Industry, innovation sorely needed to spur wealth creation in Africa

Tuesday August 31 2021
Garment factory.

Workers operating sewing machines in a garment factory at the Hawassa Industrial Park in Hawassa, Ethiopia. The country’s vision of a national network of industrial parks to attract foreign investment is fostering robust manufacturing and providing jobs. PHOTO | AFP


Speakers at the first edition of the Prof Calestous Juma Lecture Series on Inclusive Knowledge and Innovation, hosted by Kenya-based think tank, African Centre for Technology Studies (ACTS), cited Africans for neglecting to develop an industrial base for 50 years.

“No country can build a durable future on the base of raw material exports. Despite implementing some trade liberalisation measures over the past decades, African countries have not realised the projected growth and development dividend, and remain at the bottom rung of the poverty ladder because we failed to diversify our economies and technological base,” said Prof Banji Oyelaran-Oyeyinka, senior special adviser on industrialisation to the president of the African Development Bank.

Shortfalls, opportunities

The inaugural seminar themed “Re-igniting Africa industrialisation through inclusive knowledge and innovation” brought together academics and practitioners from across the globe on August 12 and 13 to discuss Africa’s industrialisation shortfalls and opportunities.

President of the Calestous Juma Legacy Foundation (CJLF), Prof Wesley Harris, said people, health, energy and education must be at the heart of the engine that drives technology and innovation.

“(Africa) cannot succeed without the people of Africa. The production of wealth in a positive sense will not happen in a capitalistic sense—with just a handful— holding all of a nation’s land but production of wealth for the benefit of all the people of Africa, through industrialisation and innovation,” he said.


Prof Oyeyinka said an agrarian Africa had lagged behind, such that it was still defined by its exportable raw materials coffee, tea, flowers, raw minerals and tourism.

He said in spite of Africa possessing huge amounts of minerals, including cobalt (52.4 percent of the global supplies), bauxite for aluminium production (24.7 percent), graphite (21.2 percent), manganese (46 percent) and vanadium (16 percent) in the 50s, the economic backwardness of Africa’s mineral-dependent countries has largely been due to the lack of critical scientific infrastructure, investment and human skills.

Africa accounts for 70 percent of world cocoa bean production, 80 percent of which is already sold before it is harvested, according to Prof Oyeyinka.

In 2019 the chocolate-making industry in the EU and US employed 70,000 people and the chocolate industry market was valued at $106.6 billion and is forecast to reach $147 billion by 2025. Yet even though it is the world’s main producer of cocoa, Africa earns only 3-6 percent of the chocolate industry’s retail market value. In 2019 Africa’s share of cocoa beans exports only earned it $6 billion.

Unprocessed minerals

“DR Congo, which supplies 70 percent of the world’s cobalt, or Nigeria and Angola with their oil had technological capabilities to reap gains across the value chain. Yet DRC remained poor and majority of its people remain in dire straits,” he said.

Prof Oyeyinka said studies by various institutions had also shown that natural resource dependence by African states had been a huge hindrance to industrialisation and innovation.

“When a country depends too much on natural resources it tends to not industrialise or innovate. This is the case with oil-exporting African countries on the continent — where manufacturing had never been a priority because of the greed from easy money. Here we see the development of perverse institutions run by elite greed,” he said.

“But in the non-oil exporting countries in Africa, like Ethiopia we actually found fast growth before Covid-19... they have made good use of their natural wealth, converting such assets by innovating, processing, usually in place the framework of equitable macro policy governance systems, and are usually intolerant of corruption,” he added.

“These are just a few examples of the anomalies that keep African countries poor,” he said, “simply because we are not innovating and industrialising. We're not adding value. So why are we surprised that Africa remains poor? With most countries actually worse off than they were in the 1960s.”

He said the continent’s future would have to depend on innovation-led economics. He noted that newly industrialised Asian economies have over time picked up the art of learning and mastering technologies that undergird industrialisation.

“Whereas there are many Asian countries, like Malaysia, Vietnam, Korea, that were previously also dependent on commodities, like rubber, oil palm and started as agrarian societies just like Africa, what they didn't do was stop there like African countries have done, they’ve all changed the game.”

He said the African Development Bank had, together with several African nations, mapped out in-country regional industrial zones that would aid in accelerating Africa’s industrialisation drive.

As far as the challenges of infrastructure go, AFDB is using localisation of existing systems through special agro-processing zones located within rural communities to promote growth in the hope of building new secondary cities.

“We must get away from the agrarian society without which the future will always be bleak,” he said. “Tying in to this is to use cluster and agglomeration. What we have found in our studies from a development and investment perspective, special economic zones should be seen as models of industrial strategies and as integral instruments of industrial policy that stimulate clustering.”

He said examples from Asia had proved the model is fool-proof. Asia has 75 percent of all 4,046 special economic zones globally, out of which China alone has 2,500, Korea 900 (50 percent of which are agro-industrial parks), Vietnam 376 as at 2019.

“These are instruments that others are using that are in plain sight, that we have not been using,” he said. “So it is an idea that we’re pushing because of the deficit of infrastructure in Africa. We need localisation and clustering of industries in order for us to begin to develop our economies.”