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Digitalisation and the future of manufacturing in Africa

Research reports

Written by Dirk Willem te Velde, Karishma Banga

The growing digitalisation of economies and the associated rapid spread of advanced technologies like 3D printers, robots and cloud computing is having a significant impact on manufacturing production globally. While the digital divide between developed and developing countries (particularly those in sub-Saharan Africa) is still significant, this does not mean developing countries will not be affected in the coming decades. With wages rising even in low-income countries, automation may become an increasingly attractive option to domestic firms, and furthermore, creeping automation of manufacturing in developed countries will have a knock-on effect globally.

With investment and growth in manufacturing traditionally seen as one of the most promising pathways to industrialisation and economic transformation for developing economies, the question of how governments can prepare for this inevitable change is a crucial one for Africa's long-term growth trajectory.

This paper presents new empirical analysis of the potential impact of growing digitalisation in manufacturing on Africa, and discusses what policymakers can do to exploit their current window of opportunity, address constraints in traditional manufacturing and prepare for the 'digital wave', which will bring with it a whole host of new opportunities and challenges.

The conceptualisation of the digital economy. Image: SET programme.
There is a significant digital divide between developed and less-developed countries, as well as within developing countries. Image: SET programme.
Not only are developing countries less digitalised, the impact of digitalisation on productivity is also less than in middle-income countries. Image: SET programme.
Investment in skills development will be crucial for African economies to get the most out of digitalisation. Image: SET programme
In the case of furniture manufacturing in Kenya, robots will become cheaper than labour in 2034. Africa must prepare for the digital future now. Image: SET programme
Karishma Banga and Dirk Willem te Velde