There is indeed a great desire to industrialize in Africa for great reasons. Obviously production is the only development model so far developed that has helped bring jobs, export earnings, quick and sustained stability to a range of poorer (mostly Asian) countries.
Unless Countries in africa undertake the chaotic and arduous task of actively supporting manufacturing via targeted infrastructure, skill building, financial policy, establishing quality links with agriculture as well as services in collaboration with the private market, and getting ready for a much more digital future, significant industrial capacity in Africa might never gain traction.
On the African continent, vast-scale production is mostly lacking (vehicles are a significant exception in South Africa). But there are many success stories and also an attractive route. Manufacturing percentage of gross national product (GDP) in sub-Saharan Africa has fallen considerably and has stayed at that point until now. But it is also true that the value of output production and exports has increased over the past century.
By 2000, yearly manufacturing productivity levels were close to 10 percent in Ethiopia (amongst the top three in the world), Rwanda, as well as Tanzania, though from a small base. The export sales of clothing and textiles to the United States of Sub-Saharan Africa improved by eighteen percent from the very first half of 2018 to the first quarter, and by a large sum of one hundred and six percent in Ethiopia, thanks largely to a move to constrict economic reforms.
Manufacturing in Africa now has great possibilities. My colleague Max Mendez-Parra, with the development of African economies and the signing previously this year of the new African Continental Free Trade Area, advocates increasing regional trade in services, which will in turn promote industrialization. The African nations shouldn’t expect big-scale offshoring of Chinese manufacturing jobs, as Chinese businesses often increase domestically and optimize in the face of increasing incomes.
Digitization could also impact the ability of African nations to keep pace with the decrease in labor costs. Karishma Banga points to a two-pronged approach: preparing for a digital economy and, whilst you can, building industrial ability. The final three perspectives highlight the essential relevance of domestic policies and organizations. Although the experiment with industrial parks in Ethiopia is very well known and shows the importance of leadership, tanzania’s experience is full of undefined plans and the recent move is mixed. Kenya lacked coordination, but its center-level intervention has recently grown. Rwanda has recently enhanced its emphasis on industrialization in Rwanda
Promoting African Industrialization Requires
Improve regional trade in manufacturing services
Another important opportunity for support of broad-based transformation and industrialisation is the African Continental Free Trade Agreement that has already been adopted by a majority of African countries this year, especially by fostering links across the continent, especially in the area of trade in services which is effectively strengthening the manufacturer industry.
The integration of manufacturing procedures into activities carried out by separate companies located in different nations has changed the manufacturing method we believe. Services (finance, insurance, business and transport / logistics) is a rising share of the complete production cost in several low-income countries. They constitute up to one-third of the export value added and up to two-thirds of the exponential increase in labor productivity.
Making sure that manufacturing businesses have distribution rights to cost-effective and efficient service inputs will have a vital effect on the productivity and competitivity of producers around the globe. In order to achieve this, African countries must work towards developing domestic facilities by improving legislative frameworks and growing competition. This will mobilize domestic and international resources (especially in capital-intensive services such as finance and insurance) to support the provision of these services. But service delivery will take different forms, which can sometimes be complementary. Certain African countries are more convenient to provide some equipment, Like Mauritius service centers.
Established service protocols and present investment and competition policy agreements within the African Continental Free Trade Agreement will result to manufacturing development – if countries give priority to efficient service provision over industry safety manufacturing growth will be achieved. Manufacturing does not need safety ; it needs to increase its competitiveness. Access to economic and efficient inputs is vital. This is due to an increase in other outputs.
Finally, industrialization is an significant agenda for the African continent. Therefore, it will also be vital to increase investment in knowledge economy and foster partnerships with international investors to access the technology and skills required. African countries need to explore the potential for South-South Collaboration (for instance, forging BRICS partnerships (Brazil, Russia, China, South Africa) that add significance to each country’s industrialisation agenda.