What Is To Be Done? Obstacles to Africa's industrial development

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Nkrumah shown with Kennedy during state visit to U.S. was Africa's biggest champion of industrialization. Ironically the CIA was involved in his ouster during the Johnson administration. Photo: Wikimedia Commons

[Letter from New York]

All countries, developed and developing, large and small, have pursued industrialization with the overall goal of achieving economic and social development. However, the priorities have differed from country to country and over time. 

In Africa, industrialization began after WWII and gathered speed and diversification after independence between the 1960s and 1970s. In Uganda, for example, the colonial government decided in the late 1940s to implement industrial programs largely to create jobs that could not be absorbed in the agricultural sector (D A.Low and Alison Smith 1976). In Nigeria since the late 1940s, the colonial government had multiple objectives of industrialization such as wealth and job creation and reduction of dependence on commodity exports in exchange for manufactured products (B.W.Hodder 1968). 

After independence, African governments pursued industrial policies to achieve a wide range of goals. In Lesotho the industrialization policy was to create jobs to reduce dependence on South African labor markets. In Malawi the industrial policies were designed to diversify the economy, create jobs and reduce dependence on manufactured products from then Southern Rhodesia, now Zimbabwe (Alan W. Whiteside undated). In Uganda one of the objectives of industrialization in the early part was to realize "a significant change in the structure of the economy"(E.J. Stoutjesdijt 1967).

In pursuit of developing and implementing  industrial policies for domestic and external markets, African countries have participated in relevant conferences including those in Africa, at the United Nations and within the framework of the Lome Convention and Cotonou Agreements.

The methods used are similar to those that the industrialized and developed countries used. 

African governments have used state intervention as a producer and/or promoter of industrialization. In Lesotho, it was stated that the role of government in industrial investment would be "primarily that of a promoter, a catalyst and a leader"(Alan W. Whiteside undated). In the first decade of development after independence, the Uganda government played  the role of producer of manufactured goods and  promoter through the Uganda Development Corporation (UDC). Since 1987 the government has played the role of facilitator after the privatization of public owned enterprises.

African countries initially embarked on important substituting industries (ISI) to manufacture in Africa previously imported manufactured goods to be followed at a later stage by manufacturing products for export in regional markets and beyond. In Uganda's second five-year development plan it was emphasized that production of manufactured products will target Uganda and East African markets. In 1964 the governments of Kenya, Tanzania and Uganda agreed on the sharing of geographic location of industries.

As recommended by Adam Smith (Michael Goodwin 2012) African governments introduced measures to protect new or "infant" industries through primarily tariffs and/or quotas. During the 1960s and early 1970s good commodity prices generated foreign exchange reserves that helped to speed up the industrialization process (Stephen McCarthy 1994). The United Nations Industrial Development Organization (UNIDO) noted that African countries had been increasingly gaining comparative advantage in labor-intensive manufacturing before the launch of liberalization and structural adjustment in the 1980s (Jomo Kwame Sundaram 2013). Since then Africa especially Sub-Saharan Africa has been de-industrializing and the role of manufacturing industries in domestic and international markets has remained marginal.

The causes of de- industrialization are many but have been dominated by two schools of thought. Some have argued that industrialization had been high cost, inefficient, overprotected and uncompetitive. Further industrialization has therefore been discouraged in favor of production and export of traditional commodities that include cotton, coffee and tea complemented by non-traditional exports that include cut flowers, fruits and vegetables and fish and meat products. This group still believes in the classical comparative advantage that assigns to Africa the production of raw materials in exchange for manufactured products.

Members of the second school have reasoned that Africa opened it's markets to imports of cheap manufactured products too early, contributing to de-industrialization.

Notwithstanding, African governments have once again stressed the critical role of manufacturing industries in the 2063 Agenda. African delegations bargained hard during the negotiations for the 2030 Agenda for Sustainable Development and manufacturing is one of the goals. What remains to be done is to design and implement a strategy that will include smart subsidies and/or tariffs to protect African manufacturing industries against unfair competition.

 

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