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Africa Must Industrialize: The Time IS Now February 20, 2014

Posted by OromianEconomist in Africa, Africa Rising, African Poor, Agriculture, Aid to Africa, Development, Economics, Economics: Development Theory and Policy applications, Environment, Food Production, Oromo, The Colonizing Structure & The Development Problems of Oromia, Uncategorized, Youth Unemployment.
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As the current economic growth did not result from value addition and increased manufacturing, but instead from increases in world commodity prices, it makes the region susceptible to commodity price volatility. If commodity prices fall, Africa’s impressive economic growth might grind to a halt — thus, the dire need for diversification through industrialization. Even if commodity prices stay high, natural resources are not infinite and they must be managed with sagacity.

As recommended by the 2013 Africa Progress report, it is advantageous for African governments to fully implement the Accelerated Industrial Development for Africa (AIDA) plan, signed in 2008 in Addis-Ababa. The AIDA is a comprehensive framework for achieving the industrialization of the continent. If Africa can successfully steward its natural resource wealth, investing it wisely and using some to industrialize, then whether the resources run out or not or whether commodity prices fall, Africa would be on a good economic footing.

Moreover, not only will industrialization create the environment for adding value to Africa’s natural resources, but it will also provide much needed employment at various stages of the value adding chain for Africa’s 1.1 billion people — leading to wealth creation.

Industrialization will address many development gaps in sub-Saharan Africa. Some of these gaps, as noted in a UNECA Southern Africa Office Expert Group Meeting Report, include:

Africa’s high dependence on primary products
Low value addition to commodities before exports
High infrastructure deficit
High exposure to commodity price volatility
Limited linkage of the commodities sector to the local economy
Poorly developed private sector, which is highly undercapitalized
Limited commitment to implement industrial policies
Limited investment in R&D, science, innovation and technology
Low intra-Africa trade
Slow progress towards strengthening regional integration
The Time is Now

Is Africa ready? The answer is an emphatic yes. The phenomenal growth is one reason why Africa is ready, but growth on its own is not enough. Other conditions need to be considered: Does the continent have access to enough raw materials for production? What is the proximity of these natural resources to the continent? Is there adequate land, labor, and capital? These are the traditional factors of production or inputs to the production process.

Yes, Africa has access to the raw materials necessary for production. Unlike already industrialized nations who have to import raw materials from Africa and elsewhere over long distances, Africa enjoys close proximity to these resources.

With regards to the factors of production, Africa is the world’s second largest continent and therefore is home to plenty of land — most of which is arable.

Africa is also the world’s second most populous continent. The average age of an African in Africa is under 19 years. This means Africa has enough manpower or labor to industrialize.

Capital refers to man-made products used in the production process such as buildings, machinery and tools. Africa does have a measure of this, but instead needs to do more in this area — hence the need for greater infrastructural and skills development. In fact, African policymakers as well as their counterparts in the developed world should realize that it is high time for a shift in the nature of aid to the continent — from primarily monetary aid to the type of capital aid needed for industrialization.

Finally, when Africa successfully undergoes industrial development, its huge populace will serve as a market for the outputs of its production processes; any excess supply can be exported and swapped for foreign exchange. Africa is ready and the time for it to industrialize is now.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
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http://www.fairobserver.com/article/africa-must-industrialize-now

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