Africa’s Industrial Development: Turning Challenges into Opportunities

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LI Yong is Director General, United Nations Industrial Development Organization (UNIDO)

Credit: UNIDO

VIENNA, Sep 23 2019 (IPS) - When world leaders gathered in New York for the 70th session of the General Assembly back in 2016, and proclaimed the period 2016-2025 as the Third Industrial Development Decade for Africa (IDDA III), it reaffirmed the importance of industrialization in supporting Africa’s own efforts towards sustained, inclusive and sustainable economic growth and accelerated development.

Since the launch of this Decade, and the call for the UN Industrial Development Organization (UNIDO), to develop, operationalize and lead the implementation of IDDA III together with our partners, the African Union Commission, the New Partnership for Africa’s Development and the Economic Commission for Africa, much has evolved in the region.

The continent’s collective GDP is expected to stand at $2.6 trillion, and consumer spending estimated at $1.4 trillion in 2020, with 50 per cent of Africans living in cities by 2030. These figures show the astounding prospects for a continent that is the most youthful.

Digital transformation is also growing – the World Bank has estimated that digital transformation will increase growth in Africa by nearly 2 percentage points per year and reduce poverty by nearly one percentage point in Sub-Saharan Africa.

The potential of digital technologies for socio-economic development is being taken up and has led to many technology-based start-ups and tech hubs in Africa. The African Continental Free Trade Area (AfCFTA), the largest free trade area in terms of participating countries, is expected to lead to greater exports, higher value-addition in manufacturing and services, and to bring about a more diversified intra-African trade opportunity for the continent with benefits spilling over to small and medium-sized enterprises in Africa.

Despite growth rates in Africa still not having reached the 7.0 per cent that would be required to pull the continent’s populations out of poverty, optimism for Africa has not diminished. Extreme poverty in Africa has started to decline, and it is anticipated that if the trend continues, the number of Africans living in extreme poverty will reduce by 45 million by 2030.

The rapid deployment of advanced technologies through the Fourth Industrial Revolution provides a window of opportunity to help transform the landscape of manufacturing in Africa.

LI Yong. Credit: UNIDO

At UNIDO, we believe that it is crucial for Africa to be prepared to address its digitalization challenges and to seize the opportunities brought by the Fourth Industrial Revolution in pursuing inclusive and sustainable industrial development (ISID) to attain the 2030 Agenda for Sustainable Development, and the Sustainable Development Goals (SDGs).

The UNIDO Industrial Development Report 2020, a forthcoming flagship publication on the Fourth Industrial Revolution, to be launched in November this year will show that advanced digital production technologies applied to manufacturing production offer huge potential to advance economic growth and human well-being whilst safeguarding the environment.

This study taps into existing knowledge on the priorities for digitalization for Africa and highlights a two-pronged approach for manufacturing to remain a valid and feasible development path: one of which refers to the need for Africa to enhance readiness for the more digital future, whilst building industrial capabilities, through improved access to broadband and developing technical skills and technology hubs.

The limitation in basic infrastructure, including access to clean, reliable and affordable energy, human capacities and skills, will need to be addressed. Autonomous systems in manufacturing are likely to bring about higher demand for human capital qualified in science, technology, engineering and math (STEM).

Such growing demand polarizes the labour force by increasing the share of employment in high-wage jobs and decreasing the share of employment in middle-or-low wage jobs. It can deprive Africa of job opportunities, where low-paid jobs are concentrated and human capital with strong digital skills is in shortage.

Due to the lack of access to new technologies, knowledge, information, and infrastructure, the technology and skill gaps between Africa and developed countries could be widened with the rapid onset of the Fourth Industrial Revolution, potentially implicating local small and medium-sized enterprises that will also require more support in technological training and enterprise innovation to be competitive in the global market.

UNIDO will aim to support its Member States in Africa to transform into “more diversified knowledge-based economies” through cooperation in technology transfer, innovation, and infrastructure development. We will further leverage on our ongoing Programme for Country Partnership (PCP) to mobilize resources for inclusive and sustainable industrial development.

This includes supporting the development of necessary physical information and communications technology infrastructure, which is pivotal for the digitalization requirements of the Fourth Industrial Revolution.

As we support the development of Africa’s industrial base, working in collaboration with our partners in the UN development system, such as FAO, ILO, ITC, UNCTAD and UNEP, we will continue to support the creation of green and decent jobs through initiatives such as the Green Job Programme. Drawing on our knowledge base and expertise in industrial development, there is scope to further explore the application of digital technology and mini-grids to support clean, reliable and affordable electricity access in Africa, which will not only serve electricity demand for households as well as for productive use.

We will also learn from our experiences in digital learning platforms to support human capital development. In Southern Africa, UNIDO and the Government of Finland have piloted programmes in virtual reality training, which are being replicated in Malawi, Zambia, and Zimbabwe.

By using mobile 3D teaching platforms, virtual reality is helping forestry students learn to operate chainsaws in a safe environment. In Liberia, UNIDO, with the support of the Government of Japan and in partnership with the Japanese company Komatsu, has deployed connected technology and innovation in its production facilities, which has enabled labour market-oriented training programmes in excavator operation and basic service training to be provided, particularly for youth and women.

As world leaders gather in New York again for the General Debate of the 74th session of the United Nations General Assembly, September 23-27, alongside the historic SDG Summit, to take stock of where we are and what we need to do to achieve the 2030 Agenda for Sustainable Development, UNIDO together with its key development partners, the African Union Commission, the UN Economic Commission for Africa, the African Development Bank, the Afro Champions Initiative, the African Export-Import Bank and the International Telecommunications Union will leverage its partnership to support innovation and infrastructure development in Africa.

*LI Yong, Director General of the United Nations Industrial Development Organization (UNIDO), has had an extensive career as a senior economic and financial policy-maker. As Vice-Minister of Finance of the People’s Republic of China and member of the Monetary Policy Committee of the Central Bank for a decade, Mr. Li was involved in setting and harmonizing fiscal, monetary and industrial policies, and in supporting sound economic growth in China