New York, voiced strong support for the industrialisation of Africa as a way forward to implement the sustainable development goals.
The organisers of the event, the African Union Commission (AUC), the Office of the Special Advisor to the UN Secretary-General on Africa (OSAA), the UN Economic Commission for Africa (UNECA), and the UN Industrial Development Organisation (UNIDO), issued a joint communiqué.
The stakeholders noted that Africa has seen remarkable economic growth since the turn of the millennium, and that it has become the second fastest growing region in the world, and continues on this path despite the persistent global economic slowdown.
However, the communiqué noted that there is still need to accelerate annual economic growth to more than 7 per cent to effect real economic transformative growth, and that to be sustainable and inclusive, this progress must now be accompanied by structural transformation, which remains the only option to lift the people of Africa out of poverty.
According to the communiqué, “To fully benefit from its rich natural resources and to reap the benefits of the demographic dividend, Africa must industrialise. Heavily investing in the training and education of women and youth is indispensable. In order to achieve inclusive and sustainable industrialisation, we must embark on a skills revolution particularly in the areas of science, technology, engineering and mathematics.”
It noted that the 2030 Agenda for Sustainable Development and Sustainable Development Goal 9 recognise the centrality of inclusive and sustainable industrialisation for development.
UNIDO’s new Programmes for Country Partnership, the New Partnership for Africa’s Development (NEPAD), the African Mining Vision and the Action Plan for the Accelerated Industrial Development of Africa (AIDA) are promising mechanisms for mobilising multi-stakeholder coalitions to promote industrialisation.
“As also witnessed during the Third International Conference on Financing for Development, and the adoption of the Addis Ababa Action Agenda, emphasis should continue to be placed on inclusive economic growth and sustainable industrial development”, the stakeholders noted.
“Now that the world has adopted the 2030 Agenda, we invoke all stakeholders to join forces and form a new global partnership for its implementation, particularly for the most vulnerable countries in Africa, including for the LDCs, the LLDCs and the SIDs.
“We need to seize this historical moment and take substantial steps collectively to achieve the transformative agenda of inclusive and sustainable industrial development for the benefit of all countries and their populations on the African continent.
“The AUC, OSAA, UNECA and UNIDO fully commit themselves to support Member States in their calling upon the General Assembly to pass in 2016 a resolution for a Decade of African Industrialisation 2016-2025”, the communiqué added.
It was signed by Chairperson of the African Union Commission, Nkosazana Dlamini Zuma; Under-Secretary-General, Special Adviser on Africa, Maged Abdelaziz; Executive Secretary of UNECA, Carlos Lopes; and Director General of UNIDO, Li Yong.
Moving Africa Forward
African leaders made a bold statement towards inclusive growth and sustainable development in their own Common African Position on the post-2015 development agenda and the African Union’s 50th Anniversary Solemn Declaration, culminating in the Africa Agenda 2063, and its First Ten Year Implementation Plan.
Many African countries have already proceeded to formulate national strategies to take advantage of the current global momentum for fostering inclusive and sustainable industrial development.
In this context, various African leaders who attended the High-level event on “Operationalisation of the 2030 Agenda for Africa’s Industrialisation” called upon the international community to raise its financial support in line with Goal 9 of the 2030 Agenda for Sustainable Development, and to back industrial and infrastructural projects underpinning this development, especially as articulated under Aspiration 1 of the Africa’s Agenda 2063, which calls for a prosperous Africa based on inclusive growth and sustainable development.
In particular, they called upon the private sector to recognise Africa’s export and domestic market potential, and invited foreign investors to substantively increase their commitments to the continent.
They also called upon international organisations to provide industrial policy advice and technical cooperation programmes to enable African countries to implement their strategies and to forge stronger regional and inter-regional cooperation. They emphasised the urgency for all countries to promote structural transformation, technological change and innovation.
Regional Economic integration, intra-African trade, increased foreign direct investment and official development assistance, and South-South and triangular cooperation will be fundamental pillars of this process.
Valuable Tips
Analysts and experts believe that to ensure adequate industrialisation, African governments, individually and collectively, must develop supportive policy and investment guidelines.
Clearly-defined rules and regulations in legal and tax domains, contract transparency, sound communication, predictable policy environments, and currency and macroeconomic stability are essential to attract long-term investors.
Moreover, incentives – such as tax rebates to multinational companies that pro- vide skills training alongside their commercial investments – will help local economies grow and diversify. In addition, each industrial policy should be tailored to maximise a country’s comparative sector-specific advantages.
While much responsibility lies with African governments, the continent’s private sectors must play their part in improving co-ordination between farmers, growers, processors and exporters to increase competitiveness in the value chain and ensure the price, quality and standards that world markets demand.
African countries must pursue beneficial economic strategies with their neighbours. Regional integration would help reduce the regulatory burden facing African industries by harmonising policies and restraining unfavourable domestic programmes. This would boost inter- and intra-African trade and accelerate industrialisation.
The right recipe for regional integration requires countries to concentrate on commodities in which they have a competitive advantage. For example, Benin and Egypt could concentrate on cotton, Togo on cocoa, Zambia on sugar, Nigeria on coal and iron ore – each country trading in bigger regional markets.
Agriculture, which employs over 65 per cent of the continent’s population, according to World Bank, could become a springboard towards industrialisation. It can provide raw materials for other industries, as well as promote backward integration.
Sustained investment and improvements in infrastructure are also needed throughout the continent. Countries everywhere, not just in Africa, cannot establish competitive industrial sectors and promote stronger trade ties if saddled with substandard, damaged or non-existent infrastructure.
Public-private partnerships (PPPs) should be developed to stimulate massive investments in infrastructure, which could have a multiplier effect on economic growth. Finally, without education the continent cannot succeed in its drive towards industrialisation.
Partnerships should be pursued in this arena too, because governments often lack the skills and finances to carry out technical training. Private sector companies would benefit from a skilled and competent workforce.
Without effective policies, however, African countries risk high youth unemployment, which may spark rising crime rates, riots and political instability. Rather than stimulating a virtuous cycle of growth, the continent could remain trapped in a vicious circle of violence and poverty. The youth represent a huge potential comparative advantage.
Africa is ripe for industrialisation. A strong and positive growth trajectory, rapid urbanisation, stable and improving economic and political environments have opened a window of opportunity for Africa to achieve economic transformation. The onus is one the present crop of leaders to take the necessary steps for the common good of all.
Sources:
* www.thisdaylive.com
* Kaplinsky, R. et al (2007). The impact of China on the Sub-Saharan Africa
* www.afdb.org

* Brighton, Institute of Development Studies. Muekalia, D. J. (2004). Africa and Chinese strategic partnership
* http://www.uneca.org/
* Economic Commission for Africa Economic Report on Africa (ERA 2013)
* www.allvoices.com/contributed-news/16646879-industrialization-in-africa