Business Development

Africa Industrialisation Week roars to life

Africa Industrialisation Week

The African Union’s Africa Industrialisation Week kicks off virtually today November the 16th and will run until the 20th of November 2020 and will be held under the theme “Inclusive and sustainable industrialisation in the AfCFTA era”.

Given the importance of industrialization for structural transformation, 20th November was set aside annually as Africa Industrialization Day (AID).

The day was adopted by the assembly of heads of state and government of the organization of African Unity at its Twenty-fifth Ordinary Session held on 26 July 1989 Addis Ababa, Resolution AHG/Res. 180 (XXV), which was followed by the UN General Assembly “UNGA” Resolution 44/237 of 22 December 1989.

The AID provides an opportunity for key stakeholders to reflect on Africa’s industrialization by looking at how the continent can change its current status quo.

Since 2018, Africa Industrialization Day has been successfully commemorated with weeklong events, an innovation marking a departure from the one-day set-up tradition to afford more time given its significance to Africa’s cause for delivering structural transformation, as an entry point towards meeting the objectives of Agenda 2063, and SDGs, 2030.

It is given the need to uphold the statutory political mandate to drive advocacy on Africa’s structural transformation, and building on the current momentum that the Africa Union Commission, will ben hosting the 2020 Africa Industrialization Week celebrations (Aiw2020) from the 16th to 20th November 2020 Under the Theme “Inclusive and sustainable industrialisation in the AfCFTA and COVID-19 era”.

Given the changed circumstances on account of the Covid-19 pandemic that has seized the global economy since early 2020, this year’s celebrations will be coordinated by the AUC Department of Trade and Industry through Virtual media tools. (Zoom Conference/Webinar Session Series).

The AUC will host co-organize the event in conjunction with AUDA-NEPAD, UNIDO, UNECA, and AfroChampions.

This year’s celebrations present a unique opportunity to consolidate the continent’s vision to build a self-resilient Africa, Africa We Want, given remarkable political traction on regional economic integration, as confirmed by milestones this far on the trade front through the fruition of the Africa Continental Free Trade Area (AfCFTA), a liberal trading regime that will create an enlarged US$3 trillion market, with 1.27 billion consumers.

“The main idea of the AfCFTA is improved coordination of African countries and a gradual transition from an export-import model (unfavorable for the continent) to a self-sufficient and strong unit capable of competing with other major economies and finally to be able to make products labeled Made in Africa.”

Industry and Trade Nexus – High-level Political Will

The AfCFTA is envisaged to become operational on 1 January 2021, backed up by 28 ratifications to date, and 54 signatures to the Agreement, with this, complemented by positive developments on institutional arrangements to date, through the instalment of the Secretariat in Accra, Ghana, in June 2020, to drive implementation of this game-changing pan-African trade development feat – a building pillar for the envisaged Africa Economic Community (AEC).

This caps a journey to build a one-Africa integrated economy that started in earnest decades back, amplified by the 10th Extraordinary Session of the Assembly of Africa Union Heads of State and Government (HoS/G) in Kigali, Rwanda that paved the way for the signature to the African Continental Free Trade Area (AfCFTA) Agreement.

Beyond this, high-level political commitment to leverage industrialization to tackle the continent’s challenges got a boost during the 33rd Ordinary Session of the Assembly of Heads of State and Government of the African Union (AU), held from 9th to 10th of February 2020 in Addis Ababa, Ethiopia
that passed a Resolution requesting the African Union Commission (AUC) in collaboration with UNIDO, UNECA, and the Afro-Champions, to organize a Summit on Africa’s Industrialization and Economic Diversification during the Africa Industrialization Week in November 2020. However, due to Covid-19 pandemic attendant risks, in September 2020 a decision was taken to defer the Summit to 2021.

Against this background, and given the need to sustain this political momentum on the industry and trade nexus in driving the continent’s development agenda, the Aiw2020 will endeavour to provide a forum that sustains the spirit and good political intentions demonstrated by our Heads of State and Government, and thus stand out as a strategic platform to rally more political visibility on the beckoning need to galvanise national, regional, continental, and global stakeholders towards charting a common ground on Africa’s structural transformation agenda.

Beyond scaling the political milestones on the AfCFTA programme the most important deliverable, for now, is to transcend beyond political rhetoric and implement continent-wide programmes to boost industrial capacity to supply the new liberal continent-wide trade regime. The structural transformation will no doubt create the conditions for putting a check on the state of poverty in Africa, towards a sustainable, inclusive human development path in the medium- to- long-term.

Thus, the coming on stream of the AfCFTA has rekindled hopes for a re-configuration of Africa’s development narrative, presenting huge possibilities for an acceleration in economic expansion, as the domestic, regional, and continental enterprises deploy under-utilised industrial capacity in the wake of new and dynamic opportunities ushered in by free trade agreement.

With this new development, that will provide unlimited scope for the exploitation of economies of scale and competition, “business- to business spending in manufacturing is projected to reach US$663.3 billion by 2030, that is US$201.3 billion more than it did in 2015.

Africa is to be the world’s next great manufacturing centre, potentially capturing part of the 100 million labour-intensive manufacturing jobs that will leave China by 2030, thus creating a great opportunity for the continent.

African industries can double production to nearly $1 trillion within a decade, with three-quarters of that growth coming from manufacturing to substitute imports and meet increasing local demand. Thus, a harmonised trading, investment, and business regime ushered in by the AfCFTA are envisaged to enhance intra-African trade, as well as foster a conducive environment that can unlock foreign direct investment into the continent.

The AfCFTA therefore offers the continent an opportunity to confront head-on the significant trade and economic development challenges confronting it, that is: market fragmentation; smallness of national economies; over-reliance on the export of primary commodities; narrow export base, caused by shallow manufacturing capacity; lack of export specialisation; under-developed industrial regional value chains; and high regulatory and non-tariff barriers to intra-Africa trade amongst others. The liberalised trade regime has the potential to enable Africa to significantly boost intra-Africa trade, improve economies of scale, and establish an integrated market.

COVID -19 Pandemic – and Industrialisation agenda

However, despite these positive developments, the advent of COVID-19 in early 2020 has posed the most formidable risk to the smooth phase-in of the AfCFTA, given its disruptive nature to business and commerce, whilst at the same time also putting a check on the vulnerability of African economies, obviating delays in the launch date of the free trade area. Thus, COVID-19 has further heightened the risks of perpetuating the continent’s trade and business vulnerability globally, with most of the commodity-dependent nations, in particular the net-oil exporters such as Nigeria, Angola, Equatorial Guinea, among others, negatively affected by a depression in global crude oil demand.

UNECA (2020) observes that the price of oil, which accounts for 40 percent of Africa’s exports, has halved, eroding incomes for net-oil exporting countries. For instance, Nigeria has been seeking US$3.5 billion from the IMF to mitigate the COVID-19 induced slump in economic activity, yet they remain a significant producer of oil.

There is no doubt that at this juncture development of strong regional and local/national value chains can be an entry point to build a resilient SMEs production capacity in the continent, to seize the business opportunities emanating from the COVID-19 induced disruptions of Global value chains.

Industrialisation prospects for the continent are anchored on unleashing the growth of small and micro-enterprises guided by the African Union SMEs Strategy whose development was informed by evidence-based mapping of the peculiarities of the continent’s production systems. By creating business-enabling conditions across the Member States that can enhance the longevity rate of Micro, Small and Medium-Sized Enterprises (MSMEs), the continent’s industrialisation momentum can be fuelled.

COVID-19 and its attendant disruption of global supply chains, global trade, which has also not spared Africa’s vulnerability due to limited diversification in its export basket, and hence weak commodity-linked export revenues has brought to the fore the urgency and significance of driving industrialisation in the continent. More fundamentally, the pandemic has openly exposed the hollowness of African economies on several fronts including the fragility and weakness of Africa’s industrial capabilities. While COVID-19 is creating a major economic and health crisis, it also presents an invaluable opportunity for the continent to re-configure its development narrative, towards the prioritization of initiatives that foster to accelerate Africa’s industrialisation.

About the author

Byron Adonis Mutingwende