Renewed commitment towards inclusive industrialization and economic diversification

By Kester Kenn Klomegah

Under the auspices of the African Union, from 20th November to 25, government representatives, corporate industrialists, and agricultural experts will discuss and re-examine strategic mechanisms for improving two key sectors and interconnection between the economy and industry in Africa. 

The gathering seeks to design new action plan for industrializing Africa, add value to the continent’s agricultural products and look at possible ways to strengthen and diversify the economy. While this might not be an easy task, it is about time that African leaders make serious and conscious efforts to transform resources to build infrastructure and work towards developing a sustainable economy.

With this background, the African Union fixed this summit theme as “Industrializing Africa: Renewed commitment towards an Inclusive and Sustainable Industrialization and Economic Diversification” reflecting the practical task ahead of all African leaders.

Given the importance of industrialization and economic transformation in Africa, the 20th of every November is commemorated as the Africa Industrialization Day, which was adopted by the Assembly of Heads of State and Government of the Organization of African Unity in July 1989 in Addis Ababa, Ethiopia.  

The Africa Industrialization Day provides an opportunity for key stakeholders to reflect on Africa’s industrialization by looking at how the continent can change its current status quo. Since 2018, the Africa Industrialization Day has been commemorated with week-long events, marking a departure from the one-day tradition, which affords more time to reflect and accelerate actions toward Africa’s structural transformation as an enabler to meet the objectives of Agenda 2063 and Sustainable Development Goals 2030.

Now that trading under the African Continental Free Trade Area (AfCFTA) agreement was also launched on 1st January 2021 makes it paramount for African leaders to address contradictions and complexities in the development paradigms, and critically focus on economic sectors with their external partners. It is a common goal to build an integrated economy for Africa.

In close interconnection with this, experts have emphasized that steps must necessarily fall within the ideals of realizing the primary aims of creating a single continental market. Understandably the AfCFTA, created as a single African market for goods and services, covers an estimated 1.3 billion people with a combined GDP of over $2.5 trillion across 55 member states. 

Thus, Africa’s industrialization and transformation agenda must be supported at the highest national, regional, continental, and global levels. The focus is to accelerate efforts in several key policy areas – energy and road infrastructure, trade facilitation, financial sector development, education development, agro-industrial transformation, green industrialization, and technological innovation and transformation. 

Advancing the AfCFTA and Africa-Industrialization side-by-side with deliberate efforts to realize the mutually reinforcing interdependences between the two will provide Africa’s critical success pillar and condition for Agenda 2063.

More fundamentally, there are still many questions by a number of African leaders, including the system of governance and poor state management combined with weak development policies and strategies, that have openly exposed the hollowness of African economies on several fronts, including the fragility and weakness of Africa’s industrial capabilities. The development narratives need to be changed toward prioritizing initiatives intended to accelerate Africa’s industrialization.

The industrialization prospects for the continent are anchored on unleashing the growth of small and micro-enterprises guided by the African Union SMEs Strategy, whose development was informed by evidence-based mapping of the peculiarities of the continent’s production systems. Creating business-enabling conditions, using available opportunities and possibilities across the entire continent, can enhance the longevity rate of Micro, Small, and Medium-Sized Enterprises (MSMEs).

While the continent’s industrial policy landscape stretches back to the 1980s, from the First Industrial Decade for Africa all the way to the Accelerated Industrial Development of Africa (AIDA, 2008). Globally, the United Nations General Assembly (UNGA) has further magnified the significance of Africa’s industrialization by adopting a resolution in July 2016 that dedicated the period 2016-2025 to the Third Industrial Development Decade for Africa (IDDA III), the performance has remained rather mixed. 

Under the circumstances, the development challenges currently confronting the continent, therefore, necessitate the need for effective, efficient, and timely deployment of action beyond political rhetoric for any meaningful impact on delivering sustainable human development in the continent in the medium- to long-term more so.

It is encouraging to note that IDDA III presents yet another opportunity to rally global partnerships and efforts to collectively drive structural transformation in Africa. As such, it should be optimally leveraged in this endeavour for any meaningful impact on delivering a sustainable and inclusive industrialization pathway for Africa. 

What is critical at the moment for Africa is to acknowledge, the need to chart a revived focus towards a rejuvenated Pan-African industrialization agenda, and framework informed by lessons learned thus far from previous programmes, taking full cognizance of the current and evolving social, economic, and political trends, and developmental needs of the continent. 

The continent’s capacity to deliver on Agenda 2063 hinges on industrialization. To buttress this, the UN SDGs have assigned Goal 9 towards building industries and resilient infrastructure to strengthen developing economies’ capacity to address structural challenges and poverty alleviation. 

In addition, IDDA III should be flexible enough to consider Africa’s industrialization within the context of uncertainties such as the geopolitical changes in the world. Going forward, Africa’s industrialization agenda must unequivocally incorporate industries that prove resilient in the face of uncertainties and recovery-ready within the shortest possible time when industries are hard hit.

On the other hand, industrialization should not be perceived as a single pathway for sustainable development in Africa. Instead, with strong multi-sectoral and multi-directional linkages to domestic economies, industrialization will help African countries achieve higher economic growth rates and diversification. Success in industrialization will be at the core of efforts to address critical structural economic growth and development weaknesses and fragilities – from poverty and inequality to inadequately developed education, health, housing, and sanitation services. 

Seeing beyond the current challenges requires policymakers to tackle other supply-side structural bottlenecks and barriers head on, such as energy and infrastructure, for enhanced enterprise competitiveness. This also places due pressure on policymakers to improve business and regulatory regimes to enhance private capital flows, absorption, and adaptation of technology, artificial intelligence, and skills transfer to unleash private sector growth.

Furthermore, sustainable success on Africa’s industrialization front will only be achieved with deliberate efforts to integrate and systematically address Africa’s underlying development features, such as the micro-small-medium enterprises and informal economy, the urban-rural transition, socio-economic diversity across the 55-member African Union, as well as linkages between education-skills development and industry. Cross-cutting issues such as gender, climate change, energy security, youth population, and growing unemployment to facilitate the evolution of a sustainable and inclusive industrialization pathway for the continent.

Africa has a lot to learn from its own experiences on industrialization over the past several decades and from other parts of the world. However, what is abundantly clear is that industrialization successes in Europe and the Americas and, more recently, in Asia cannot be fully replicated in Africa. Apart from that, Africa has its unique circumstances, and many of the factors that propelled industrial success in other continents no longer exist. That is why advancing Africa’s industrialization has to consider what can and should work for Africa while ensuing interdependence with the rest of the world in those areas that can amplify the continent’s benefits. 

It is important to emphasize here that there are partnerships and alliances to deliver on Africa’s industrialization: these include rallying domestic and international public-private partnerships for enhanced planning and implementation capabilities for accelerated-expanded industrial growth in Africa.

It depends on multi-/cross-sectorial approaches as key condition for success: aligning key cross-sector conditions and policies for success: energy security, institutions, policies and legislation, human capital – skills and intellectual capacity, environmental resilience and climate change (green industries).

Noteworthy to reiterate here that African leaders have to take into consideration the youth and women-led MSMEs in driving success in Africa’s industrialization, special cross-cutting drivers for sustainable success: youth, micro-, small and medium enterprises, women, competitiveness, and urban-rural transitions.

There are also resource governance and leveraging financial and non-financial resources into Africa’s industrialization: de-risking Africa’s industrialization, catalyzing domestic and international investments, technology transfer, and local innovations to leapfrog Africa’s industrial growth. Besides these discussed above, another aspect is indigenous knowledge and Africa’s industrialization: protecting indigenous knowledge with intellectual property rights to integrate into Africa’s industrialization.

In light of the key and strategic interdependences between industrialization and the African Continental Free Trade Area Agreement (AfCFTA), the summit aims to rally desired political momentum, resources, partnerships, and alliances towards an African industrialization drive. This is along the continental resolve to drive structural transformation, built around leveraging Africa’s rich and diverse natural resources while at the same time embracing current advances in technologies, continental and global geopolitical trends, and the emergence of tradeable services.

Therefore it is anticipated to unlock the evolution of a vibrant Pan-African enterprise and capital base that will unleash an inclusive and sustainable industrialization pathway that carries along with the participation of all economic agents, including SMEs, youth, and women in the generation of national wealth and creation of jobs as well as expansion of entrepreneurship opportunities for Africa’s 1.3 billion population. While this November summit aims at highlighting Africa’s renewed determination and commitment to industrialization, it simultaneously aims at reminding the expectation for Africa to take a great leap forward from its industrial stagnation. (Modern Diplomacy)