Manufacturing development a boost to industrilization in Africa

Posted on : Tuesday , 3rd February 2015

 Africa still accounts for a very low share of global manufacturing value-added (MVA) and global manufacturing exports (1.1 percent and 1.3 percent respectively in 2008). Even more worrying is that Africa's share of global low-technology manufacturing exports, a sector where it should have immediate comparative advantages, fell from 1.5 percent in 2000 to 1.3 percent in 2008, as opposed to East Asia and the Pacific where it rose from 17 percent to 26 percent over the same period. Africa has made some progress in boosting medium and high technology manufacturing activities in recent years. The share of medium and high technology (MHT) activities in total MVA in the region increased from 25 percent in 2000 to 29 percent in 2008 and its share in total manufacturing exports rose from 23 percent in 2000 to 33 percent in 2008. However most of Africa's MHT activities are heavily concentrated in the chemical industry.

Empirical analysis also reveals that African countries are very dependent on resource-based manufacturing. In 2009, resource-based (RB) manufacturing accounted for about 49 percent of both total MVA and manufacturing exports in the region.  Such dependence is problematic for the continent for several reasons. RB manufacturing involves relatively low value-addition, makes exporting countries highly vulnerable to external price shocks, exhibits lower productivity growth and have few linkages with the rest of the economy. In sum, resource-based manufactures show only very limited product differentiation and share the pitfalls that are characteristics of commodities on which many African countries depend. Manufacturing development should be viewed as an opportunity for Africa to lessen its dependence on commodities and engage in economic diversification as a way to reduce vulnerabilities to shocks. In this respect, there is thus a need to diversify away from RB manufacturing within the manufacturing sector in Africa.

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