Africa is a continent in dire need of growth. The continent’s GDP of $2.18 trillion in 2017 as estimated by the International Monetary Fund is less than the GDP of Germany ($3.677 trillion), a country of fewer than 83 million citizens and a land mass that is only slightly larger than one-third of Nigeria’s.
In the meantime, Africa’s output is generated by 1.3 billion inhabitants. It can thus be easily averred that the continent’s poor economic state is a result of the extremely low levels of productivity that are pervasive in most African countries.
A major factor for Africa’s low productivity and consequent deplorable economic conditions is the low level of industrialization across the continent and a seeming lack of urgency among African leaders, which is evidenced by a slow pace of adoption of technology and modern industrial practices and systems.
In an op-ed published June 15, 2018 by The East African, a Kenyan weekly journal, Mr Akinwunmi Adesina, president of the African Development Bank, opined that Africa’s manufacturing sector is the weakest link in its ongoing integration into the global economy. He stated that primary products or raw materials make up 62% of the continent’s total exports.
According to him, it explains (among other things) why a region that produces about 75 percent of the world’s cocoa accounts for just 5% percent of the nearly $100 billion annual chocolate market.
According to the Economist Intelligence Unit, a British research group, Africa accounted for more than 3% of global manufacturing output in the 1970’s but this percentage has since halved. This is a clear indicator of the urgency the continent needs to catch up with the rest of the world.
The United Nations, as part of its efforts to redress this situation set aside 20 November of every year as Africa Industrialisation Day.
The year 2018 theme, “Promoting Regional Value Chain in Africa: A Pathway for Accelerating Africa’s Structural Transformation, Industrialisation and Pharmaceutical Production,’’ is very appropriate considering the low level of integration and economic co-operation within Africa’s regions or among its nations.
Take Nigeria, Africa’s largest economy for instance, in 2017 only two of its top 15 export destinations were African countries (South Africa and Togo accounting for 4.5% and 2.4% of exports, respectively)
The low level of industrialization is the reason much of Africa’s exports are still commodities (raw materials) with very little value-add as the continent is unable to compete with other more established economies on quality, cost and scale. Consequently, Africa accounts for a paltry 2.6% of total world exports and exports account for only 7.3% of the continent’s economic output.
Many economic experts agree that a major reason for Africa’s slow industrialization is that its leaders have failed to pursue bold economic policies out of fear of antagonizing donors. In spite of suboptimal policy direction and implementation in many parts of the continent, some multinationals and other manufacturing concerns are leading the charge for industrialization and regional integration.
Taking another look at Nigeria that has struggled to find ways to increase non-oil revenues to counter the fall in commodity prices in the near term and achieve sustainable growth in the long term, the annual report of the nation’s central bank for 2017 revealed that the top three contributors to Nigeria’s non-oil exports in 2017 were British American Tobacco Nigeria (BATN), Olam and Indorama Eleme Fertiliser Company.
While BATN led the top 100 companies with $145.48 million (about N52.37B) worth of exports, it also brings the added value of having exported manufactured goods as a result of its investments in processing and manufacturing (across Africa and particularly in Nigeria) and its integration of local farmers into its operations such that rather than tobacco leaves, cigarettes were exported to Liberia, Cameroon, Ghana, Niger and Cote D’Ivoire. Olam International was second with $110.892 million (about N39.92 billion) worth of Sesame seeds and fermented cocoa beans while Indorama exported $69.815 million (about N25.13 billion) worth of granular urea in bulk to Uruguay Brazil and Argentina.
Other companies that contributed to the volume of manufactured exports include De united foods with $30.568 million (about N11 billion) on indomie and mini me exports as well as Dangote with $21.496 million (about N7.74 billion) from export of cement. Dangote also continues to improve Africa’s industrialization drive with the establishment of manufacturing plants in industries including flour, sugar and cement across African countries and notably the multibillion dollar refinery in Lagos, Nigeria.
Data from the National Bureau of Statistics put Nigeria’s total exports for 2017 at N13.59 trillion. Though an improvement on 2016 figure N8.53 trillion, it still leaves a massive and daunting industrialization and productivity gap especially when it is noted that crude oil exports accounted for N11.03 trillion (81.1%).
In commemoration of Africa Industrialisation Day 2018, the UN Secretary-General Antonio Guterres, in a message, called for inclusive and sustainable industrial development in Africa, saying it is critical for achieving the 2030 Agenda for Sustainable Development.
Meanwhile in Lagos, Governor Akinwunmi Ambode pledged to continue formulating and implementing policies and programmes that would consolidate the state’s position as the industrial and commercial hub of Nigeria. In his address delivered by Mrs Olayinka Oladunjoye, the State Commissioner for Commerce, Industry and Cooperatives, Ambode said that sundry projects in the areas of security, environment, infrastructural renewal and upgrade were designed to create an enabling environment that would promote industrialisation and sustain the state’s status as prime investment destination in Africa.
His Edo State counterpart Governor Godwin Obaseki said that his administration’s commitment to the development of an industrial park, a modular refinery and the Benin River Port in the state, will help accelerate Africa’s industrialisation drive. It is hoped that governments at all levels across Africa will improve on policy formulation and implementation to urgently close the gap in Africa’s industrialization.
Elujoba is of the Centre for Promotion of Enterprise and Business Best Practices