African countries can’t industrialise? Yes, they can
NARRATIVES are essential. Humans are, after all, “helpless story junkies”. Business and economic success depend much more than is commonly acknowledged on getting the narrative right.
And if there is a narrative where getting it right or wrong matters hugely, it is the narrative about Africa’s industrial development.
Africa is the poorest continent. It is likely to be the most affected by climate change.
It is the continent where terrorist groups are spreading fast. Therefore, African industrialisation is essential. Unfortunately, the dominant narrative is that Africa has been de-industrialising, even prematurely.
In this narrative, it is also questioned whether Africa can ever industrialise. African countries have even been advised not to try. The World Bank’s “Trouble in the Making” report concludes that manufacturing is becoming less relevant for low-income countries.
Fortunately, a very different narrative is possible.
In a recent paper, I argue that Africa can industrialise because of three factors. These are “brilliant” new technologies enabling digitisation, smart materials and 3D-printing; a more vibrant entrepreneurship scene; and Africa’s growing middle class (as measured by the share of households that earn between $11 and $110 per person per day), which supports the continent’s first generation of indigenous tech-entrepreneurs.
Consider, therefore, the following narrative: More than 300 digital platforms, mostly indigenous, are operating across the continent.
There are also more than 400 high-tech hubs, and more are being added. In addition, venture capital funding into African tech startups increased 10-fold between 2012 and 2018.
Moreover, manufacturing has more than doubled in size in real terms since 1980. And since 2000, manufacturing value added has grown at more than 4 percent a year. That is double the average between 1980 and 2000 (numbers from the Expanded African Sector Database).
As a result, total employment in manufacturing in 18 of the largest African economies (for which there is data) grew from roughly nine million in 2004 to more than 17 million by 2014. That is an 83 percent increase in 10 years.
The proportion of labour in manufacturing for Africa as a region grew from roughly 5 percent in the 1970s to almost 10 percent by 2008.
So, how will these trends shape the future? I argue that they will result in three varieties of industrialisation.
Three varieties
The first variety can be labelled “acquiring traditional manufacturing capabilities”.
This variety is implied by Overseas Development Institute researchers Karishma Banga and Dirk Willem te Velde. It will be experienced by countries and sectors where technological change is too fast and complex to benefit immediately.
These countries and sectors will need time to first put complementary investments in place, while at the same time continuing to promote traditional labour-intensive manufacturing.
The second variety, “fostering sectors with the characteristics of manufacturing”, is elaborated in a recent UNU-WIDER book.
Here it is argued that service sectors can take up “the role held by manufacturing in the past”. In many countries, services such as ICT and telecoms, tourism and transport, financial and farming services can lead to productive development.
The third variety, “resurgent entrepreneurship-led industrialisation” is based on my earlier work. I point to the growing list of achievements of African countries in terms of high-tech manufacturing. For example, South Africa leads in advanced manufacturing in having one of the world’s largest 3D-printers, used to manufacture parts for the aviation industry.
Different combinations of these varieties will dominate in different countries. For example, Kenya is already experiencing the simultaneous development of high-tech financial services alongside growth in traditional manufacturing, such as food processing and textiles, as well as clusters of advanced manufacturing.
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THIRTY-NINTH MEETING CABINET DECISIONS MATRIX: 5th NOVEMBER, 2019
1. State Enterprises Reform Programme: Forestry Performance Review and Turnaround Strategy.
Cabinet considered and approved a comprehensive turnaround strategy for the Forestry Commission, which the Minister of Finance and Economic Development presented as part of the ongoing State Enterprises Reform Programme.
The strategy is intended to address funding, governance and skills training needs and thereby enable the Forestry Commission to effectively discharge its mandate of preserving and growing the country’s rich forestry endowment.
Cabinet approved as follows: to restructure and realign the Forestry Commission to perform its core function on the conservation and management of the country’s forestry reserve in contributing to the economic turnaround and the attainment of Vision 2030; that the Forestry Commission broadens community participation by setting up natural resource management committees in rural communities in collaboration with rural district councils; that, in line with the New Dispensation’s Devolution policy, each province develops a Natural Resources Development Plan, which entails sound management of forestry and wildlife resources for effective contribution to economic growth; and that the Forestry Commission undertakes effective marketing as well as competitive pricing of its tourism facilities in order to enhance its financial performance.
Cabinet further directed that the Forestry Commission urgently concludes its lease agreement with Allied Timbers and thereby expand its revenue base through lease fees. On its part, Government will institute and coordinate measures to deal with the challenges of illegal settlers who exacerbate the depletion of forests and thereby undermine the operations of the Forestry Commission.
2. Operationalisation of the Walvis Bay Dry Port Facility
Cabinet noted with satisfaction the progress report on the operationalisation of the Walvis Bay Dry Port Facility in Namibia as presented by the Minister of Transport and Infrastructural Development. The dry port facility, which was officially inaugurated by His Excellency the President on 26 July 2019, is set to commence operations mid November 2019.
The facility was established for purposes of cargo handling, storage and freight logistics.
Zimbabwe will derive tremendous benefits from the dry port through facilitation of the smooth flow of the country’s imports and exports. Cabinet has since directed ministries
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In another
gagement egy, Cabinet further noted other offers of cooperation from the Republic of Serbia, and looks forward to concrete actions in this regard.
and their agencies to commence using the facility, especially in view of the need to de-congest traditional routes to the Mozambican and South African ports.
3. Update on Medical Doctors Illegal Job Action
Cabinet was informed by the Minister of Health and Child Care that the public hospitals medical doctors’ strike has now gone beyond 63 days. Medical services at most central hospitals, therefore, remain constrained. The situation is being exacerbated by City of Harare nurses who have since stopped reporting for duty citing incapacitation.
Disciplinary hearing for the doctors by the Health Service Board commenced on 1st November 2019. Of the 80 doctors charged, 77 were found guilty and discharged.
Cabinet, however, assures the public that necessary measures are being instituted to ensure that the situation in the health sector returns to normalcy in the shortest possible time.
4. The 18th Summit of Heads of State and Government of the Non-Aligned Movement
The Minister of Local Government, Public Works and National Housing, who led a Government delegation to the 18th Summit of Heads of State and Government of the Non-Aligned Movement (NAM) held in Baku, Azerbaijan from 25 to 26 October 2019 briefed Cabinet on proceedings and outcome of the summit. Cabinet noted the report with satisfaction amid indications that several countries spoke very strongly in solidarity with Zimbabwe and called for the removal of the sanctions that are stifling the country’s economic development.
Furthermore, the Republic of Azerbaijan extended offers for enhancing bilateral cooperation with Zimbabwe and, including through the provision of undergraduate and postgraduate scholarships under the NAM framework.
In another boost for the country’s engagement and re-engagement strategy, Cabinet further noted other offers of cooperation from the Republic of Serbia, and looks forward to concrete actions in this regard. Generally, the summit highlighted the need to strengthen NAM’s role in global efforts to address challenges that include, inter alia, xenophobia, human trafficking and illicit financial flows. 5. Threat of Strike Action by Civil Servants Following a statement issued by civil servants that they intend to go on strike to demand a review of their salaries, negotiations have been taking place between the Apex Council and the National Joint Negotiating Council.
In the latest meeting that took place this afternoon, it has been agreed as follows: Government does not dispute the need to give a cost of living adjustment to its workers, but was faced with various competing national demands. These include:
◆ Payment of the annual bonus that will take a significant portion of resources and due to restricted revenue inflows, will be staggered between November and December 2019;
◆ The need to import grain to supplement
grain reserves;
◆ The need to support the Presidential Inputs Support Scheme by providing vulnerable households with agricultural input;
◆ Government was subsidising on transport through ZUPCO and the recent purchase of 15 additional Public Service buses;
end and that was difficult to get additional resources from the current budget and, therefore, a review in the cost of living was definite in 2020.
The Government team then indicated that Government would be able to provide cushion through the payment of the annual bonus which would be paid inclusive of allowances contrary to the previous years where it was paid based on basic salary alone.
In addition, Government was also putting measures to contain loss of the workers purchasing power and requested the Apex Council to provide three nominees to attend a Tripartite Negotiating Forum Technical Committee workshop in Kadoma from 10 to 15 November 2019.
The workshop is aimed at coming up with a social contract that is aimed at bringing the social partners to a common position. This may result in the freeze of incomes and prices. Workers response
In response, the workers just advised the meeting that they had heard the Government’s position and gave no explanation on their next move.