{"id":290,"date":"2018-05-18T16:47:12","date_gmt":"2018-05-18T16:47:12","guid":{"rendered":"https:\/\/governancesolutions.wordpress.com\/?p=290"},"modified":"2022-04-05T16:46:46","modified_gmt":"2022-04-05T16:46:46","slug":"africa-must-industrialize","status":"publish","type":"post","link":"https:\/\/sunesishq.com\/notes\/africa-must-industrialize\/","title":{"rendered":"Africa Must Industrialize"},"content":{"rendered":"
Originally written January 2014<\/strong>
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In order to make its current growth sustainable, Africa must rethink its economic focus.<\/span><\/em><\/p>\n

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In 2013, a major policy\u00a0discourse<\/span>\u00a0<\/span><\/a>within and between the supranational bodies that influence policymakers in sub-Saharan Africa was the industrialization of the continent. These bodies include, but are not limited to, the African Union (AU), the United Nations Economic Commission for Africa (UNECA), and the United Nations Industrial Development Organization (UNIDO).<\/span><\/p>\n

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Industrialization is\u00a0defined<\/span><\/a>\u00a0as: \u201cThe process in which a nation or continent transforms itself from a primarily agricultural society into one based on the manufacturing of goods and services.\u201d During the trans-Atlantic slave trade and later the colonial era, Africa supplied raw materials and labor for the industrial development of Europe and North America. This practice continues until today. Much of sub-Saharan Africa still has a high dependence on primary products, exporting much of its raw materials without adding value to them while importing manufactured goods.<\/span><\/p>\n

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The crux of the continent\u2019s development narrative is how to leverage the current economic growth in the region, in addition to other favorable conditions, as a bridge to help facilitate industrial development.<\/span><\/p>\n

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Economic Growth and Value Addition<\/span><\/p>\n

Gross Domestic Product (GDP), the economic indicator, is defined by the\u00a0World Bank<\/span><\/a>\u00a0as: \u201c[The] sum of gross\u00a0value added\u00a0by all resident producers\u00a0<\/em>in the economy plus any product taxes and minus any subsidies not included in the value of the products.\u201d Economic growth is linked to creating value by adding value to a nation\u2019s raw or intermediate materials.<\/span><\/p>\n

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Unfortunately, however, adding value to sub-Saharan Africa\u2019s own natural resources has not been a strength of the continent. In spite of this, the\u00a0World Bank Africa\u2019s Pulse<\/span><\/a>\u00a0and the\u00a0IMF World Economic Outlook<\/span><\/a>\u00a0(WEO) state that the economies of sub-Saharan Africa have,\u00a0since the late 1990s to 2013,\u00a0been experiencing consistent economic expansion. Six of the world\u2019s fastest growing economies are currently within this region. Whereas economic growth slumped for most of the world in recent years, sub-Saharan Africa\u2019s growth has stayed resilient right through the global recession.<\/span><\/p>\n

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The IMF\u2019s World Economic Outlook for October 2013 estimates that 16 countries in sub-Saharan Africa will experience GDP growth greater than or equal to 6%. It forecasts 15 more countries to experience economic growth of 4-6% \u2014 meaning 31 out of the total 45 countries analyzed in sub-Saharan Africa are expected to experience economic growth greater than or equal to 4%. This is significant when one considers that the growth of advanced economies in the same period is forecasted to be 1.2%.<\/span><\/p>\n

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The reasons suggested for the economic growth are many. According to Bretton Woods Institutions, much of the growth is a result of increased world commodity prices. The\u00a02013 Africa progress report<\/span><\/a>\u00a0concurs and enumerates other reasons for the growth such as improved macroeconomic policies, increased investment in infrastructure, institutional development, the deepening of financial systems, and rising productivity.<\/span><\/p>\n

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Africa Must Industrialize<\/span><\/p>\n

As the current economic growth did not result from value addition and increased manufacturing, but instead from increases in world commodity prices, it makes the region susceptible to commodity price volatility. If commodity prices fall, Africa\u2019s impressive economic growth might grind to a halt \u2014 thus, the dire need for diversification through industrialization. Even if commodity prices stay high, natural resources are not infinite and they must be managed with sagacity.<\/span><\/p>\n

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As recommended by the\u00a02013 Africa Progress report<\/span><\/a>, it is advantageous for African governments to fully implement the Accelerated Industrial Development for Africa (AIDA) plan, signed in 2008 in Addis-Ababa. The AIDA is a comprehensive framework for achieving the industrialization of the continent. If Africa can successfully steward its natural resource wealth, investing it wisely and using some to industrialize, then whether the resources run out or not or whether commodity prices fall, Africa would be on a good economic footing.<\/span><\/p>\n

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Moreover, not only will industrialization create the environment for adding value to Africa\u2019s natural resources, but it will also provide much needed employment at various stages of the value adding chain for Africa\u2019s 1.1 billion people \u2014 leading to wealth creation.<\/span><\/p>\n

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Industrialization will address many development gaps in sub-Saharan Africa. Some of these gaps, as noted in a\u00a0UNECA Southern Africa Office Expert Group Meeting Report<\/span><\/a>,\u00a0include:<\/span><\/p>\n

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