Implementing industrialisation strategies in Africa
African countries face difficult challenges in breaking into world manufacturing markets, new developments work in their favour. These include rising wages in China and a rebalancing in Asia away from export-led towards domestic and regional consumption-led growth; Africa’s growing regional markets; falling transport costs; greater access to abundant natural resources; improved firm productivity and access to global value chains; and better general economic policy environments.
But governments should not stand aloof; to seize these new opportunities they will have to formulate and implement coherent industrial development strategies. The key elements of such strategies must include:
- continued improvements in the basics, including sound macroeconomic management, stronger general investment climate and support for the private sector and development of public infrastructure and relevant skills
- an export push, including regional trade and integration
- agglomeration through building and running efficient special economic zones (SEZs) and industrial parks
- active foreign direct investment (FDI) promotion and building linkages with local firms
- supporting productivity enhancement of local small and medium enterprises (SMEs) and their access to technology and long-term finance to help them venture into production of new or technologically more sophisticated products
- improved coherence and implementation coordination within government and
- strengthened consultation and collaboration between government and the private sector
By Dirk Willem te Velde, Director of Supporting Economic Transformation Programme and Head of International Economic Development Group, ODI