Economic growth in Africa: Can Africa become a Manufacturing Hub?
By Emmanuel Allottey
Africa is the lowest contributor to the worlds manufacturing output at 1.5% according to the United Nations Industrial Development Organisation, in comparison with a 21.7% share for the Asia Pacific region, 17.2% for East Asia and 22.4% in North America’s. The Manufacturing industry creates jobs, value and growth on an unrivalled scale. African nations looking to transform their economies into high output nations should be considering the expansion of the manufacturing sector.
The launch of the African Continental Free Trade Area (AfCFTA) in March 2018, a single market for goods and services in Africa that aims to unlock manufacturing potential and facilitate industrialization, driving sustainable growth and jobs among other objectives is yet to yield results. The introduction of this arrangement gives a glimmer of hope in the development of intra-African trade.
Africa has a rare combination of the required mix for a successful manufacturing industry namely; Raw materials, a growing population and a strategic geographical location. Africa is a mineral rich continent with a vast array of resources. In addition to mineral resources, Africa is home to some of the largest waterbodies in the world Zambezi river, Okavango Delta, Nile river that serve as inputs for manufacturing.
The major benefit of Manufacturing is employment creation. Youth unemployment is a major concern for African governments. Africa has largest concentration of young people in the world. 20% of the population are between the ages 15-24. High numbers of young, unemployed people mean a cheap labour force is readily available in many African nations to participate in the manufacturing industry. Mass job creation for the largely unskilled, helps to spread wealth and bolstering the continents economic output.
Despite the attractiveness of manufacturing, growth has been hindered by a combination of factors such as high capital investment requirements, poor governance and weak institutions, ill-advised industrial policies; and poor infrastructure services resulting in higher production and transaction costs.
Through the adoption of advanced manufacturing, African nations can leapfrog and become the world leaders in manufacturing output specialising in next-generation industries, where there is enormous demand and enormous profit to be made. The advancement of disruptive technologies like additive manufacturing, 3D-printing, advanced robotics, and the utilization of the Internet of Things and Big Data where adopted will increase productivity, efficiency and create competitive advantage.
African nations seeking robust economies must develop a national manufacturing strategy and execute against it relentlessly.