By Wim Naudé
Narratives are essential. Humans are, after all, “helpless story junkies”. Business and economic success depend much more than is commonly acknowledged in getting the narrative right. And if there is a narrative where getting it right or wrong matters hugely, it is the narrative about Africa’s industrial development.
Therefore, African industrialization is essential. Unfortunately, the dominant narrative is that Africa has been de-industrializing, even prematurely. In this narrative, it is also questioned whether Africa can ever industrialize. African countries have even been advised not to try. The World Bank’s “Trouble in the Making” report concludes that manufacturing is becoming less relevant for low-income countries.
Fortunately, a very different narrative is possible. In a recent paper, I argue that Africa can industrialise because of three factors. These are “brilliant” new technologies enabling digitisation, smart materials and 3D-printing; a more vibrant entrepreneurship scene; and Africa’s growing middle class (as measured by the share of households that earn between $11 and $110 per person per day), which supports the continent’s first generation of indigenous tech-entrepreneurs.
Consider therefore the following narrative: More than 300 digital platforms, mostly indigenous, are operating across the continent. There are also more than 400 high-tech hubs, and more are being added. In addition, venture capital funding into African tech start-ups increased ten-fold between 2012 and 2018.
Moreover, manufacturing has more than doubled in size in real terms since 1980. And since 2000, manufacturing value-added has grown at more than 4% a year. That is double the average between 1980 and 2000 (numbers from the Expanded African Sector Database).
As a result, total employment in manufacturing in 18 of the largest African economies (for which there is data) grew from roughly 9 million in 2004 to more than 17 million by 2014. That is an 83% increase in ten years. The proportion of labour in manufacturing for Africa as a region grew from roughly 5% in the 1970s to almost 10% by 2008…