eBusiness Weekly
Business Writer
Thirty — seven of the 52 African countries have become more industrialised over the past 11-years, according to a new report by the African Development Bank (AfDB) — the African Union and the United Nations Industrial Development Organisation (UNIDO).
The Africa Industrialisation Index (AII) report provides a country-level assessment of 52 African countries’ progress across 19 key indicators. Zimbabwe, which was ranked in the lower category, despite making little progress is looking towards expanding its industrial base through the value chain initiatives.
The report will enable African countries to identify comparator countries to benchmark their own industrial performances and identify best practices for faster industrialisation.
The African Development Bank, the African Union and UNIDO jointly launched the inaugural edition of the AII on the sidelines of the African Union Summit on Industrialisation and Economic Diversification which was held in Niamey, Niger last week.
Analyst Carlos Tadya; said while making notable progress, Zimbabwe still had a long way to go as it was still ranked in the lower category and could increase the pace of its industrialisation through the wide spectrum of its value chains to expand its industrial base.
“In fact there is a lot of industrial activity in Bulawayo where we see more and more companies being revived,” said Tadya. “Zimbabwe also recorded substantial investments in the manufacturing sector; more investments are trickling and that should result in the better performance of the industry,” he added.
The Index’s 19 indicators cover manufacturing performance, capital, labour, business environment, infrastructure, and macroeconomic stability.
The index also ranks African countries’ industrialisation across three dimensions namely performance, direct determinants and indirect determinants.
Direct determinants include such endowments as capital and labour and how these are deployed to drive industrial development. Indirect determinants include enabling environmental conditions such as macroeconomic stability, sound institutions and infrastructure.
South Africa maintained a very high ranking throughout the 2010-2021 period, followed closely by Morocco, which held second place as of 2022. Rounding up the top six over the period are Egypt, Tunisia, Mauritius, and Eswatini.
Abdu Mukhtar, African Development Bank Director for Industrial and Trade Development said that while Africa had shown encouraging progress in industrialisation over the 2010-2022 period, the Covid-19 pandemic and Russia’s invasion of Ukraine had set back its efforts and highlighted gaps in production systems.
“The continent has a unique opportunity to sort out this dependency by further integrating and conquering its own emerging markets.
“The African Continental Free Trade Area is creating a once-in-a-lifetime single market opportunity of 1,3 billion people and total aggregate consumer and business spending of up to US$4 trillion creates an opportunity to enhance their trade and production linkages and finally reap industrial competitiveness from regional integration as other regions have done.”
Over the past five years, the African Development Bank has invested up to US$8 billion over the past five years under its Industrialise Africa High-5 priority.
“In the pharma sector alone, we intend to spend at least US$3 billion by 2030,” Mukhtar said.
Building productive industry will be integral to Africa’s development, offering a path to accelerated structural transformation, creating formal jobs at scale and inclusive growth. However, Africa’s share of global manufacturing has declined to the current level of less than 2 percent. More proactive industrial policies are seen as critical to reversing the trend, but these are knowledge-intensive and require a detailed understanding of the constraints and opportunities that each country faces.
During the coverage period, Djibouti, Benin, Mozambique, Senegal, Ethiopia, Guinea Rwanda, Tanzania, Ghana, and Uganda all improved by five or more places in the rankings.
The top performers are not necessarily those with the biggest economies, but those countries that generate high manufacturing value-added per capita, with a substantial proportion of manufacturing goods bound for export; North Africa remains the most advanced African region in industrial development, followed by southern Africa, central Africa, west Africa and east Africa.
One of the important pillars of National Development Strategy (NDS1) is “moving the economy up the value chains and structural transformation” as an enabler to the realisation of Vision 2030.
Adding value to raw materials produced locally, especially in agriculture and mining will transform the economy from commodity-driven to industry and services driven.
As part of the thrust to strengthen domestic value chains and economic transformation, the Government is capacitating the Industrial Development Corporation Zimbabwe (IDCZ) to support its subsidiaries to value-add raw minerals into compound fertilisers and other products, currently being imported as part of the local content strategy.
As part of promoting value chains, Finance and Economic Development Minister Prof Mthuli Ncube said the Government would support feasibility studies on the various options of value-adding tobacco, so that the country exports fully processed tobacco. The Government is also prioritising capacitation of local pharmaceutical companies.
To support the value chain initiative, US$22,5 million from the country’s Special Drawing Rights has been set aside for retooling for new equipment and replacement under the Value Chain Revolving Fund (REVCRF), which was launched recently to support companies with foreign currency requirements.
