(6 minutes read)
Manufacturing is the key word for the African businesses now. In any forum, where business debates take place, speakers underline the role of manufacturing to bail the continent from the vicious cycle of poverty, low level of employment, dithering income to the households and a host of other problems. Is that enough for the continent, which is chartering a new development plan?
As Africa navigates the path to recovery post-pandemic, the manufacturing sector has a definite role to play, particularly when that sector is still in its infancy. Yet, the estimated growth through this decade for manufacturing does not indicate an encouraging trend. For instance, the combined worth of the manufacturing sector for the 55 countries in the continent is estimated at US$ 666.4 billion dollars by 2030. That could be over US$$200 billion more than in 2015. Still, the average size of the manufacturing sector for the 55 countries would work out to less than US$ 13 billion or so. Given that four or five large economies like Nigeria, South Africa, Egypt, Tanzania, and Kenya account for the lion’s share of the manufacturing sector, the size of the lesser known economies would be much lower and can be counted in millions.
Undeniably, value addition is the key factor that decides the size of the manufacturing sector. What is the scope for value addition in the continent? Many feel that mining is a sector that holds considerable scope for value addition. True, but that needs a lot of investment and expertise to convert raw materials into semi-finished or fully finished end products. Those investments have to come from outside the continent. To expect that the FDI flows into Africa, which still is not an attractive destination for investors, in the short run will be bereft of reality. As things stand now, many of the investors in the mining sector may be reluctant to invest in the value addition. An example is the oil sector, where tanner 90% of the refining is taking place outside the continent. To expect that there could be redeeming change in that pattern in the short and even in medium term may be a misplaced one since there can be a gestation period for setting up such facilities along with other imponderables.
Does it mean that the continent has to wait for that timeframe to keep the manufacturing process to pick up? Not necessary, if proactive planning is given importance. Agri processing can be a low lying fruit. The continent has the largest land mass in the world. A lot of usable land can be brought under cultivation. Also, with modern farming, productivity can be increased considerably. Hardly is there any crop not growth in the continent. Cash crops like tea, coffee; Cocoa, cashew nuts, avocado etc are some among them. Processing of these crops, at least the pre-processing stage, like fumigation, packing etc may not require large investments. These processes can be undertaken by small and medium enterprises in different countries, thereby creating local employment and importantly, preventing wastages.
Africa can grow cereals, food grains and pulses in large quantities and the soil and climatic conditions are suitable for that. It is instructive to discern how that is not taking place, despite endowed with large tracts of fertile land. Is it not the time for promoting collective or even corporate farming in the continent with checks and balances to protect the farmers’ land and rights. That will also help the continent to up its agriculture exports including floriculture, which can bring precious foreign exchange to the producing countries,besides employing a large number of people gainfully.
What is the bottom line? A mere focus on industrialization can be a partial solution for the economic ills of the continent. What Africa needs is a balanced approach towards industrialization, modernization of agriculture and services sector. Undeniably, the services sector including IT and IT enabled services can be a force multiplier for the
continent not only for connecting people but also for generating millions of productive employment.
