Time for Manufacturing Africa — Economic Confidential

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Time for Manufacturing Africa — Economic Confidential
Time for Manufacturing Africa — Economic Confidential

Time for Manufacturing Africa
By Issa Aremu

Friday, November 20th marks 2020 edition of Africa Industrialization Day (AID). In 1989, the United Nations General Assembly, proclaimed 20 November “Africa Industrialization Day” (AID) to raise awareness about Industrialization, Diversification and beneficiation in Africa. In the past three decades, United Nations Industrial Development Organization (UNIDO), annually organizes a number of activities to value addition and manufacturing in the continent. The theme of this year’s AID is “Inclusive and sustainable industrialisation in the AfCFTA and COVID-19 era”.

The point cannot be overstated: Industry is the key driver of sustainable jobs and development for national economies and the foundation of good living standards. It does not matter whether it is first industrial revolution, (Industry 1.0), Second Industrial Revolution (2.0), Third Industrial Revolution (Industry 3.0) or the Fourth Industrial Revolution (Industry 4.0), Africans must make what we wear (gold, rings and necklaces, clothes and textile), what we ride, (automobiles), what fuel our cars (petroleum products) what we build with (iron and steel), soaps we bath with (chemicals and allied products) and generate energy we consume. Africa must stop exporting raw cottons, crude oil, mineral resources, gold and diamond only to be importing finished goods from China, Europe and America. Don’t replace crude oil with gold exports. Refine both! With large small or medium scale enterprises, Africa must consume products it produces not imported or smuggled as it is the case in Nigeria.

Industrialization assumes a special importance in development given its importance in the transformation of the economy through production of goods and services, employment generation and poverty eradication. Industrialization is at the heart of development discourse. Industrialization delineates between growth and development of nations. If goods produced are not broadly distributed, among the population, we can only talk of economic growth. However if the goods meet the basic human needs of a large percentage of the population, industrial growth can then be said to be accompanied by development. The advantages of industrialization include lessening of dependency on imports, thus saving scarce foreign exchange. Where the economy is diversified, industrialization serves as a source of foreign exchange. It also serves as a source of employment for greater number of the population and invariably reduces income poverty. The dispersal of industry and the emergence of new industrial centers are the most remarkable features of modern globalization. In the past two decades, for instance, China has overtaken Japan and challenged USA as a leading industrial power in the world. There had been dispersal of industry away from Europe and America to the newly industrializing countries of South East Asia, notably South Korea, Indonesia and Malaysia. Paradoxically at the same time Africa is de-industrializing with regular trade marks of factory closures, under-capacity utilization, unemployment and underemployment fueling insecurity, youth revolts as we just witnessed recently with Nigeria’s SARS protests. I agree with Ooni of Ife, Oba Adeyeye Ogunwusi, Ojaja II who recently called on government at all levels “to create employment opportunities to pacify angry and hungry Nigerian youths to curb uprising”. While it is commendable that the Royal father is set “.. to empower 5000 youths and ensure that they financially independent”, sustainable jobs can only come from industry and manufacturing, which must be seen not as an act of charity but as a necessary condition to transform Nigeria and indeed Africa from underdevelopment, dependence to development. Africa must copy China’s industrialization drive which has within 20 years moved over 250 million people out of poverty through manufacturing and industrialization. Africa parades as many as 1.2 billion humans, some 80 percent being energetic youth population. Sadly millions of these youths join the labour market annually without jobs making them voluntary slaves to Europe and America after three hundreds Africa put an end to forced slavery/ labour. In order for Africa to meet the Sustainable Development Goal 2030, especially SDG 9 dealing with industry and innovation, Africa must urgently innovate and industrialize.

The centrality of the transformational role of industry was widely shared by Africa’s post-colonial states which informed the aggressive campaign of the post-colonial government on industrialization. Indeed, Industrialization was part of the post-colonial development project. Colonialism undermined the growth and development of domestic industry through a deliberate policy of import for a protected market and blatant indifference to local efforts to promote indigenous enterprises. There was once an Africa of industrial estates in Nigeria, Ghana, Senegal and Ivory Coast!

UNIDO shows that manufacturing industry in Sub-Saharan Africa (SSA) lags behind other developing regions in almost all measures of economic development, namely income per head, industrialization and agricultural productivity. The distribution of manufacturing activity in SSA, measured by the dollar value of manufacturing value added (MVA), is highly skewed. With the exceptions of South Africa and Mauritius, MVA per head in the 15 most industrialized countries is very low. South Africa is the only country in which manufacturing plays a major role in both domestic output and exports, while Mauritius, an island with a population of only1.2 million inhabitants, is best described as an export platform. According to the World Bank, Manufacturing, value added, MVA, (% of GDP) in Nigeria was 9.65 as of 2018. The National Bureau of Statistics, says the manufacturing sub- sector “is responsible for about 10% of total GDP annually, while in terms of terms of employment generation, manufacturing activities account for about 12 per cent of the labour force in the formal sector of the nation’s economy” . Sadly. This is because through out the 70s, MVA averaged, 25 per cent making Nigeria an investment/job destination for other Africans. There was one a Manufacturing Nigeria, with full employment for the working population.

I agree with UNIDO that Industrial development is of critical importance for sustained and inclusive economic growth in African countries. Africa must make what it consumes, otherwise it will be consumed by the rest of the world. Undoubtedly, 2019 novel coronavirus disease (COVID-19) with its notorious lock down effects would further impact negatively on manufacturing. But the COVID-19 disruptions in global value supply chains mean Africa has another opportunity to produce what it consumes. 2020 AID takes place against the background of the take off of the historic Africa Continental Free Trade Agreement (AfCFTA) creating “a single African market for goods and services and the world’s largest free trade area by number of countries”. Expected to take off, on 1 January 2021, will AfCFTA, backed up by 28 ratifications to date, and 54 signatures to the Agreement, promote Africa’s Industrialization or further factory closures? The Rule of Origin ( ROO) must be such that Africa trades in its own goods rather than recycled and repackaged imports. Buhari administration commendably launched the Economic Recovery and Growth Plan which elapsed this year. But production targets sets for domestic petroleum refining were not met. So much for “Growth Plan” without value addition ! Nigeria is scandalously the only OPEC member without a functioning refinery. It’s good news that Aliko’s 650,000 BDA refinery is 80 percent completion. Good news that Edo State, Imo and Delta states are building modular refineries. That’s the way to go: beneficiation. Oil is not a curse if there is Diversification. However no industrialization without electrification. We must therefore urge all African governments to massively invest in energy mix of hydro, solar and nuclear to drive Industrialization. Africa must develop a Sustainable Industrial Policy with respect to artificial intelligence, Digitalization within the context of the so called Industry 4.0. All industrial transformations must promote the much needed social justice in the world of work including a just transition for affected workers in terms of training and retraining. Sustainable industrial policy must be based on an assessment of how to steer towards a destination all Africans desire rather than a destination that is favourable to only a few investors. The benefits of industrialization should not be privatized while the costs are socialized through environmental degradation and low labour absorption. Industrialization must create decent jobs and uplift the environment.

Issa Aremu mni writes from Abuja

Time for Manufacturing Africa — Economic Confidential

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