Industrialisation: The route to Africa’s long awaited development
What you need to know:
- Africa is still as a source of raw materials and value is added elsewhere. To change this narrative, the African Union Commission through the Department of Trade and Industry (DTI) has risen to the occasion to promote industrialisation as part of the key drivers of the AfCFTA and Agenda 2063.
The Africa Continental Free Trade Area (AfCFTA) is now three months old after it was launched by the African Union (AU) during a summit of Heads of States in Nigerian capital, Niamey.
With this launch, the continent was ready to sing one song of becoming the world’s biggest economic bloc whereby member states will jointly market their products and commodities in Africa.
In the AfCFTA, the AU sees fruits of the Abuja Treaty, and sets the ball rolling towards realising the objectives of the Agenda 2063. The continent of over 1.2 billion people with 450 million of them being employable youth aged between 15 and 35 (AfDB, 2018), creating opportunities is key for the leaders of the member states.
With the AfCFTA, the times when Africa was the final consumer of commodities produced from across the world especially Asia, Europe and the Americas, are poised to be washed under the carpet so that African raw materials are processed at home and sold elsewhere as finished goods.
Much as the continent missed out on the Industrial Revolution in Europe and America between 1760 and the 1840s, most of the raw materials originated from Africa which is endowed with mineral deposits and other natural resources needed for manufacturing.
Currently, most African countries have opened their doors to industrialisation. Much as the proprietors are foreign investors whose main aim is profit repatriation, they employ some of the nationals in their factories and also sell the products on the local market.
To change this narrative, the African Union Commission through the Department of Trade and Industry (DTI) has risen to the occasion to promote industrialisation as part of the key drivers of the AfCFTA and Agenda 2063.
“The main framework for Continental Industrialisation is the Accelerated Industrial Development of Africa (AIDA) programme and its Plan of Action,” said Mr Rongai Chizema, the DTI Technical Adviser. He was speaking during a one-week media orientation workshop on Africa Industrialisation, at the AU headquarters in Addis Ababa, Ethiopia last week.
According to Mr Chizema, for the AfCFTA and Agenda 2063 to be a reality, African countries ought to take a step from the continuous exploitation by the developed world by setting up industries so that the continent itself becomes a market.
Road to industrialisation
He believes that to achieve the goal of industrialisation, the continent must add value to what is produced locally through developing Agro-Industries and minerals.
The continent has abundant agricultural products especially in the sub-Saharan Africa where majority of the population are cultivators who must be encouraged to move from subsistence farming to commercial agriculture.
Mr Chizema said; “We want to change the super structure of exploitation of the minerals that are taken to Europe and brought back as high value goods. The political economy of industrialisation is rooted in the manner in which colonisation was configured. That has not changed in present day Africa and the change has been belated. But we could do it now.”
Abundant raw materials
Africa has abundant treasure in its natural resources. Some of them are extractives such as minerals of different types and value their rivers which are ever flowing to support electricity generation and the agro-processing products.
Unlike, Europe, Asia and the Americas where the industrialists look out to Africa for the source of raw materials, the Continent has more than enough. But what is lacking is machinery and the requisite skills.
Ms Ron Osman Omar, the Acting head of the Industry Division at the AU, says that time is now for Africa to feed and enrich its own people using the available resources. She says Africans must stop being exploited by the outside world by driving Agenda 2063 with industrialisation.
“Though abundantly endowed with natural resources, including many industrial minerals and agricultural resources (that is hosting the most arable land in the world), the continent remains food insecure, and poor,” she said.
“This is mainly due to the fact that resources continue to be exported with no local value addition and processing. The persistent lack of industrialisation is a dent or drag on the African economies, which remain largely dependent on agriculture and unprocessed commodities that add little value,” adds Ms Ron.
Africa versus the world
Comparing the continent with the rest of the world (which pick supplies from Africa), Mr Ron says on average, Africa’s industrial sector generates $700 (Shs2.6m) of Gross Domestic Product (GDP) per capita, which is less than a third of the same measure in Latin America, $2,500 (Shs9.3m) and a fifth of $3,400 (Shs12.6m) in East Asia.
Despite the agriculture sector not producing for industrialisation, the main raw materials required from Africa are minerals and hides and skins.
Middle Income status
On the Ugandan perspective, industrialisation is one of the key drivers for the country to achieve Middle Income status.
President Museveni has been emphasising it alongside Commercial Agriculture, Services and Information and Communications Technology (ICT).
At least 22 industrial parks are being developed in strategic towns across the country. However, much of the investments in manufacturing are by foreigners who enjoy several incentives including a five-year tax holiday, provision of land and doing feasibility studies.
President Museveni who speaks passionately about integration of Africa to make it a strong market has already announced bans on exportation of some minerals without value addition. Copper ore will not be exported when mining resumes at Kilembe Mines in the Western part of the country.
“On the issue of Kilembe (mines), I will not allow what the Canadians were doing. Just blistering copper. We need it to be purified up to 98 per cent. What we call cathode copper. We want to see cables and transformers all made here,” Mr Museveni said during the Presidential-Investors Roundtable meeting at State House, Entebbe early this year.
Protecting local market
To protect the market for local products, the government has also increased import duty on every product that can or is being produced in Uganda so that local manufacturers seize this opportunity to be the first point of call.
Imports of office furniture and some construction materials have been banned to promote the ‘Buy Uganda, Build Uganda’ policy such that local products have market.
Leather industry: changing the narrative
The leather industry is something the continent has not highly embraced because Africa still imports more leather than it would export.
Prof Mekonnen Hailemariam from the Africa Leather and Leather Products Institute (ALLPI) emphasises that to change the narrative on the exploitation of the leather market, governments should emphasise the establishment of leather industries.
“Our continent is weak in the aspect of getting final products. We need to develop different leather policies and support human capacity development,” he said.
ALLPI, said Prof Mokennen, has been used a case study for other continents who sent their personnel to Addis Ababa to learn more so that they can develop their leather institutions.
He revealed that, in 2018, the global value for trade in leather products was $258b ( about Shs944.4 trillion) with Africa importing products worth $5.4b (Shs19.7b) compared to exports worth $2.55b (Shs9.3b).
The continent is not short of quality. But it lacks the quantity of raw materials to make the leather industry self-reliant.
Information from the ALLPI indicates that, with support from experts in Turkey, tests on the quality of hides and skin from Uganda, Ethiopia, Sudan, Zimbabwe and Zambia have returned “amazing” results in the past few years.