Africa: Getting Industrialisation Right

Once again the refrain is for Africa to industrialise. But we have been here before, in the 1970s, and the result was disastrous. But times have moved on and while there are many sceptics, mostly foreign, the age of industrialisation is beckoning again. Can we get it right this time around? Analysis by Said Adejumobi

The issue of industrialisation is firmly back on the table in policy and development circles in Africa. Regional institutions, national political leaders and policy makers are now making it a major priority.

The Economic Commission for Africa (ECA) dedicated the last three editions of its Economic Report on Africa to the issue. The theme of the last edition of the report, Dynamic Industrial Policy for Africa: Innovative Institutions, Effective Processes and Flexible Mechanisms, was on how African countries can craft effective industrial policies.

At the last SADC Summit held at the Victoria Falls, Zimbabwe, in August, Southern African leaders asked its secretariat, based in Gaborone, Botswana, to must craft a strategy and roadmap for industrialisation for the sub-region. The leaders will consider and adopt it at an extraordinary summit to be held soon.

Where Africa is today is far from where it was some 15 to 20 years ago. Two decades back, and until recently, the focus of Africa was on putting the shattered pieces of its economies back together.

Makeshift policies such as structural adjustment programmes and poverty reduction strategies were adopted for Africa to stabilise and stay afloat. Surviving and saving our economies from sinking totally was our major priority.

Africa’s share of world manufacturing value addition fell from 1.9% in 1980 to 1.5% in 2011

Because the economic crisis deepened poverty, fighting poverty was an adjunct of our recovery plan. As Africa weathered the storm of crisis with sustained economic growth, the discourse has gradually shifted from ‘recovery’ to ‘industrialisation’. Africa is now in stage two of its development trajectory.

However, the continent has a dismal record on industrialisation. According to the ECA, the contribution of manufacturing to GDP declined from 11.5% in the 1960s to 10.5% in the 2000s. Also, Africa’s share of world manufacturing value addition fell from 1.9% in 1980 to 1.5% in 2011, at a time when other developing regions of the world, especially Asia, catapulted themselves into the industrial age.

Controversial struggle for industrialisation
The struggle for industrialisation is not alien to Africa. In the immediate post-independence era in the 1960s, much effort, energy and hope was placed on it. Massive infrastructure investment, generous investment promotion regimes and Import Substitution Industrialisation Strategies (ISIS) were adopted.

ISIS, then in vogue and largely supported by Africa’s development partners, was an exercise in failure. Multinational corporations (MNCs) exploited it for illicit funds transfer through over-invoicing, denied skills and technology transfer, and decelerated government revenue earnings. ISIS left Africa empty and dry!