Industrialization has long been touted as one of the key pillars which can lift the African continent out of poverty. In the quest for Africa’s economic development, it is inevitable to run into the industrialization debate, specifically the need for Africa to industrialize. This structural shift has become more than necessary considering that Africa continues to lag behind in economic development and it is a deprived continent. It is not that there have not been industrialization policies and strategies in Africa. They have just not been successful enough over the past decades.
So far, the picture of Africa`s industrialization trajectory is rather grim. Globally, the share of manufacturing in total outputs rises with per capita income until the country attains upper middle-income status, then it declines as services become more entrenched. This has happened with other continents but not Africa. Africa is at the bottom of the global value chain (GVC) with its share of a mere 1.9 percent in 2020. The need for industrialization has never been greater. In his editorial remarks, Akinwumi Adesina, the President of African Development Bank Group stated that, “The secret of the wealth of nations is clear: developed nations add value to everything they produce, while poor nations export raw materials. Africa must quit being at the bottom of the global value chains and move to rapidly industrialize, with value addition to everything that it produces`’
There is enough evidence to indicate that the traditional approach towards industrialization will miss the mark and a more pragmatic diversified approach might provide a long-lasting solution to this objective. What is apparent is that Africa`s development path will be a much more complex, varied model which will be multi-dimensional in nature. It might be more rational to pursue a diversified pathway which takes much into consideration such as the need for pragmatism, pluralism, where new technologies are best utilized, rather than a radical remake of the manufacturing sector.
This is an acknowledgement that a more diversified model might be the best approach towards the continent attaining its industrialization goals. A number of factors inform this rationalizing. In the first place it is important to understand that Africa has entered a 21st century with a global economy which is substantially different from the previous late industrialisers in Asia. In any case the strong economic growth of the 1990s has slowed down in the new century. The old argument for industrializing through manufacturing by integrating into Global Value Chains (GVC) or adding value through beneficiation of minerals and commodities or by establishing assembly type operations for exports does not quite stick currently. Another argument was to tap into China`s growing infrastructure`s investment and trade to facilitate industrialization. That appears unlikely and will not materialize as these positions do not factor in the heterogeneity and complexity of Africa`s position in GVC. As such instead of following the classic manufacturing industrialization route, Africa has to take a much more complex set of diversified industrialization paths. Since there is also diversity in endowment, economic and social background, and geographic location, there will be no straight jacketed industrialization strategy
What then is this diversified industrialization model? This model is a new technology driven development of a modern service economy (for countries with large domestic markets) and resource-based industrialization (for those countries rich in minerals). Each country then will have a multipronged approach towards industrialization but these approaches would work within the confined circles as laid down by the model for industrialization. What would link all of them is the necessity for African governments to overcome market failures.
The African Development Bank Group President Adesina stated that;
“Diversification is not a goal. It is the outcome of well-planned policies for the structural transformation of economies. No region of the world has moved to industrialized economy status without passing through the transformation of the agricultural sector. This is the formula: agriculture allied with industry, manufacturing and processing capability, equals strong and sustainable economic development and wealth creation throughout the economy”.
A hybrid approach to industrialization involves three deliberate industrial polices. In the first instance countries have to develop sectors which are less automated, where the installation of technology has been slow and where Africa still offers labour cost advantages. Studies done by industrial experts on the continent have shown that there are sectors like food processing, paper products, basic metals, textiles and garments which have labour cost advantages in many economies in Africa. These sectors can be promoted through development of local markets and regional trade, which will promote industrialization. Also, what is important is the need to reduce energy costs while improving its management. A second aspect in diversification is the phenomena of “industry without smoke tracks”. This is pathway to industrialization where technology opens new manufacturing avenues for value addition. Sectors to be transformed on global services include horticulture, transport, tourism, business and trade. The last in the diversification matrix is the use of indigenous entrepreneurship in small scale manufacturing, contrary to the so-called digital gap and skills mismatch, the new industrial revolution represents an opportunity for valuable growth. This is evidenced in some African countries like Rwanda, where there has been increased digitization to improve efficiency in farming, tourism and conservation.
A heterogeneity amongst African countries in terms of context and less likelihood that countries will experience, all these varieties simultaneously means that a strait jacket approach is not an option. Each country on the content will benefit by deliberating and designing its own response so as to create an environment where a multiplicity of industrial futures can thrive. Such an approach can be a realistic path to Africa’s industrialization and ultimately economic development.
