For Africa’s economic transformation to happen, it has to industrialize. By favouring export of raw materials over processing goods, the continent denies itself a huge opportunity to add value through manufacturing, losing its chance to address its unemployment challenge and generate additional revenue. At the moment, Africa has just 1.5 percent of global manufacturing output. This is very low for a continent with the highest youth population in the world.
“Africa doesn’t exploit its scale,” said Johan C. Aurik, Global Managing Partner and Chairman of the Board, A.T. Kearney, USA at the just concluded World Economic Forum on Africa. According to him, Africa’s rapid population growth is a key driver of innovation and growth. He noted that the percentage of GDP represented by manufacturing is still low across Africa – 9 percent in Nigeria, 12 percent in Kenya and just 8 percent in Zambia, compared to 30 percent in China.
However, Aurik said the continent needs to improve infrastructure and energy supply to be able to attain its full potential.
Ally Angula, Co-Founder and Managing Director of Leap Holdings Namibia took a motivational approach. She said Africans need to believe they can manufacture goods themselves because the main opportunity lies in the production of goods for African consumers.
“It is a myth that it is okay to be a micro-business,” said Angula.
While the usual challenges being talked about as hindrances to industrialization in Africa are poor infrastructure and high cost of doing business, Angula said the lack of implementation of plans and policies is also a big challenge that needed to be tackled.
Africa also needs to address its skills gap. Productivity levels on the continent are lower than the global average and the labour pool is largely unskilled. This presents challenges for the industrialization of the continent. Technology can help Africa to develop faster in many respects, however, it is important to balance this with the need to create labour-intensive industries to create much needed jobs.