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4 ways to manufacture an African renaissance


Thursday, 20 July 2017

4 ways to manufacture an African renaissance

For the 50th anniversary of the creation of the Organisation of African Unity (now the AU), African leaders adopted the Agenda 2063: The Africa We Want - a vision for a prosperous Africa based on inclusive growth and sustainable development. One of the defining features of this agenda is the structural transformation of African economies towards achieving shared growth, decent jobs and economic opportunities for all. So far, the structural transformation that shifts productive resources from agriculture and mining to manufacturing - which has helped many countries achieve greater prosperity - has bypassed most African countries. According to a recent International Monetary Fund report, the limited structural transformation in Africa has not translated into more jobs because the manufacturing sector itself requires extensive reform.Therefore, what Africa needs is a manufacturing renaissance, with more local value-addition that would create more and better-paid jobs and contribute to fulfilling the aspirations of the Agenda 2063. It could make African countries more resilient to economic shocks and less dependent on the export of natural resources. Africa can achieve this ambitious goal if it taps into available opportunities, while mitigating the challenges it faces. There are already several positive signs. Overseas Development Institute data shows African manufacturing production, exports and foreign direct investment (FDI) have developed positively over the last decade. Between 2005 and 2014, manufacturing production within Africa more than doubled from $73 billion to $157bn, growing 3.5% annually in real terms. Some countries, such as Uganda, Tanzania and Zambia, have achieved more than 5% annual growth in the recent past. Overall, sub-Saharan African manufacturing exports almost tripled between 2005 and 2015 to more than $140bn. A reduced reliance on the traditional OECD market is also clearly visible, with China and India now absorbing a major portion of African exports. In addition, intra-African trade is rising much faster than in the past. FDI in African manufacturing is increasing.

Source: Africanindy