With the adoption and entry into force of the Agreement Establishing African Continental Free Trade Area (AfCFTA), Africa is presented with ample opportunities to industrialize. To seize the opportunity, calls for innovative industrial policy for Africa anchored on the AfCFTA and where African governments must develop and implement smart policies conducive for investment in manufacturing, beneficiation and value addition.
African Union Ministers in charge of industrialization and economic diversification have renewed their commitment to industrialize Africa in a sustainable, dynamic and inclusive manner to support economic diversification, competitiveness and prosperity as an integrated market.
The ministers convened this week to prepare for the 17th Extraordinary Summit of the Assembly of the African Union on Industrialization and Economic Diversification scheduled to on 25th of November 2022 in Niamey, Niger.
The African Union, while exploring opportunities to accelerate industrialization on the continent, reflected on the progress in the implementation “Accelerated Industrial Development for Africa (AIDA)”, Africa’s industrial policy framework and Action Plan encompassing several clusters; such as Industrial policy and institutional direction; upgrading production and trade capacities; promotion of infrastructure and energy for industrial development; human resources development for industry; industrial innovation systems, research and technology development; financing and resource mobilization; and sustainable development. The two reviews undertaken to assess the progress in implementing the framework have concluded that there is minimal implementation of the framework.
Amb. Albert Muchanga, African Union Commissioner, Economic Development, Trade, Tourism, Industry and Minerals observed that for the continent to achieve sustainable industrialization, there is need for productive transformation in strategic sectors of agriculture, industry and services as a sustainable path to promote inclusive growth and sustainable development which subsequently, creates quality jobs needed by Africa’s growing and youthful population.
He noted: “The role of African leaders is critical in ensuring that we attain the vision of building resilient institutions, developing quality infrastructure and putting together the human, natural and financial resources needed for inclusive sustainable industrialization. In this respect, there is need to show greater commitment on industrialization and economic diversification by creating more opportunities for productivity and revenue generation. Furthermore, there is need to build institutions and implement the right policies that create enabling business environment for the formalization of the private sector as well as enhancing industrial policy coherence necessary for effective implementation of industrial development programmes and projects through appropriate monitoring and evaluation of outcomes.”
H.E. Mr. Ouhoumoudou Mahamadou, Prime Minister and Head of Government of the Republic of Niger, observed that for the continent to achieve the ambitions of Agenda 2063, industrialization plays an important role to transform, expand and modernize African economies by enriching and adding value to natural resources.
While sharing experiences of how the Government of Niger is investing in structural transformation, citing the “One Region, One Industry” program that seeks to implement flagship programs on strategic value chains, he emphasized the urgency to operationalize and implement industrial policies and the development of productivity plans and regional value chains.
“The priority will be to focus on micro, small and medium enterprises which are major providers of employment. The development of these SMEs is obviously linked to the creation of a favourable business climate that promotes growth, job creation and investments for industrialization. The industrialization of Africa must involve the modernization of our agriculture and agri-food industries and diversification from basic raw materials. This will enable us to effectively combat malnutrition and food insecurity, reduce our dependence on imports, particularly of food products, and increase intra-African trade in agriculture and processed agricultural products. There will therefore be a need to need to implement affirmative action and advocacy policies to ensure improved access to land and inputs for women and youth, to and inputs, to ensure that they have access to at least 30 percent of agricultural finance, which is an important prerequisite for Agenda 2063.
Reflecting on the several crises that the continent has undergone in the last years, and particularly the effects of the COVID-19 pandemic and the Ukraine war, Ms. Nardos Bekele-Thomas, Chief Executive Officer of the African Union Development Agency (AUDA-NEPAD), in a statement read on her behalf by the Kossi Toulassi, AUDA-NEPAD Head of Industrialization, called for deliberate and inclusive in recommendations in the renewal of commitments to industrialization.
In her statement she said: “Agenda 2063 calls for swift transformation of economies through beneficiation from natural resources, manufacturing, industrialization, and value addition, as well as raising productivity and competitiveness. AUDA-NEPAD welcomes the review of the Accelerated Industrial Development for Africa as its sound implementation of the will enable the continent become stronger and powerful. Further, the promotion of regional and continental value chains in the context of the African Continental Free Trade (AfCFTA) Area and increasing productive capacities and competitiveness of African products to benefit from the AfCFTA and their integration into global trade flows, will require harmonious integration of the Infrastructure, Industry and Trade which are pillars of the African Union’s Agenda 2063.”
An Africa that increasingly trades with itself in a diverse range of products is an Africa that can withstand external shocks with relatively less impact when they happen. Africa suffered more deeply than other regions from the COVID-19 pandemic and the war in Ukraine because of its excessive import dependency due to lack of indigenous manufacturing capacity. Mrs Ngone Diop, Director of the Sub-Regional Office, UN Economic Commission for Africa, Western Africa, while recalling Africa’s low levels of export diversification and excessive concentration of its exports in a limited range of primary products, often derived from the extractive sector, stated, “Today, primary products – whether extractive or agricultural – account for the bulk of our exports to the rest of the world, while processed products dominate our imports. In far too many cases, we export the raw product and reimport the same thing in processed form – thereby exporting African jobs to others and effectively paying for the wages of foreign workers.”
Fatou Haidara, Managing Director, Corporate Management and Operations at United Nations Industrial Development Organization (UNIDO) underscored the urgency toaddress the energy challenge while prioritizing climate neutral and climate resilient industries with innovative local solutions and adaptation technologies. “In evidence-based industrial policy design and effective implementation processes, focusing on empowerment of youth and women will guide our joint efforts for Africa’s accelerated industrialization process. Fostering multi-stakeholder partnerships and innovative partnership models should include enhancing, the role of the private sector to drive industrialization, digital and economic transformation”, she noted.
Under-Secretary-General and Special Adviser on Africa to the United Nations Secretary-General is Ms. Cristina Duarte underscored the need for reliable energy to increase the continent’s industrial development in critical sectors such as steel, cement, and fertilizer production. She added that Africa’s industrial capacities to transform critical minerals needed for the global clean energy transition can only be realized with access to sustainable energy. “Access to constant, adequate, reliable, and affordable energy is fundamental to making green jobs a reality and worthwhile for Africans. It is a precondition and a determinant to attract investments and develop energy-intensive industries related to mining, additional metal processing, and manufacturing renewable energy components such as solar panels, fuel cells, wind turbines, and batteries on the continent.”
The Africa Industrialization Week leading up to the Extraordinary Summit on Industrialization and Economic Diversification is convened under the theme “Industrialising Africa: Renewed commitment towards an Inclusive and Sustainable Industrialization and Economic Diversification.”