Africa makes progress in industrialization over the past decade, set for more growth

AFRICA – The African Development Bank, the African Union and UNIDO, have jointly launched the inaugural edition of the Africa Industrialization Index (AII) report and the complementary African Industry Observatory.

The All report provides a country-level assessment of the 52 African countries in terms of manufacturing performance, capital, labour, business environment, infrastructure, and macroeconomic stability over the past decade.

According to the report, thirty-seven of 52 African countries have become more industrialized over the past eleven years, with North Africa remaining the most advanced African region in industrial development, followed by Southern Africa, Central Africa, West Africa and East Africa.

South Africa maintained a very high ranking throughout the 2010-2021 period, followed closely by Morocco, which held second place as of 2022.

Rounding out the top six over the period are Egypt, Tunisia, Mauritius, and Eswatini. During the coverage period, Djibouti, Benin, Mozambique, Senegal, Ethiopia, Guinea Rwanda, Tanzania, Ghana, and Uganda all improved by five or more places in the rankings.

However, looking at the continent as a whole, its share of global manufacturing has declined to the current level of less than 2%.

Abdu Mukhtar, African Development Bank Director for Industrial and Trade Development, stated that while Africa had shown encouraging progress in industrialization over the 2010-2022 period, the Covid-19 pandemic and Russia’s invasion of Ukraine had set back its efforts and highlighted gaps in production systems.

“The continent has a unique opportunity to sort out this dependency by further integrating and conquering its own emerging markets.”

For instance, the African Continental Free Trade Area is creating a once-in-a-lifetime single market opportunity of 1.3 billion people and total aggregate consumer and business spending of up to US$4 trillion.

This will enhance the countries trade and production linkages and finally reap industrial competitiveness from regional integration as other regions have done.

Building productive industry will be integral to Africa’s development, offering a path to accelerated structural transformation, creating formal jobs at scale and inclusive growth.

More proactive industrial policies are also seen as critical to reversing the trend, but these are knowledge-intensive and require a detailed understanding of the constraints and opportunities that each country faces.

To monitor the progress of the different countries, the African Industry Observatory will serve as a central online knowledge platform to collect, analyze and consolidate the quantitative data needed for qualitative analyses of national, regional and pan-continental industry trends, forecasts and comparisons. 

Chiza Charles Chiumya, the African Union Commission’s Acting Director for Industry, Minerals,  Entrepreneurship & Tourism, said, “These tools are going to greatly enhance our industrial policymaking as well as help to bring in the required focus that industrialization needs both from policymakers as well as the private sector, who will now clearly see where the continent has opportunities.”

“The African Industry Observatory and the Africa Industrialization Index will help consolidate cross-institutional cooperation, strengthen each institution’s policy dialogue influence for accelerating industrial development and an enhanced knowledge of industrial development dynamics,” said Victor Djemba, Chief of UNIDO’s Africa division.

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