Africa must make its way to a "lion economy"

Africa must make its way to a "lion economy"

Despite the recent slowdown in the global economy, unprecedented change is underway in so-called non-Westerners. From Southeast Asia to Latin America, these economies have experienced explosive urbanization and the emergence of a new middle class. Manufacturing remains the engine of the reemergence of a non-Western economic power. Robust manufacturing sectors have created millions of jobs in countries such as China and India, which in turn have placed these economies on impressive growth trajectories.

Africa remains an anomaly in this changing history. One of the growth rates of Africa's urbanization is also booming. Yet its savings do not realize their potential. While the continent has taken advantage of the Internet to create new industries, its manufacturing sector has lagged behind the rest of the world. Poor governance (a lack of trade-friendly legislation), a lack of investment in local and regional infrastructure (a lack of efficient ports) and high costs are all factors in the origin of the economy. 39, catastrophic state of the sector.

If African countries want to free themselves from the vestiges of colonialism and establish healthy economies, leaders must be serious about manufacturing. The next generation of Africans is desperate for jobs. A robust manufacturing sector that absorbs large numbers of workers is the proven path to independence. The factories provide bridges from the working class to the middle class and even the upper management with which no other sector can compete. It worked in the west; it worked for the economies of the Asian tiger.

At a time when a large number of citizens of several countries want to free themselves from the legacy of colonialism, it is necessary to facilitate investment in the manufacturing sector as a pathway to independence.

Joseph Dana

According to a report released this year by the Brookings Institution, corporate-to-business spending in the continent's manufacturing industry is expected to reach $ 666 billion by 2030, which would represent $ 201 billion more In 2015. Given population growth, Africa could create 100 million jobs in the manufacturing sector if the appropriate policies are put in place. The problem is that "if".

First, there is some optimism: the African Union recognizes the positive impact that manufacturing investment – and, by extension, trade – can have on the continent. The regional agency is heavily focused on the sector in its Agenda 2063, with objectives of modernization of infrastructure, regional trade agreements and the creation of several special economic zones in countries outside the region. traditional African manufacturing bases in South Africa, Nigeria and Egypt. One such attempt is the African Continental Free Trade Area (AfCFTA), launched in March to create a single market for goods and services in Africa. While the deployment of AfCFTA has fallen behind due to slow implementation in the countries, the direction of the trip is positive.

There is another reason for optimism: Financial technology is a booming cross-border business sector. With the growing penetration of smartphones, Fintech startups are developing new ways for Africans to do business, send money and do banking, no matter where they are on the continent. The apps target migrant groups who send money home, insurance companies providing services via mobile operators and even funeral insurance companies selling their products on smartphones. The fintech sector is not big enough to create sustainable growth platforms for countries, but it shows that countries have what it takes to work together toward an economic goal. Such cooperation is essential to building a sustainable manufacturing sector across the continent.

In addition, small countries adopt a manufacturing philosophy. In Ethiopia, for example, small textile firms are trying to create a viable manufacturing sector from below. SoleRebels, a worldwide footwear company, is one of these companies. Each of her shoes is handmade in Ethiopia and the founder, Bethlehem Tilahun Alemu, said she did not intend to outsource the work as her brand continued to grow.

However, more generally, the path will be long and difficult for Africa's manufacturing sector. Opening a factory is an expensive and bureaucratic process. According to a 2017 report by the Center for Global Development, small African manufacturing plants were 39% more expensive than similar facilities elsewhere. Medium and large plants were 50% more expensive. Despite high unemployment rates, labor costs have been high in countries ranging from South Africa to Tanzania. All of this makes no sense, as the continent's countries remain among the poorest in the world. The reason, in a word, is corruption. It exists on a large scale thanks to the accumulation of a multitude of small gains – almost like a differential calculus of the graft.

Without broad political will at the national level, there will be little change. At a time when a large number of citizens of several countries want to free themselves from the legacy of colonialism, it is necessary to facilitate investment in the manufacturing sector as a pathway to independence. Politicians must go out of their way to adopt pro-manufacturing and trade-friendly laws, further prevent officials from seeking bribes at every stage of life, and build the infrastructure for Africans to trade with each other. Africa needs a "lion economy".

• Joseph Dana, based between South Africa and the Middle East, is the editor of emerge85, a laboratory that explores the changing emerging markets and its global impact. Copyright: Syndication Bureau www.syndicationbureau.com

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