African finance, planning and economic development ministers and central bank governors met in Abidjan last week to discuss the challenges impeding Africa’s emergence and ways to reverse the continent’s history as the least developed region in the world.
Organizers of the weeklong conference, the UN Economic Commission for Africa (ECA) and the African Union Commission (AUC) believe industrialization is the best way to achieve this goal, hence the theme of the conference.
The 6th edition of the Joint Annual Meetings of ECA Conference of African Ministers of Finance, Planning and Economic Development and AU Conference of Ministers of Economy and Finance, was held under the theme “Industrialization for an Emerging Africa” from 21 to 26 March 2013.
At the conclusion of the conference on Tuesday March 26, the African ministers gathered in the commercial capital of world’s top cocoa grower and exporter, Cote d’Ivoire, have committed to work together to develop a united vision to influence the global economic agenda and shape the outcomes of globalization for the benefit of Africans.
As ECA and its partners work to rally members states behind common policies and strategies to fundamentally transform Africa’s economic structure from predominantly mineral resources and agricultural products exports based to an industrial one that can process these resources, the Ministers pledged to do their part to ensure repositioning Africa as a new growth pole and emerging market in the next 50 years.
“We welcome the Africa 2063 project and encourage the African Union Commission, ECA, and AfDB (African Development Bank) to continue working on the initiative so that the continent can attain its vision of becoming an integrated, competitive, prosperous and peaceful continent that represents a dynamic force in the global economy,” the ministerial statement adopted at the end of the conference stated.
According to the ministers, though Africa’s return to a positive growth trajectory has been attested by the fact that about seven of the 10 fastest growing economies are in the continent and this achieved at times of global economic meltdown, the pattern of development on the continent has remained mixed. For example, the growth has not translated into commensurate job creation and poverty rates remain high in most countries. This is partly because economies continue to rely heavily on primary commodity production and exports.
The two-day segment of the ministerial conference, therefore, sought ways African countries can design and implement effective policies to support the promotion of value addition. It was preceded by a four-day preparatory meeting of the Committee of Experts who reviewed the state of economic and social conditions in Africa.
“If Africa can show a competitive edge, I believe it is possible for Africa to industrialize,” Maxwell Mkwezalamba, Commissioner for Economic Affairs of the AUC, told journalists Friday, March 22, as experts next-door were debating how to industrialize Africa. “Whatever the developed countries are doing, it shouldn’t stop us from industrializing,” he added.
At the beginning of their discussion a day before, the experts blamed both Africa’s former colonizers and failures of subsequent leaders for policies that kept most countries in almost the situation since independence.
“While industrialization had widely contributed to the increase of exports and creation of jobs in countries such as Malaysia and China, and made Korea one of biggest ship and microchips producers across the globe, Africa has remained stagnant in terms of their industrialization policies,” the experts said.
The “extractive policy” put in place by colonial powers and sustained by African leaders after independence countries have caused this situation, according to the experts.
The pre-independence structures of African economies were purposely made not to allow processing of raw materials favouring value addition only by the exploiting powers outside of Africa. Things worsened when African leaders failed to correct such policies and by the imposition of one size fits all policies after independence, the experts argued. “It was even made worse by policies imposed from abroad, including the import substitution policy and then the Structural Adjustment Programmes which caused African countries to de-industrialize themselves.”
Structural Transformation, not Structural Adjustment
The ECA, under its new revolutionary chief, Carlos Lopez, is now pushing for the designing and implementation of effective industrial strategies and policies to promote value addition and economic transformation to eventually reduce Africa’s dependence on the production and export of unprocessed material.
“There is no doubt that Africa requires structural transformation and not structural adjustment. Industrialization is absolutely indispensable to this objective,” ECA Executive Secretary, Carlos Lopes, told the gathering ministers at the opening of the ministerial conference on Monday March 25.
His assertion was echoed by both the President of the host country and chief of the co-organizer, the AUC.
Alassane Ouattara, who leads the West African country on top of the list of global cocoa production stated it is time Africa focused on increasing local productivity and its share of finished goods in global value chains. Ironically, his country is the best example of why Africa need to listen to the revolutionary Lopes. Though Cote d’Ivoire produces over a third of world’s cocoa, it exports the raw bean to mega chocolate manufacturers in the west such as it former colonizer – France – Belgium and the US, who are reaping the most out of the bean exporting the produce to the world including Cote d’Ivoire itself.
“Industrialization is not a luxury for the region (Africa) but a necessity,” said Chairperson of the AUC, Nkosazana Dlamini Zuma.
Gabon’s State Minister for Economy, Employment and Sustainable Development, Desire Guedon, on his part added that industrialization was key to unlocking Africa’s potential in the same manner the policy helped Asian economy to boom.
Best African Examples
Besides, the reference to Asian cases, few African countries were repeatedly stated both by experts and ministers as domestic examples attesting the benefits of shifting from raw material export to processing, otherwise called value addition.
Ethiopia was praised for its success in the leather industry which is now producing various leather products including shoes and exporting them to top markets around the world. South Africa’s case of establishing a billion dollars smelting plant was raised for enabling the strongest economy in the continent to process 25 percent of its manganese production as opposed to exporting 100 percent as ore in earlier cases.
These and other examples should be replicated throughout the continent, according to Lopes. In addition to the broader benefits of industrialization, a commodity based approach offers immediate scope for value addition and opportunities for exploiting forward and backward linkages, Lopes explained.
Both Zuma and Lopes said the structural transformation of Africa will require bold leadership, and innovation and determination to overcome current infrastructural deficiencies. Additionally, it will require robust knowledge base of industry structure and global value chains.
While global growth declined by 2.7 percent last year, Africa bucked the trend and grew at 5 percent. However, the growth is not sufficient as it fell short of 7 percent necessary to reduce poverty. This is partly due to the fact that many African economies are dependent on the production and export of primary commodities.
“Africa’s resources should a true blessing and not a curse. Resource based industrialization is possible in Africa,” said Zuma.
At the domestic level, countries must strengthen bureaucratic capacity to undertake dynamic long term planning and coordination of economic activity. “For finance we must begin to pay more attention to domestic resource mobilization while we accelerate the pace of regional integration to reap greater economies of scale,” said Lopes.
According to him, African also needs to develop economic infrastructure “necessary to significantly reduce the cost of inputs especially low cost and reliable energy and significantly improve the business environment.”
New ECA Approach
Carlos Lopes’ arrival at ECA heralded a complete overhaul of the 50 years old structure of the organization which led to the creation of new and strengthening existing departments. With a bold, revolutionary, media friendly as well as newmedia savy brand of leadership, Lopes shook ECA first before going public with a new approach that he believes would position his organization on the driver’s seat of Africa’s transformation over the next half a century.
Much like the bulldozing mayor of Addis Ababa, Arkebe Ukbay, whose restructuring of the city’s administration down to Kebele level preceded the introduction and implementation of many socio-economic policies that helped win hearts of Addis Ababans in a short time, Lopes has now made sure ECA is ready for the task ahead.
“We will support member States in their efforts to implement growth oriented macroeconomic policies, and to restore development planning. This will be underpinned by the generation of high quality data using latest technologies,” he told the participants at COM13.