Africa’s quest to achieve significant growth and development can become a near-term reality if the continent, with one of the world’s youngest populations, replicates the industrialisation-led expansion that powered Asia.
According to world economists and industry experts at the just concluded Africa Business Convention by BusinessDay, the aggressive adoption of industrialisation can open the door to the continent’s prosperity, especially as it embarks on recovery post-pandemic.
“For Africa to get the sustainable 6-8 percent growth Asia has had in the last few decades, it requires industrialisation, an educated population, electricity and Morocco’s interest of 2 percent,” Charles Robertson, global chief economist, Renaissance Capital, said.
About five decades ago, the Asian Tigers, Hong Kong, Singapore, South Korea, and Taiwan, were in almost similar conditions as most African countries, but they leveraged the impact of industrialisation and evolved from being third world economies to topping the chart.
The governments of the ‘tiger’ nations in the early 1960s, when the global economy was just starting to recover after the traumas of the Second World War, took advantage and invested heavily in industrialisation, building major industrial estates, offering tax incentives to foreign investors, and implementing compulsory education for its young population to secure the future of the workforce.
“Transformation of Asia from its status as the most impoverished region to the growth locomotive of the world economy within the past five decades is unprecedented and dramatic. Led by East Asian countries, the industrial transformation and socio-economic progress may have lessons for the latecomers,” the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) said in a report.
Thanks to the evolution of technology, Africa’s success story may take a shorter route, industry experts at the Business Convention said on Wednesday.
With industrialisation as the foundation to economic growth and development, industry experts at the BusinessDay Convention believe Africa can ride on the wings of advanced technology in critical sectors like manufacturing, agriculture, and others to lift millions of its citizens from poverty.
Peter Quartey, a professor in the institution of statistical, social and economic research, University of Ghana, also pointed at the importance of industrialisation for Africa’s growth.
“Many African countries have become import-dependent, with less production, less manufacturing and more consumption and have become distribution networks. We need to transform the industries in Africa, that’s where we will find the jobs,” Quartey said.
If Africa fails to pay attention to industrialisation, Quartey said, it will only be creating jobs for others who have developed their countries.
Bloomberg data that tracked 82 countries globally ranked three African countries with the world’s highest unemployment rate in 2021. South Africa, the continent’s most industrialised nation, topped the chart with Nigeria, Africa’s largest economy occupying the third spot after Namibia.
Thanks to industrialisation, the ‘tiger’ nations have some of the world’s highest human capital index, Singapore (0.88), Hong Kong (0.81) and South Korea (0.80) compared to African countries such as Nigeria (0.36), Angola (0.36), Ethiopia (0.38) and Tanzania (0.38). The World Bank said 80 percent of the world’s extreme poor reside in countries with a human capital index under 0.5.
Like Asia did some five decades ago when the continent concentrated its resources on infrastructure development, industry experts believe Africa needs to channel more funds in the things that can benefit it in the nearest future.
“Infrastructure is the bridge Africa needs to economic growth,” Dolapo Ogunmekan, partner/group head, international energy portfolio, Platform Investment.
“Approval, licence delays and funding issues have been the bane of infrastructure, and a robust entrepreneurial class will help develop the continent,” Ogunmekan said.
Experts define industrialisation as the process by which an economy is transformed from a primarily agricultural one to one based on the manufacturing of goods, which involves the large-scale introduction of manufacturing, advanced technical enterprises, and other productive economic activity into an area, society, and country.
The experts at the Africa Business Convention unanimously agreed that the Africa Continental Free Trade Area (AfCFTA) provides an opportunity through a larger market, the drive to develop competitive manufacturing industries, adoption of value addition practices, and enhanced capacity utilisation to achieve Africa’s desired growth.
Affirming that AfCFTA provides an opportunity for the continent, Quartey said, “There is a need for Africa to embark on transformative activities to properly optimise the opportunity of the agreement through the adoption of value addition practices and industrialised manufacturing.
“With the trade agreement, we have a larger market but our products need to be differentiated and with a good quality, this is the only way we can benefit from the trade.”
In driving economic growth, the industry experts at the business gathering said Africa’s prospects in agriculture are largely underutilised, which partly contributes to its growth limitations, especially as major players in the sector are small-scale farmers equipped with little resources.
For example, the Food and Agriculture Organisation of the United Nations notes that over 90 percent of the world’s rice is produced in the Asia-Pacific region. This has contributed to providing a dynamic trade and economic activity with a positive impact on growth.
“Commercial agriculture has a significant challenge in sub-Saharan Africa, a very significant percentage of food produced in Africa is done by small-scale farmers. Farming is very profitable but not as a tiny scale,” Dimieari Von Kemedi, CEO, Alluvial Agriculture, said.
Read also: African countries need investment in export-related industries to achieve objectives of AfCFTA
Kemedi advised the African continent to effectively utilise its comparative advantage in agriculture, believing it will enhance the capacity and productivity of small-scale farmers.
Following its ability to leverage industrialisation, it will help the continent attract significant investments that will rub off on the economy.
“Foreign Direct Investment (FDI) goes into the richest countries and drops occasionally into developing countries, this is also the same with trade,” Kemedi said.
The ability to create opportunities for its young talents to acquire skills and reduce brain drain will also play a role in taking Africa to its desired destination, the industry experts said.
Checks by BusinessDay shows that the leading Asian countries that have some of the World’s powerful economies today did not only invest in infrastructural development but also their education system.
In search of greener pastures, many of Africa’s talented minds have been fleeing the continent and helping to develop other nations.
For example, Nigeria saw 805 medical doctors migrate to the UK between July and December 2021, according to the data by the British General Medical Council.
The continent needs to be healthy to achieve the much-needed development. It should therefore retain its health workers just as much as it needs to retain others in many other professions, industry experts said.
To boost the health sector and reduce brain drain, medical workers should have tax free incomes, said Akin Oyediran, managing director of Africa’s largest disposable Syringe Company, Jubilee Syringe.
“There will be no brain drain if there are no brains in the country. We must put in place incentives to retain them,” Oyediran said.
