Africa: Towards Building Africa's Us$3 Trillion Industry

20 November 2019
opinion

Zimbabwe today joins the rest of the continent in commemorating Africa Industrialisation Day, a day set aside to raise awareness in the international community on the challenges and opportunities for Africa's industrialisation within the framework of the newly created African Continental Free Trade Area (AfCTA).

Industry can enhance productivity, increase the capabilities of the workforce, and generate employment, by introducing new equipment and new techniques.

Industrialisation, with strong links to domestic economies, will help Zimbabwe and the rest of the continent to achieve high growth rates, whilst reducing exposure to external shocks.

This will substantially contribute to poverty eradication through employment and wealth creation.

Industrialisation is not a new phenomenon in Zimbabwe as evidenced by national development policies such as the Transitional Stabilisation Programme (TSP) and the Zimbabwe National Industrial Policy (ZNIDP) that emphasise on value addition and local processing of natural resources, to boost export incomes and reduce vulnerability associated with exports of raw products.

Both policies seek to strengthen capital and financial markets, as well as improvement of business finance, especially for small-scale and rural industries.

In the recent past, calls for Africa to unite and put together vibrant policies that allow countries to diversify their economies and utilise local resources through comprehensive value addition have been amplified.

This is largely because most African countries, Zimbabwe included, continue to be among the poorest in the world, despite their vast natural resources.

The natural resources are exported in raw form, costing the continent billions of dollars in potential revenue.

The theme for this year is "Positioning African Industry to supply the African Continental Free Trade Agreement (AfCFTA) Market".

In a statement to mark the day, UN Secretary-General Antonio Guterres said: "This year's Africa Industrialisation Day marks a milestone as we highlight how the African Continental Free Trade Agreement will boost regional economic transformation and sustainable development.

"Africa's manufacturing has been growing faster than the world average, but this pace needs to gain even more speed.

"With the new trade agreement ushering in a market of at least US$3 trillion and a consumer base of more than 1,3 billion people, Africa's manufacturing sector is projected to double in size by 2025 and create millions of jobs."

AfCFTA is expected to be one of the world's largest single markets, accounting for US$4 trillion in investment across the 54 countries on the continent.

This is to be achieved by the creation of a single continental market for goods and services, with free movement of business persons and investments, paving the way for accelerating the establishment of the Continental Customs Union and the African Customs Union.

The UN Economic Commission for Africa (UNECA) thinks AfCFTA has the potential to raise intra-African trade by 15 percent to 25 percent, or US$50 billion to US$70 billion, by 2040.

It thus becomes imperative for the country to put in place a thorough import substitution strategy that will aggressively reduce the country's import bill.

This will improve the country's trade deficit whilst protecting economic activities which reduce increasing returns.

This is important for Zimbabwe because exporting primary products keeps poor countries poor.

There is need to move away from such activities and promote manufacturing and services sectors which create increasing returns.

To achieve this end, economists agree that for countries to industrialise, governments must issue provisional monopoly rights to cushion local companies involved in increasing return activities.

Government should provide all the necessary support and protect such economic activities from foreign competition until the sectors become competitive on the global market.

Additionally, to fully industrialise, the country should fully support sustainable small and medium enterprises growth and development through improving business linkages and market access among other support services.

The idea is to enhance investment flows in the country's industrial sector, hence the private sector must come on board to lead the new growth trajectory.

For this to happen in line with Vision 2030, the country should aim at strengthening industrial value chains, improve agro-based industries, mineral beneficiation and promote export-led industrialisation to accelerate the country's industrialisation.

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