Manufacturing production in sub-Saharan Africa has more than doubled during the last decade, dispelling the myth the sector is in long-term decline, a new report by the Overseas Development Institute has found.
The report ‘Developing export-based manufacturing in sub-Saharan Africa’ found while the share of manufacturing in GDP had fallen from 19% in 1975 to 11% in 2014, it had still grown faster than the global average at a rate of 3.5% annually, from $73 billion in 2005 to $157 billion in 2014.
At the same time, manufacturing exports doubled from $50 billion in 2005 to more than $100 billion in 2014, while many countries have also seen an increase in Foreign Direct Investment (FDI).
The report argues strong growth in many parts of the continent, rising wages in China and policy improvements have provided the region with a unique opportunity to attract investment in manufacturing.
Dirk Willem te Velde, Director of Supporting Economic Transformation at ODI, said: ‘The common perception is that manufacturing in sub-Saharan Africa is in decline, in part because its share of GDP has fallen.
‘But when we look at the figures for the overall value of manufacturing production in the region, we see it has been growing fast over the past two decades.
‘Given the much stronger decline in commodity exports, manufacturing exports is also making countries more resilient to the current slowdown.
‘With strong growth in parts of Africa, rising wages in China and improvements in policy, many African countries now have a unique opportunity to attract investment in higher value-added, export-led manufacturing.’
The report finds SSA countries are increasingly exporting manufactures to each other, with 34% of total SSA manufacturing exports in 2014, from 20% in 2005, although countries in Asia have also become much more important destinations.
The analysis includes a Manufacturing FDI Potential Index, which ranks nine country case studies based on their potential to attract FDI. Researchers highlighted Ethiopia, Kenya, Mozambique and Zambia as four countries which are particularly well-positioned to attract FDI in manufacturing.
The report also suggests a number of promising manufacturing sub-sectors, with Africa’s share in global exports of fertilisers and inorganic chemicals rising to more than 5% and more than 4% for leather.
Notes to editors
- The report ‘Developing export-based manufacturing in sub-Saharan Africa’ is due to be published on Thursday, April 21
- Figures for manufacturing production (in constant prices), value of exports and share of GDP are based on ODI analysis of data from World Development Indicators from The World Bank
- While the value of SSA manufacturing goods exports to the US, EU and Japan have declined only very marginally (by 3% over the last 2 years for which monthly data are available; and no decline in the most recent year), the value of commodity exports dropped significantly (by more than a third in the last 2 years)
- The report analyses quantitative and qualitative accounts of the manufacturing sectors and policy context in nine African countries (Ethiopia, Ghana, Kenya, Mozambique, Nigeria, Rwanda, Tanzania, Uganda and Zambia) as well as the average of sub-Saharan Africa (including South Africa)
- Manufacturing FDI rose in nine African countries considered between 2003-2006 and 2010-2014, with the exception of Nigeria
For more information, a full copy of the report or to arrange an interview with one of the researchers please contact James Rush on 07808 791265 or [email protected]