By Boris Esono Nwenfor
BUEA, January 15, 2024 – Africa's contribution to global manufacturing stands at a mere 1.9%, placing it at the bottom of the global value chain. This disparity is evident in the trade imbalance, where manufactured goods constitute a substantial portion of imports, accounting for 62% of total imports. Between 2018 and 2020, manufactured products made up only 18.5% of overall exports.
According to Dr Denis Foretia, member of the Technical Advisory Group of AUDA-NEPAD’s Africa Policy Bridge Tank, representing the Nkafu Policy Institute, by 2050, one in four people in the world will be African. “As a continent, we will add more than 800 million people to the global workforce and we will have the youngest and at the same time the largest population,” he said.
Dr Foretia was speaking at the first Inception Conference of the Africa Policy Bridge Tank convened by the African Union Development Agency (AUDA-NEPAD) in Addis Ababa, Ethiopia. His talk focused on the Future of Africa’s Industrialization: The three-day conference was organized under the theme “Africa Futures”
Dr Denis Foretia said: “Our industries are not growing at any palpable rate to create the number of decent jobs that we need on the continent. While our population is increasing daily, the contribution of the industrial sector to job creation has not changed at all in three decades. The share of manufacturing in the Gross Domestic Product (GDP) has steadily decreased since the sixties and is now only 12 per cent.”
The conference brought together leading African think tanks, commissioners and executives of the African Union, representatives from the African Union’s Regional Economic Communities (RECs), development partners, members of the diplomatic corps and the leadership of AUDA-NEPAD.
Other institutions in the Advisory Group are the Institute for Security Studies (ISS – South Africa), the South African Institute of International Affairs (SAIIA), the African Center for Economic Transformation (ACET - Ghana), the African Economic Research Consortium (AERC - Kenya), the Science Technology Innovation Policy Research Organization (STIPRO - Tanzania), and the Policy Center for the New South (PCNS – Morocco).
The African Union Development Agency notes that the low level of industrialisation in Africa can be attributed to various factors, including unfavourable policies such as state-led import substitution, structural adjustment and investment climate reforms implemented by many African countries in the late 1980s and early 1990s. These policies hindered the growth of the manufacturing sector and industrial development.
Additionally, political instability and conflicts prevalent in several African countries have also discouraged investors from committing their resources to the continent, further impeding industrialisation efforts. African countries have also faced criticism for their overreliance on exporting raw materials and importing consumer goods and services, stifling the growth of the manufacturing sector and industries.
“The continent must re-prioritize the industrial sector to transform our economies. We must improve the business environment that addresses informality and increases government revenue generation,” Dr Denis Foretia said.
“Upskilling and reskilling initiatives must be expanded to increase labour force participation and productivity. Priority must be placed on economic diversification and development of regional value chains. And most importantly, the continent and member states must overcome the implementation dilemma and improve government execution of industrial policy.”
“Governments must play an active and targeted role in creating the incentive structures and required inputs for industrial takeoff. Without a focus on industrialization, the demographic dividend is likely to become a demographic curse,” Dr Foretia said.