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Manufacturing key to Africa’s economic transformation

31st July 2017

By: Anine Kilian

Contributing Editor Online

     

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Manufacturing will drive Africa’s transformation, African Export-Import Bank intra-African finance trade manager Gerald Nsomba said on Monday.

Addressing delegates from across the Southern African Development Community (SADC) at the SADC Industrialisation Week, in Johannesburg, he pointed out that manufacturing in sub-Saharan Africa had grown from $73-billion in 2005 to $98-billion in 2014.

“Manufacturing in the region has shown an increase of 3.5% a year, faster than the global average,” he noted.

Manufacturing exports, he added, had doubled from $50-billion in 2005 to more than $100-billion in 2014.

Nsomba highlighted that Africa’s affordable and attractive labour force has resulted in the continent becoming the destination for light manufacturing jobs, which were relocating largely from China and Mauritius.

“With the delocalisation of Chinese light manufacturers to other developing parts of the world, including Africa, as is evident in countries like Ethiopia, the continent is poised to become an exporter of manufactured goods of some significance by 2020,” he said.

He further highlighted that Africa’s growth would also be driven by greater intraregional trade and industrialisation.

While a number of African economies were making steady progress in reducing their reliance on commodities, Nsomba said it appeared that the broader continent remained largely exposed to the volatility of commodity prices.

He added that these developments threatened to reverse the significant gains made by Africa during the 2000s and early 2010s, slowing economic growth below trend levels of about 5% and contracting trade values to below $1-trillion.

“Intra-Africa trade declined from $175-billion in 2014 to $142-billion in 2015 owing to the decline in commodity prices, as well as depressed global demand.”

Lack of access to trade and market information was a key barrier to intra-Africa trade, Nsomba noted.

He added that if issues around trade and market information on the continent were resolved and more opportunities were unlocked for exporting manufactured goods, intra-Africa trade could potentially increase from its current levels of 15% to 38%, without further beneficiation of existing traded products.

“The size of intra-Africa trade could be doubled from the current level of about $170-billion a year to almost $400-billion by addressing the issue of availability of market information,” he said. 

“To address challenges that are exacerbated by overdependence on commodity exports, Africa needs to add value to its agricultural products and minerals and deepen intra-Africa trade,” he said.

Nsomba stressed that Africa needed to learn from regions such as Europe and Asia, and use technology and its resources to industrialise and catch up with other industrialised regions.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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