To cap­ture po­si­tions out­sourced from China, con­ti­nent must re-ex­am­ine its ca­pac­ity-build­ing sec­tor, ex­perts say

China Daily European Weekly - - FRONT PAGE - By LU­CIE MORANGI lucy­morangi@chi­

“The win­dow of op­por­tu­nity is fast clos­ing for Africa to ben­e­fit fully from China’s in­dus­trial de­lo­cal­iza­tion process.” CAR­LOS LOPES, for­mer ex­ec­u­tive sec­re­tary of the United Na­tions Eco­nomic Com­mis­sion for Africa

Alead­ing Kenyan politi­cian re­cently vis­ited a Chi­nese com­pany to call for it to ex­pand its op­er­a­tions lo­cally and re­gion­ally.

Adan Mo­hamed, the cabi­net sec­re­tary of in­dus­tri­al­iza­tion, trade and co­op­er­a­tives, told China Wu Yi (Kenya) Pre­cast Co Ltd — an en­ter­prise worth $100 mil­lion (81 mil­lion eu­ros; £71 mil­lion) —

that the move would not only in­crease the sup­ply of af­ford­able con­struc­tion prod­ucts, but would also gen­er­ate job op­por­tu­ni­ties for young Kenyans.

The Kenyan govern­ment has pledged to cre­ate 1.3 mil­lion jobs each year, with the man­u­fac­tur­ing sec­tor be­ing key to these plans. The coun­try has the high­est un­em­ploy­ment rate in the re­gion at 39.1 per­cent, ac­cord­ing to a re­cent re­port by the United Na­tions’ Hu­man De­vel­op­ment Index.

The chal­lenge is not con­fined to Kenya. A re­cent re­port by the In­ter­na­tional La­bor Of­fice, ti­tled World Em­ploy­ment and So­cial Out­look: Trends 2018, says un­em­ploy­ment for the en­tire con­ti­nent stands at 7.9 per­cent. The fig­ure is ex­pected to in­crease this year, driven by a grow­ing la­bor force in a cli­mate of lim­ited im­prove­ment in the la­bor mar­ket, the re­port says.

This is un­like the sit­u­a­tion in other re­gions, where a down­ward trend is pre­dicted. For ex­am­ple, the North Amer­i­can un­em­ploy­ment rate is ex­pected to de­cline from 4.7 per­cent to 4.5 per­cent this year, while Asia-Pacif- ic lev­els are ex­pected to re­main low at around 4.2 per­cent, the In­ter­na­tional La­bor Of­fice re­port says.

A num­ber of fac­tors are blamed for the ris­ing lev­els of un­em­ploy­ment in sub-Sa­ha­ran Africa.

“Chief among them are po­lit­i­cal and so­cial in­sta­bil­ity, closed bor­ders lim­it­ing the move­ment of peo­ple and cap­i­tal, an un­fa­vor­able busi­ness en­vi­ron­ment, dif­fi­cul­ties in ac­cess­ing credit by small and medium-sized busi­nesses, dis­rup­tive tech­nolo­gies, harsh weather and lack of in­fra­struc­ture,” says Robert Ka­giri, a lec­turer at the In­sti­tute of Diplo­macy and In­ter­na­tional Stud­ies at the Uni­ver­sity of Nairobi in Kenya.

But above all, sev­eral em­ploy­ers have cited a skills deficit as the rea­son be­hind job­less­ness in Africa. A study com­mis­sioned by the Bri­tish Coun­cil, the Uni­ver­si­ties, Em­ploy­a­bil­ity and In­clu­sive De­vel­op­ment Project (201316), says that around 49 per­cent of new grad­u­ates are not ad­e­quately pre­pared for the la­bor mar­ket.

More­over, the World Eco­nomic Fo­rum’s Hu­man Cap­i­tal Index re­port, The Fu­ture of Jobs and Skills in Africa, Pre­par­ing the Re­gion for the Fourth In­dus­trial Rev­o­lu­tion, which was re­leased last year, says sub-Sa­ha­ran Africa cur­rently uses 55 per­cent of its hu­man cap­i­tal po­ten­tial, com­pared with a global av­er­age of 65 per­cent.

It says em­ploy­ers across the re­gion iden­tify in­ad­e­quately skilled work­forces as a ma­jor con­straint on their busi­nesses, in­clud­ing 41 per­cent of all com­pa­nies in Tan­za­nia, 30 per­cent in Kenya, 9 per­cent in South Africa and 6 per­cent in Nigeria.

“This pat­tern may get worse in the fu­ture. In South Africa alone, 39 per­cent of core skills re­quired across oc­cu­pa­tions will be wholly dif­fer­ent by 2020,” the re­port says.

“Ca­pac­ity con­tin­ues to be the miss­ing link for the con­ti­nent to suc­cess­fully drive its in­dus­tri­al­iza­tion am­bi­tions,” says Ka­giri. “This means that African gov­ern­ments need to fo­cus on per­for­mance of the econ­omy as well as ca­pac­ity-build­ing. It goes hand-in-hand.”

At the Africa 2017 In­ter­na­tional fo­rum in Egypt, Car­los Lopes, the for­mer ex­ec­u­tive sec­re­tary of the United Na­tions Eco­nomic Com­mis­sion for Africa, warned that Africa is run­ning out of time for cap­tur­ing jobs out­sourced from China. He said man­u­fac­tur­ers are in­creas­ingly turn­ing to ad­vanced tech­nol­ogy such as robots for cheap and ef­fi­cient la­bor.

“The win­dow of op­por­tu­nity is fast clos­ing for Africa to ben­e­fit fully from China’s in­dus­trial de­lo­cal­iza­tion process,” Lopes says. “Con­trary to widely held ex­pec­ta­tions, the con­ti­nent might miss out on the mil­lions of jobs up for grabs.”

The World Bank es­ti­mates that ris­ing wages in China, as well as Bei­jing’s com­mit­ment to up­grade its man­u­fac­tur­ing in­dus­tries, will see the coun­try shed around 83 mil­lion to 85 mil­lion jobs, pro­vid­ing un­prece­dented in­dus­tri­al­iza­tion op­por­tu­ni­ties for Africa and other low-in­come coun­tries.

“We have to face the fact that some low-end value pro­duc­tion can be re­placed by robots. Africa there­fore has to re­al­ize that these op­por­tu­ni­ties are be­com­ing elusive and the win­dow is fast clos­ing. Re­forms have to be im­ple­mented ur­gently,” says Lopes, who is now a pro­fes­sor at the Grad­u­ate School of De­vel­op­ment Pol­icy and Prac­tice at the Uni­ver­sity of Cape Town, based in Guinea-Bis­sau.

Fi­nanc­ing is not a big chal­lenge, since China is back­ing Africa’s in­dus­tri­al­iza­tion, ex­perts say.

At the 2015 Fo­rum on China-Africa Co­op­er­a­tion Sum­mit in Jo­han­nes­burg, South Africa, Pres­i­dent Xi Jin­ping pledged to set up a China-Africa pro­duc­tion ca­pac­ity co­op­er­a­tion fund with ini­tial cap­i­tal of $10 bil­lion.

The China-Africa In­dus­trial Co­op­er­a­tion Fund, set up in 2016, has al­ready ap­proved 10 projects worth a to­tal of $1.7 bil­lion, in­clud­ing fund­ing a $40 mil­lion alu­minum man­u­fac­tur­ing project in An­gola by CITIC Con­struc­tion, re­search shows.

In spite of ac­cess to cheap credit, Chi­nese com­pa­nies are not mov­ing to Africa quickly enough. A re­cent re­port by global man­age­ment con­sult­ing com­pany McKin­sey says that at least 10,000 Chi­nese-owned com­pa­nies are on the con­ti­nent today.

Lopes says: “Chi­nese brands are grow­ing in global vis­i­bil­ity and, de­spite the de­sire to set­tle in Africa to take ad­van­tage of low la­bor costs, their skill-ca­pac­ity de­mands are high. Coun­tries that would suc­cess­fully cap­ture these in­vest­ments are those that start in­vest­ing in build­ing a tal­ent pool around these mar­ket-ori­ented needs.”

Sa­muel Nyademo, a lec­turer at the School of Eco­nom­ics at the Uni­ver­sity of Nairobi, agrees, say­ing gov­ern­ments have paid lit­tle at­ten­tion to up­grad­ing tech­ni­cal train­ing in­sti­tu­tions. “Most of our grad­u­ates are un­pre­pared for the la­bor mar­ket. There are weak link­ages be­tween the in­dus­tries and tech­ni­cal col­leges to de­velop mar­ket-driven pro­grams,” he says.

Nyademo ac­knowl­edges that new Chi­nese com­pa­nies set­ting up in the East African coun­try are em­pow­er­ing grad­u­ates with ad­vanced train­ing. China Road and Bridge Corp, the com­pany be­hind the con­struc­tion and man­age­ment of a $3.7 bil­lion rail­way in the coun­try, linked with the Rail­way Tech­ni­cal In­sti­tute of Kenya to train stu­dents who were later em­ployed by the com­pany. Avi­a­tion In­dus­try Corp of China hosts a re­gional com­pe­ti­tion in part­ner­ship with tech­ni­cal col­leges to up­grade stu­dents’ tech­ni­cal skills.

These skills-up­grad­ing pro­grams can only be ac­cessed by stu­dents who are still in col­lege. Those who have al­ready en­tered the job mar­ket, Nyademo says, should be re­trained with short pro­fes­sional cour­ses funded by the govern­ment.

“These pro­grams should be tai­lored to spe­cific in­dus­tries,” he says, but adds that many African coun­tries, in par­tic­u­lar Kenya, lack a road map needed to drive the process.

How­ever, Her­man Many­ora, a lan­guage and com­mu­ni­ca­tion lec­turer at the Uni­ver­sity of Nairobi, says Kenya and other African coun­tries, such as South Africa, Egypt, Zim­babwe and Malawi, have the tal­ent pools needed by light in­dus­tries. But they are rarely tapped, since the job mar­ket has placed a pre­mium on uni­ver­sity grad­u­ates in­stead of ar­ti­sans from tech­ni­cal in­sti­tu­tions who have the rel­e­vant skills, he says.

“This has con­se­quently led to a skewed sys­tem that churns out more



A worker in­spects door pan­els for VW Polo au­to­mo­biles on the pro­duc­tion line at the Volkswagen AG plant in Uiten­hage, South Africa, on Jan 25.


Car­los Lopes, the for­mer ex­ec­u­tive sec­re­tary of the United Na­tions Eco­nomic Com­mis­sion for Africa.

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