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Implementing industrialisation strategies in Africa

Blogs 18/05/2017

By Dirk Willem te Velde, Director of  Supporting Economic Transformation Programme and Head of International Economic Development Group,  ODI


A cursory look at national and pan-Africa policy statements suggests that many African countries have a strong desire to industrialise. They have a point: manufacturing creates jobs, diffuses technology and makes the economy more resilient. Unfortunately, much analysis points to a reduction recently in the share of manufacturing as a percent of GDP on the continent, although significant progress is being made in selected countries. Real manufacturing value added has grown around 7% annually or more over 2005-2015 in Tanzania, Rwanda or Ethiopia. And few realise that real manufacturing production and exports of manufacturing doubled in sub-Saharan Africa in the decade to 2015.1

However, despite selected successes, many African countries will miss significant opportunities presented by their comparative and natural advantages, rising wages in Asia, and growing regional markets if they do not place a greater practical focus on implementing a co-ordinated strategy around manufacturing. Research2 on economic transformation over several years in various African (and Asian) countries uncovers key characteristics of a good industrial policy regime, factors behind effective implementation and country examples, recognising that whilst there are broad commonalities, the specifics will always be particular to the context.

So, what is a quality industrial policy regime?

Important substantive factors behind industrialisation and job creation include the political commitment to promote investment in employment-intensive manufacturing and the quality of the industrial policy regime. A good quality industrial policy regime includes:3

  • an inclusive industrial policy making process;
  • an enabling environment around trade rules and trade facilitation;
  • attention to industrial clustering and the provision and regulation of special economic zones (SEZs);
  • the availability and effectiveness of current investment promotion, facilitation and aftercare services;
  • the promotion of activities to support local capacity building, infrastructure planning and development processes;
  • a high quality public-private dialogue; and
  • the availability of support to build firm capabilities, especially around the provision of finance.

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Press release

Unlock the potential of African entrepreneurs for accelerating Africa’s industrial transformation, says the African Economic Outlook 2017

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