Manufacturing

What are the Key Drivers of Industrialisation/ Manufacturing in Africa?

The manufacturing sector is widely considered to be the ideal industry to drive Africa’s development due to the labour-intensive, export-focused nature of the business. Indeed, as pointed out by The Economist during 2014, few countries have been able to escape poverty without employing a significant amount of their people in manufacturing activity. Factory activity accounted for 10% of Africa’s GDP over the past decade. The manufacturing sector is widely considered to be the ideal industry to drive Africa’s development due to the labour-intensive, export-focused nature of the business. Indeed, as pointed out by The Economist during 2014, few countries have been able to escape poverty without employing a significant amount of their people in manufacturing activity. The Africa Progress Panel also sees some degree of manufacturing development as a prerequisite for sustained high economic growth on the continent. According to World Bank Economist Hinh Dinh: “It is the responsibility of African governments to bring foreign direct investment (FDI) to manufacturing to create jobs.

The history of economic development is such that any country would need to start producing basic household goods. Over time they moved to higher value goods. No country in the world has developed without producing light manufacturing. And no country can skip it.” From a different perspective, alleviating poverty on the continent is directly linked to improved nutritional levels, as healthier workers are more productive. Increased agro-processing in the continent would reduce food insecurity and demand for imported foodstuffs. For this reason, stimulating manufacturing production via industrial policies is an important political variable. Already, in many African countries, investment flows from politically friendly states in Asia come with conditions requiring politicians to make room for manufacturing in their policy decisions.

In the Invest Africa recording below, we discuss the significance and key drivers of industrialisation in African economies, and also find out whether a major hub in Africa, South Africa, is at risk of de-industrialisation and why do those in favour of this argue that China is responsible for Africa’s de-industrialisation. For this discussion CNBC Africa is joined by guests Bonang Mohale, Former President, Black Management Forum and Themba Khumalo, Director Africa Regional Industrial Integration, Department of Trade and Industry.

David Okwara

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