There is great potential in production and consumption

Monday December 23 2019

Technicians work on a new Polo Vivo at a newly opened assembly plant at Kenya's Thika town industrial area, on December 21, 2016

Technicians work on a new Polo Vivo at a newly opened assembly plant at Kenya's Thika town industrial area, on December 21, 2016. Africa can tap into the world market by setting up industrial zones. PHOTO | AFP 

DIANA MULILI
By DIANA MULILI
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A peek into Africa’s crystal ball shows a continent confident in its future. It has the people, large reservoirs of the world’s most prized resources, and the post-digital advantage of huge amounts of knowledge from all the previous epochs. This sleeping giant’s iterations of learning, trying and failing, and achieving will be more rapid than the others – if we are deliberate about it.

This optimism is, however, enveloped in a context of great volatility, uncertainty, complexity, and ambiguity that comes with the ever-changing global markets and the real pressures of climate change – where growth for growth’s sake is not enough.

As Africa projects 60 years into the future, it must embrace the fact that its industries will be grappling with a radically different reality whose shape is simply not known. What matters is whether or not we can create competitive, inclusive, and resilient industries where there are opportunities, knowing we have to go beyond being observers of trends and be active builders.

What is known is that those industries must provide jobs for an increasing number of people. In the next two decades, Africa will need to provide jobs for 450 million people joining the labour market. East Africa alone needs to create 7,000 new jobs daily to keep pace with demographic change. All these people cannot work in the same industries. We must and can create opportunities as diverse as the continent itself.

We need to move from focusing on extractives to manufacturing. There are opportunities represented in the fact that the continent still imports a third of the food, beverages, and processed goods that it consumes. The construction sector will consume large amounts of cement and oil refining will offer a great opportunity for investments. The business-to-business spending across the continent is likely to expand as trade barriers are removed and trade blocs entrenched. In industries such as textiles and apparel, agro-processing for value addition, mobile telephony, building materials, car manufacturing, and pharmaceuticals, Africa has the potential to replace or supplement part or complete unit source markets of China, India, South East Asia, and Latin America.

We can be innovative and become cutting-edge. Africa’s industries of the future must be highly technologically adaptable, a lot smarter and more nimble to retain customers whose tastes change rapidly, and operate world-class systems in that interconnected space.

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E-commerce is already having a profound impact on businesses in Africa – with M-Pesa taking the lead globally. Millions of digitally enabled workers will use online platforms as a source of livelihoods, and utilise these forums to transform SMEs into structured entities with the capacity to grow. Furthermore, Africa’s diversity means its cultures can become part of a thriving industry in the arts, fashion, movies, and music.

The shape of these industries will be among the issues discussed by scores of eminent scholars, researchers, scientists, development gurus, political leaders, and captains of industry gathering in Kigali this week for the Nation Media Group-sponsored Kusi Ideas Festival.

Horizon, East Africa’s regional report, quotes commentators emphasising the role of “industries without smokestacks” – such as business process outsourcing, horticulture, and tourism – in supplementing manufacturing. These are industries with “high tradability, the potential for economies of scale, and a capacity to employ large numbers of people”.

As we move into the Fourth Industrial Revolution, the fear is that technology can undermine employability. Horizon argues that although automation means clever machines and robots take on more and more tasks performed by humans, this capacity means we have to prepare for increased human labour in other sections that cannot be automated. Some studies (like Frey and Rahbari 2016) demonstrate that technology has created more jobs than it has displaced. The deliberate creation of the right skill sets will be critical for Africa’s place in this ever-changing world.

Africa’s industries of the future are poised to benefit from the growing demand from consumers and the continent’s growing reputation as a source of highly competitive consumer products destined for overseas markets.

But for Africa’s industries of the future to harness these opportunities, they must raise their productivity and increase efficiency. They also need support, like elimination of tariff and non-tariff barriers, reduction of the cost of energy, vastly improved infrastructure, and a strong education and skill foundation.

This is where governments, the private sector, academia, and development catalysts come in; the former to create and sustain investor-centric environments, the latter to deploy their unique capacity to convene multiple stakeholders to deliberate and agree on the best approach to catalyse industries. These industries must improve operations, introduce world-class processes, and increase their contribution to the economies by creating employment and triggering activities in other sectors through forward and backward linkages.

Diana Mulili is the interim CEO of Msingi East Africa. Email: [email protected]