Africa's industrialisation: reversing the decline
Dirk Willem te Velde- Head of International Economic Development Group (IEDG) and Director, Supporting Economic Transformation (SET)
Lead presenter:
John Page – Senior Fellow, Brookings Institution
Discussants:
Nick Lea - Deputy Chief Economist, DFID
Kimiaki Jin - Chief Representative, JICA Ethiopia
Helen Hai - CEO Huajian Company in Ethiopia, Goodwill Ambassador for UNIDO
Machiko Nissanke - Professor of Economics, SOAS, University of London
Alberto Lemma - Research Fellow, International Economic Development Group (IEDG) ODI
Key Points from event are as follows:
· Manufacturing in sub-Saharan Africa has declined in recent decades, but different economic strategies, new circumstances and individual effort is expected to help reverse the decline.
· Africa has suffered from two things in the past: bad luck (trying to enter world markets when China was developing) and bad policy.
· There is now a chance to break into the global market for industrial goods - exports, agglomeration and capabilities must be linked strategically.
· Investment climate support is not sufficient. It requires emphasis on skills, infrastructure etc. Aid and trade must be coordinated and focussed on making Africa’s Special Economic Zones world class.
· Politics is a further key factor behind weak industry in Africa. Broadly-owned institutions, leadership and vision from the top are essential for industrialisation.
· Africa’s market size is an asset. It should increase its own effective demand and consumption aim to enhance the market size (within the region).
· Job creation is key - Africa has a huge young population in need of formal jobs – and China needs to “find people to do jobs”. Rising wages in China has led to opportunities for Africa to attract investment.
· Information asymmetry is a problem. Investors may think there is not much opportunity in Africa and it is too difficult to do operate or set up there. However, working directly with supportive ministers and relevant government officers in-country improves the chances of success.
Despite the major challenges to Africa’s industrialisation there are examples to suggest that progress towards industrialisation can be made. It is important to engage in demonstration projects and industrial policy learning.
To read the full report and download presentations, please visit the the event page on the SET programme website.
Description
But there are also some positive signs. Manufacturing production has been increasing faster in sub-Saharan Africa than in the rest of the world, and it now makes up a greater share in wold manufacturing than fifteen years ago. Recently, several Asian firms have set up new manufacturing operations in African special economic zones such as in Ethiopia.
John Page joined a panel of experts to explore the challenges and prospects for industrialisation in Africa, discussing what caused the lack of industrialisation in sub-Saharan Africa and what can be done to improve it.
ODI has undertaken research on industrialisation in the context of a project with JICA on the role of Kaizen and through the Supporting Economic Transformation Programme.