Sir, David Pilling, in “Between hope and despair” (The Big Read, April 25), is right to argue that Africa is facing severe challenges, now that commodity exports have dropped. Macroeconomic crisis management has returned. Yet, it is even more laudable that he points to the productive exceptions. Our recent research on Africa’s manufacturing does this, too, suggesting we should alter the current doom and gloom perceptions being applied to the whole continent.
For example, we find that while in the 12 months to January 2016, compared with the previous year, there was a drop of 30 per cent in the value of African exports to EU, US and Japan, exports of manufactured goods hardly changed (and doubled over the past decade). Between 2005-14, the value of Africa’s manufacturing production also doubled, growing 3.5 per cent a year in real terms, double the rate of world manufacturing, and five times the rate in the EU, and (close to) double-digit growth rates in Ethiopia, Rwanda and Tanzania. Of course, more could be done, but at least the recent experience of special economic zones in Ethiopia and Rwanda suggest countries can attract manufacturing investment if they really set their minds to it.
Our research identified seven core ingredients of successful industrial strategies: improving fundamentals (macroeconomic management, investment climate, infrastructure and skills); an export push, clustering in special economic zones; active foreign direct investment promotion and building links with local companies; supporting productivity in SMEs through access to technology and long-term finance; improving co-ordination of implementation within government; and strengthening collaboration between state and the private sector.
This is the time for African countries to make use of the increasing wage cost of Chinese manufacturing and regional market growth that is (still) higher than the world average, discover production niches and make improvements in policy.
Dr Dirk Willem te Velde
Overseas Development Institute,
London SE1, UK