Africa is responsible for only 1% of global manufacturing and is losing ground in labour-intensive industries. So what will it take to convince a multi-national manufacturing company to significantly increase its investments on the continent?
For William Hickey, president and CEO of global packaging company Sealed Air, the three most important factors are: improved infrastructure, easier access to markets across the continent, and a better skilled labour force.
“As a global investor with the opportunity to invest in six continents around the world, the things that we look at that would be important for significant investment [by] our company in Africa, are three things. One clearly is infrastructure in the broader sense of the word, which includes roads, railroads, ports, as well as the ability to move goods around.
“The second is market access because only through access to [Africa’s] 900 million people, can you really invest to scale. So clearly access across borders; simplified procedures for crossing borders; little or no tariffs; perhaps something as radical as a free trade zone of Africa.
“The third would be talent … You really need talented people – engineers, business people, even skilled labour. Manufacturing today is a lot more than someone with a wrench putting an automobile together … Manufacturing today involves computer skills, it involves very significant math and science.
“Those would be my three demands, where I can go to our board and say, ‘I’m going to recommend a sizeable investment in Africa because the conditions are there to be successful’,” said Hickey during a session at the recent World Economic Forum on Africa, held in Ethiopia’s capital Addis Ababa.
Sachen Chandaria, executive director of Kenya’s Orbit Chemical Industries, echoed Hickey’s comments, saying that it is difficult for African companies to compete with international manufacturers. “In Africa we compete against the Chinas and Indias of the world. It is almost like being in a boxing match with both your hands tied behind your back against a heavyweight.”
He said that Africa doesn’t have enough engineers to work in the manufacturing sector. “In Kenya we are creating a culture where everybody seems to want to be an IT billionaire overnight. The challenge we have is to find people that are ready to work at a middle management … engineering level. Finding engineers is a challenge. I don’t think our universities are training enough of the right type of skills that is relevant to create a strong manufacturing sector,” Chandaria noted.
He also called for greater support from the government. “The private sector is not an enemy of government … We are partners. The request is to be treated as a partner. Development will only come when you sit in dialogue with [the] private sector … In Kenya it is happening, but it doesn’t seem to be acted upon. The government makes policies that are totally independent of what the private sector actually wants. So you end up with this constant argument about where the country should be going and where we would like to be. There is a lot of talk about manufacturing and development, but in practice the reality is that it is actually very difficult to get that done.”
Hickey said that manufacturing is critical for Africa’s economic development. “I can think of very few societies, countries or continents that have gone from poor to rich without a robust manufacturing sector.”