The Case for an Industrial Revolution in Africa: Can South Africa’s Re-industrialisation be the spark?
Paul Terna Gbahabo is a research consultant and a PhD graduate in Development Finance at Stellenbosch Business School.
Africa, a continent of immense potential, stands at a critical juncture. The call for an industrial revolution is not merely a suggestion but an economic imperative. Africa desperately needs an industrial revolution. Though daunting, it is not beyond reach – it has been accomplished elsewhere in Europe, North America, and recently in East Asia.
Why can’t Africa spearhead its own economic and technological revolution? This transformative change entails rapid enhancements in productivity growth, driven by increased technical proficiency and efficiency rates across all economic sectors. The agenda for this transformation must encompass strategic policies promoting mechanisation in production, especially in agriculture and artisanal economies. Digitalisation, particularly in service sectors and government operations, is crucial, along with ensuring a consistent and dependable energy supply — where nuclear energy could be a viable consideration. Additionally, leveraging labor-intensive manufacturing (such as food processing, textiles, and apparel) can be a potent policy tool to foster decent job creation and mitigate the continent’s soaring unemployment rates. Significant improvements in transportation and communication infrastructure are also imperative.
However, it’s crucial to reflect on the context that highlights the urgency of this moment and characterises Africa’s precarious realities, largely due to its failure to industrialise.
Consider the stark reality faced by the African continent during the COVID-19 pandemic. The potential devastation loomed large if the pandemic had been deadlier, more virulent, and centered in Africa. The situation isn’t far-fetched; think of the Bubonic plague that ravaged Europe’s labor force in the 14th century, resulting in an estimated death toll averaging around 25 million in Europe alone. Despite initial fears that Africa could easily have been the pandemic’s epicenter due to the prevailing poor healthcare systems in many African nations, the continent escaped relatively unscathed. However, during the race for limited vaccine supplies, many African economies found themselves outbid and completely sidelined from the initial phases of vaccine distribution. African leaders, led by President Cyril Ramaphosa, found themselves at the mercy of Western industrial powers, pleading for consideration of Africa’s vaccine needs. This reliance showcased Africa’s lack of development in manufacturing its vaccine technology.
Furthermore, the tragic scenes of African youths drowning in overcrowded, ill-equipped boats while attempting to reach Europe in search of employment opportunities paint a grim picture. In 2023 alone, over 2,500 migrants, primarily African, perished in attempts to cross the Mediterranean. Since 2014, the International Office on Migration’s report highlights over 29,000 youths dying while attempting this perilous journey.
These distressing events are not isolated; they occur against a backdrop of technological backwardness, lack of visionary leadership, and the consequent social and economic deprivation that has plagued Africa for too long. The continent’s failure to undergo an industrial revolution, capable of radically transforming its economic base and enabling global competitiveness, remains the bane of its existence.
The expansion of manufacturing output and employment lies at the core of industrialisation. Manufacturing possesses unique qualities that give it a significant advantage in accelerating economic development. Beyond being a net job creator, it facilitates economic diversification and global competitiveness. Manufacturing’s capacity for technology transfer and absorption surpasses other sectors, as it produces tradable goods and can swiftly integrate into the global production value chain. However, the unimpeded progress of manufacturing requires an active and robust industrial policy, unlike agriculture and services.
The United Nations Industrial Development Organization estimates that manufacturing alone generates more than half a billion jobs globally. From low-tech, labor-intensive manufacturing to high-tech machinery and electronics assembly plants, the industry has the potential to employ a diverse workforce, offering a solution to create millions of jobs. This employment generation capability makes manufacturing a potent instrument to improve living standards, alleviate poverty, and foster economic inclusivity.
Recent studies highlight those low-tech industries such as Food and Beverages, Textiles, and Apparel exhibit higher employment intensity ratios, followed by high-tech sectors like electrical machinery, automobile, and machinery equipment. Thus, emphasising specialisation in these sectors could generate numerous job opportunities. Conversely, medium-tech enclave industries like mining refineries, chemicals, and basic metals are less likely to create sufficient employment opportunities.
The benefits of an industrial revolution in diversifying Africa’s economy and enhancing its global competitiveness would be immense. Diversification stands as the cornerstone of a resilient economy. Africa’s overreliance on resource-based industries has left it vulnerable to commodity price fluctuations. Harnessing the potential of manufacturing can mitigate this vulnerability.
Data from the World Bank Development Indicators shows that currently, Africa’s merchandise export base is dominated by low-benefit commodity exports at 62%, while manufactured goods stand at a mere 22%. In comparison, other regions like East Asia, Europe, North America, and Latin America export 84%, 71%, 54%, and 46% of manufactures respectively. Expanding into manufacturing will reduce dependence on commodity exports and bolster global competitiveness. Moreover, industrialisation broadens economic sectors, fuels long-term growth, and diminishes the risks of commodity price fluctuations. By diversifying into a spectrum of goods and services, Africa can enhance its trade balance, decrease imports, and compete effectively on the global stage.
In this connection, an argument may be made concerning South Africa’s promise towards Africa’s industrialisation. An active industrial policy in South Africa could potentially spark a continent-wide industrial revolution, much like 18th-century Britain’s pivotal role in spreading the Industrial Revolution to continental Europe and North America. Through technology transfer, British entrepreneurs and engineers shared knowledge with other economies, fostering learning by emulation. South Africa, having undergone industrialisation, stands as a seedbed, a blueprint, and an economic hub from which a meaningful African industrial revolution could originate. Alternative approaches might present steeper learning curves. To save itself and the continent, South Africa must initiate re-industrialisation by actively pursuing increased manufacturing value-added targets across industries and reversing the declining trend in manufacturing employment. Data from the Economic Transformation Database indicate that currently, South Africa’s manufacturing employment share sits at a meager 9% of total employment, down from 14% in 2005. This stark decline contrasts with emerging economies like Vietnam, Mexico, and Turkey, which average at 18%.
Africa’s Industrial Revolution is not merely a lofty aspiration but a moral and economic imperative. Its potential for economic diversification, job creation, technology transfer, infrastructure development, and enhanced global competitiveness is substantial. The time has come for Africa to seize this opportunity and embark on a path towards prosperity. The industrial revolution isn’t just a hopeful wish; it’s the future Africa rightly deserves. A successful re-industrialisation strategy in South Africa, supported by a robust industrial policy, can serve as a model for other African nations. Active technology transfer and learning by emulation will eventually reshape the economic landscapes across the continent.