Africa’s Failure to Industrialize
By admin November 22, 2014




Africa’s experience with industrialization over the past quarter century has been disappointing. In 2010 sub-Saharan Africa’s average share of manufacturing value added in GDP was 10 percent, unchanged from the 1970s. At the same time, manufacturing output per person was about a third of the average for all developing countries, and manufactured exports per person about 10 percent. Then, is Africa’s failure to industrialize in the 25 years since the first African Industrialization Day due to bad policy or bad luck? About four years ago the African Development Bank, the Brookings Institution and the United Nations University-World Institute for Development Economics Research (UNU-WIDER) came together to try to figure out why there is so little industry in Africa. Eight sub-Saharan countries—Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Senegal, Tanzania and Uganda—were all among the region’s early industrializers and are also all among the stars of the region’s growth turnaround. Tunisia—along with Mauritius, which was not studied in detail, is one of the brighter lights in the African continent’s industrialization story. The Asian countries—Cambodia and Vietnam—were chosen because they are emerging Asia’s newest industrializers. What is striking about the eight sub-Saharan African countries is that they share remarkable similarity in their experience with industrialization. Africa’s failure to industrialize is partly due to bad luck. The terms of trade shocks and economic crises of the 1970s and 1980s brought with them a 20-year period of macroeconomic stabilization, trade liberalization and privatization. Political instability and conflict also caused investors to hold back the failure to industrialize was also due to bad policy. The eight sub-Saharan countries enacted remarkably similar policies for industrial development: state-led import substitution, Structural Adjustment and investment climate reform. Import substitution sowed the seeds of its own destruction. High protection and heavy import dependency meant that African industry was poorly prepared for international competition.

What is the alternative? By leveraging knowledge about climate change, through adopting improved agriculture technologies and using water and energy more effectively, Africa can accelerate its march towards sustainable development. Policy and development practitioners say Africa is at a development cross roads and argue that the continent, an increasingly attractive destination for economic and agriculture investment should use the window of opportunity presented by a low carbon economy to implement new knowledge and information to transform the challenges posed by climate change into opportunities for social development. “Climate change is not just a challenge for Africa but also an opportunity to trigger innovation and the adoption of better technologies that save on water and energy,” Fatima Denton, director of the special initiatives division at the United Nations Economic Commission for Africa (ECA), told IPS. The African Development Bank (AfDB) and the Alliance for a Green Revolution in Africa (AGRA) Kenya signed on November 14, 2014, in Nairobi, a grant agreement to support the growth and formalization of 54 African seed companies in eleven countries. The 54 seed companies are located in Burkina Faso, Ghana, Mali, Rwanda, Mozambique, Tanzania, Sierra Leone, Senegal, Niger, Liberia and Uganda. Through interactive on-site sessions with seed managers and staff, classroom instructions, field visits, secondment of specialists to seed companies and provision of literature and updates on the seed industry in Africa, the 54 seed companies will be capacitated to improve their management and technical capacity; increase their knowledge of new varieties developed by breeders and gain practical and technical skills enabling them to produce high quality staple crop seeds for African rural farmers. Food security is a top priority on the African continent. It is certain that support to seed companies will boost African agricultural productivity, currently only reaching 20% of what is observed in the rest of the world.

At least 370 million Africans, or 34 percent of the continent’s 1.1 billion people, are now middle class, according to a survey by the African Development Bank. In turn, the emergent class will help drive further economic growth and development, the Tunis-based AfDB study said. By 2060 the group should represent 42 percent of the population, according to the study launched in Johannesburg nearly 20 years ago. “There is a stable middle class and it is growing,” said Mthuli Ncube. North Africa leads the pack with at least 77 percent of its population counted among the middle class, surprisingly followed by the central African region with 36 percent of its people falling in that category — though many are considered to be vulnerable. The southern African region, home to the continent’s most developed economy, South Africa, is in third place, level with west Africa with around 34 percent of their people classified as middle class. East African countries are at the bottom of the ranking, having just a quarter of their nationals in the middle class. With no streamlined model or standardized measures for assessing the results of innovation, it might be time for the public sector to take a harder look at how corporations evaluate innovation. Private and public sectors possess similar motivations to innovate, but the value of innovation differs. For example, input-output measures of performance — such as return on investment — are more difficult to identify outside of the for-profit world. Development agencies are faced with new challenges in addressing globalization and internationalization of firms, rapid demographic and technological changes, societal and organizational fragmentation, a new institutional role of states and market revolution and the crisis of the representative democracy. Innovation as well as the evaluation of such initiatives is no longer just an option.


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