Developing export-based manufacturing in sub-Saharan Africa

Research reports and studies
April 2016
Neil Balchin, Stephen Gelb, Jane Kennan, Hope Martin, Dirk Willem te Velde and Carolin Williams

This report describes how production, employment, trade and foreign direct investment (FDI) in the manufacturing sectors in nine selected sub-Saharan African (SSA) countries has increased in the recent decade and identifies opportunities for the development of promising manufacturing sectors in the future.

The paper uses a number of techniques to examine promising country-specific sectors. Africa already has a share that is greater than 2% of world trade in fertilizers, chemicals, leather products, apparel, oil, iron and steel. Qualitative accounts and calculations using standard techniques indicate that there are some very interesting opportunities in the following African manufacturing sectors: garments, agri-business, mineral processing, manufactures of consumer goods, pharmaceuticals, automobiles, and food, beverages and tobacco.

Finally, the report examines rankings for selected countries in terms of geographical advantages, market size, economic fundamentals, general investment climate and specific policies. Some countries are well positioned in relation to comparators. For example, Nigeria’s size and growth in Tanzania and Ethiopia stand out, as do Ethiopia’s low labour costs, Rwanda’s investment climate and Ghanaian skills.

The paper concludes that while some are positioned better than others, all of the countries we examined will need to improve in several areas if they are going to attract high levels of investment into export-based manufacturing sectors. African countries should act to take advantage of recent trends such as African regional growth and rising wages in Asia.

Infographics

Infographic: manufacturing exports have grown in the last decade
Infographic: manufacturing increases resilience to economic shocks