Africa needs industrialization to achieve prosperity and a decent standard of living for its citizens. But this can only be achieved through good governance policies and infrastructure development. The lack of these two critical factors have largely undermined the industrialization trajectory in most African countries. Given this scenario, the industrial settlement framework as well as tax policies, are particular dynamics to be looked into.
This was the key message that emerged during a Tuesday panel discussion at the 12th African Economic Conference in Addis Ababa, Ethiopia, on the theories and practices for building resilient infrastructure, promoting sustainable industrialization and fostering innovation in Africa. The session brought together more than 150 researchers, media, private sector and civil society representatives, among other participants.
Prof. Keun Lee from Seoul National University launched the debate in a keynote address, where he underscored the need for Africa to be industrialized to add value to its huge raw materials and services. "Access to finance and markets is key to promoting industrialization", he said, but "failure in designing governance policies can be a serious downside for promoting the sector."
Dr. Tilman Altenburg, Head of Department of the German Institute for Development, explained the dichotomy between his country's industrial policy and his experience in Africa. His analysis touched on the viability of national projects, productive transformation and mobilizing societal support for it. He argued that establishing clear rules for market-based competition; delivering services effectively; and removing protection are requisites for effective industrialization.
Industrial policies are more likely to achieve results if targets are agreed upon in a collaborative manner, involving the private sector as well as the competent public entities and civil service organizations, he said. "There is a need to look into the settlement framework, the distribution and marketing strategy, as well as productive integration and focus on tax policies."
For her part, Dr. Miriam Altman, South Africa's National Planning Commissioner, expressed the view that industrialization is a long-term process of more than 20 to 50 years, which requires incredible commitments and leadership, as well as appropriate policy in public sector procurement. "While there is need to focus on attracting foreign investments, leveraging domestic and regional markets is necessary," she said.
Focusing on "governance of power in African societies," Prof. Adebayo Olukoshi, Regional Director for Africa and West Asia at the Institute for Democracy and Electoral Assistance, underscored the need to have functional states with effective leaders. "We need to get the policies right, and build nations with leaders capable of building and leading industrial policies," he said.
Overall, the panelists agreed that Africa's industrialization would have a more positive impact on the continent's Gross Domestic Product. However, they noted that, for this to happen, a comprehensive and resolute continental industrial policy that is country-adjustable to local contexts and that can be aligned with countries' development goals, should be designed.