Industrialisation, particularly the expansion and increased sophistication of manufacturing production and exports, and also the expansion of manufacturing employment, remains an essential part of Africa’s economic transformation. Unfortunately, manufacturing as a share of gross domestic product has declined over the past few decades in most African countries, even though in absolute terms it is growing.
Although African countries face difficult challenges in breaking into world manufacturing markets, new developments work in their favour. These include rising wages in China and a rebalancing in Asia away from export-led towards domestic and regional consumption-led growth; Africa’s growing regional markets; falling transport costs; greater access to abundant natural resources; improved firm productivity and access to global value chains; and better general economic policy environments. But governments should not stand aloof; to seize these new opportunities they will have to formulate and implement coherent industrial development strategies.
This paper was produced in collaboration with the African Center for Economic Transformation, as a background paper for the African Transformation Forum in Kigali, Rwanda on 14-15 March 2016.