Busting the myths about industrialisation in Africa

Africa’s need to aggressively pursue the industrialisation path has become more compelling in light of the need to sustain current growth standards. With carefully developed backward and forward linkages, industrialisation has the potential to diversify economies and reduce exposure to external shocks.

We at the United Nations Economic Commission for Africa (ECA) are working the case for industrialisation and we do not apologise for that. We are convinced it opens doors to address most of Africa’s many challenges, if properly done. It has the potential for poverty reduction, dealing with inequality provoked by rent seeking practices still persisting in many countries, and it can allow leapfrogging into a green economy model. Several myths are bandied around for why Africa’s industrialisation has been stunted. Let me address a few fallacies that continue to plague Africa’s industrialisation drive – discussing them and giving reasons why there is no truth in these allegations.

Myth 1: Industrialisation is a fashionable developmental word that will soon be forgotten

There continue to be strategic and policy changes in the posture taken by African states regarding development strategies. We remember buzzwords like ‘structural adjustment’, ‘trickle-down effect’, ‘poverty reduction strategies’ that influenced national policy direction. Although industrialisation has always been in development literature, this is the first time it will likely take centre stage. We see this because the call for industrialisation is now linked to a structural transformation of the state.

The Action Plan for the Accelerated Industrial Development of Africa (AIDA) supported by the African Union, ECA, African Development Bank and New Partnership for Africa’s Development demonstrates how the link between industrialisation and structural transformation is being taken seriously. AIDA is based on four pillars: using Africa’s own natural resource endowment as a basis for industrial transformation; developing an infrastructural system including energy and transportation; increasing research and development and the adaptation of technology; and promoting private sector development, especially the role of small and medium scale enterprises. It is hoped that these enablers will lead to the structural transformation of the continent’s economies.

In the 1970s, Korea had neither the skill, nor raw material for developing a world class ship building industry but decided to follow this path based on a well-developed policy. Today, South Korea is one of the three largest ship building nations. These are examples we need to think about. Although we need African solutions and priorities we can learn from such successes.

Myth 2: Industrialisation is all we need to develop

African countries must begin to see industrialisation as a tool for the social and economic transformation of their societies with structural transformation as the end result. Deng Xiaoping’s transformation of China’s economy is an example of the need to address industrialisation as part of a wider integrated and intergenerational process of development.

In this regard, I define structural transformation as a significant change in the sectoral composition of GDP with the share of the primary sector in employment and output shifting to industry and modern services. Structural transformation can be realised by giving attention to key developmental elements, one of which is industrialisation. We have to still deal with a demographic challenge and transform it into a dividend, not to mention social cohesion that should result from less inequality, embracing diversity and increasing human security and inclusive governance.