Statement by K. Y. Amoako United Nations Under-Secretary-General and Executive Secretary of the Economic Commission for Africa at:

Thirteenth Meeting of the Conference of African Ministers of Industry

Accra, Ghana 26 May 1997

Your Excellency, Mr. Jerry Rawlings, President of the Republic of Ghana,

Mr. Chairman,

Honourable Ministers,

Distinguished Director-General of UNIDO,

Your Excellencies Members of the Diplomatic Corps,

Dear Colleagues from the United Nations System,

Ladies and Gentlemen,

On behalf of the Economic Commission for Africa, and on my own behalf, let me start by expressing thanks to His Excellency, President Jerry Rawlings, for the importance he has accorded to this meeting and for accepting to grace it with his esteemed presence. Through him, let me also express my utmost appreciation to the Government and my country men and women for their generosity in accepting to host this Conference and for their typically African warm welcome to all of us.

I must also express my sincere thanks to Mr. Mauricio de Maria Y. Campos, Director-General of UNIDO for the continued commitment he has shown in support of our continent's industrialization and for organising this meeting. He has spared no effort to ensure its success.

The theme of this 13th Meeting of the Conference of African Ministers of Industry, "Africa's Industrialization in the 21st Century" is important and timely. Rapid and sustained industrialization is an essential element in achieving Africa's goals of accelerated development and poverty reduction. Industrialisation is key to increasing Africa's participation in world commerce and finance. And industrialization is crucial to the structural transformation of Africa's economy and provides the platform for enhancing Africa's competitiveness in an increasingly globalized economy of the 21st century.

Though Africa has witnessed improved growth rates in the last two years and its development prospects appear much brighter, poverty reduction remains a major challenge. Industrialization can contribute to poverty reduction by increasing opportunities for employment, skills acquisition, and increasing incomes.

The promise and premium of industrialization are enormous. Nowhere does that promise need to be realised quickly than in Africa. Nowhere should the determination to industrialise be greater than Africa. Indeed, one can point to the proclamation of two industrial development decades both as an indication of Africa's commitment and evidence of international support for that effort. And yet, nowhere are the challenges to industrialization greater than in Africa.

Mr. Chairman,

Your Excellencies,

Ladies and Gentlemen,

By all standards, Africa has a weak industrial base. Three key facts illustrate Africa's low industrialization. First, there are only a handful of countries where manufacturing as a share of GDP exceeds 25 per cent -- the benchmark for considering a country as having achieved critical threshold of industrial take-off. Second, the export composition of African countries continues to be dominated by primary rather than processed or semi-finished products. Third, the ratio of public expenditure and private investment in scientific research and development (R&D) remains minuscule as percentage of gross domestic product in all African countries.

A combination of factors has contributed to Africa's slow pace of industrialization. Because accurate diagnosis is the first step to an effective remedial action, it is important to identify some of the major impediments. First, inspired by the success of a some previously centrally-planned economies; many African countries had relied on state-led industrialization strategy. This resulted in the proliferation of state-owned enterprises, many of which were inefficiently managed. A second contributory factor to the slow pace of industrialization was the poor economic incentives structure exemplified in the macro economic framework.

A second contributory factor to the slow pace of industrialisation was the poor economic incentives structure exemplified in the macro economic framework.

Third, poor and inadequate infrastructures have been a major constraint to industrial investment. Weak and unreliable infrastructure services, especially, water, electricity, telecommunications, sewerage disposal etc., increased the cost of doing business in Africa and lowered industrial productivity and efficiency.

Fourthly, public policy was hostile to active private sector industrial development. This hostility was manifested in the limits placed on sectors, in the share that foreign entrepreneurs could hold in certain enterprises and in the many administrative barriers to registering industrial enterprises. The picture that emerges from this brief review is of an economic environment that was hostile to business in general and in industrial development in particular.

Mr. Chairman,

Distinguished Delegates,

Africa's current industrial situation and the problems that contributed to it, provide a picture of where we are. However, the most important, and in many ways, the most exciting issues are: where do we want to be? and how do we get there? The first issue relates to vision and the latter pertains to strategy. This Conference would be assessed by the extent that its deliberations clarify our vision and sharpen our strategy for Africa's industrialization in the 21st Century.

Allow me to share with you my perspectives on these issues. African countries should aim to be middle income industrialised nations in the next 15-20 years. This is a bold, but achievable vision. Bold, because Africa's past economic and industrial performance has been lacklustre. But achievable, because Africa is decidedly on a new path -- a path marked by economic reforms, enhanced commitment to political pluralism, winding down of conflicts, and more private investor friendly climate.

More significant for industrialization is the burst of private sector dynamism in Africa. Privatisation has accelerated, with divestiture programmes encompassing enterprises in the agricultural and mining sectors, but also the industrial sector, as well as infrastructure sector, which operations are vital for industrial development. Some African countries have opened up their stock markets to foreigners. The enthusiasm in stock market development is evidenced by the surge of Wall Street interest in Africa, the investment funds being traded in New York and Europe from zero in 1992 to over US$1 billion currently.

Moreover, there are also encouraging signs of growing interest in portfolio investment. Since 1994, more than 12 Africa-oriented funds have been set up. The growth of these financial instruments and capital market institutions will help to eliminate one of the major constraints to industrialization, namely, lack of adequate financing.

These promising trends are reason for much hope and optimism about Africa's industrialization prospects. To foster and nurture these positive trends require perseverance and commitment. The crucial questions for the future are what form should the commitment to rapid and sustained industrialization by African governments take and how should the private sector support that effort.

The first major commitment by governments will be to persevere with economic reforms. This will, among other things, include pursuing sound macro-economic policies; continuing the legal and regulatory reform to support private sector development; provide stable political environment; improve civil service performance; and strengthen accountability to reduce incidence of corruption.

Second, governments need to be more proactive in encouraging private investment in the industrial sector. This means that, in addition to adopting business friendly measures, governments should implement specific policies to support the small- and medium-scale industrial enterprises, in particular. These could take the form of facilitating access to credit; establishing industrial enterprises zones or estates where most basic infrastructures are provided; and reducing administrative barriers to registration of industrial enterprises.

Third, governments need to provide more public investment in basic education and vocational training, as a means of enhancing acquisition of technical and scientific skills. The benefits of a well-educated work force extend beyond mastery of new technology. They include, for example, high motivation to work, ability to introduce technical innovations to production processes, and commitment to change orientation. Closely related, there is need for Africa to give priority to research and development to support industrialization process. National research institutions should be given necessary incentives to embark on industrial research and development, which also involves the transfer and development of technology.

Mr. Chairman,

Delegates,

The Gaborone Declaration adopted at the 12th meeting of CAMI committed African governments to pursuing these various policy measures and actions to relaunch Africa's industrial development. But it did more: it underscored the full involvement of the private sector in the industrialization process of Africa. This was a strong reaffirmation of the growing consensus that the private sector should play the lead role in industrial development. If there is one lesson from economic history, it is that the private sector is better at identifying market niches, seizing opportunities, marketing products, and making profits. These are the factors that make the private sector a better agent of industrialization than governments.

But as many aspects of economic development, industrial development requires partnership between public and private sectors. Indeed, experience in so many country contexts has demonstrated the importance of public-private partnership in industrialization. Public-private partnership is essential to building consensus about the direction of the economy, about the stability of economic policies and about incentive regimes to encourage and sustain industrialization.

Mr. Chairman,

Your Excellencies,

Distinguished Ladies & Gentlemen,

As you are aware, ECA is in the midst of reform and renewal aimed at strengthening the organisation to serve Africa better. The reforms have many facets. The renewal has involved sharpening the focus of work programme, with a view to concentrating on selected, priority areas in Africa's development. It has led to the restructuring of the secretariat. The senior management team at ECA has also been revamped, and we have recruited high calibre men and women who were selected for their intellectual, technical and managerial excellence. And, the intergovernmental machinery of the Commission, which provides legislative guidance for ECA, has been streamlined. At the last session of the Commission held early this month, the Conference of Ministers responsible for economic and social development and planning assessed the reforms and renewal as providing fresh impetus to work of the Commission.

Mr. Chairman,

Honourable Ministers,

Ladies and Gentlemen,

Institutional reform and renewal, be it in the private or public sector or in a regional or international organisation, has significance and impact when it delivers tangible results to the clients. Our main clients and constituency are our member States. Thus, we can ask, what can ECA do to help promote industrialization in Africa? Because the policy measures and actions needed to promote sustained and accelerated industrialization require actions on several fronts, many of the initiatives and activities that are being implemented by ECA will contribute to that effort.

At the regional level, we have recently completed two conferences both of which benefited from innovations in programming that brought to the conferences special sessions of internationally recognized African and non-African experts.

The first confernece was two months ago in Addis Ababa where the Conference of Finance Ministers convened. They were joined by 20 governors of Central Banks to discuss three topics: financial sector reform, the development of capital markets and initiatives to resolve Africa's debt problems. the Ministers focused on revamping legal, regulatory and financial frameworks and the pursuit of sound exchange rate management. And they made a number of pragmatic recommendations on the issue of Africa's external debt crisis, particularly the debt reduction initiative recently adopted by the World Bank and the International Monetary Fund for Highly Indebted Poor Countries (HIPC).

The second conference was of the Ministers Responsible for Economic and Social Development and Planning which, as I have already mentioned, convened in Addis Ababa last month. It focused on policies to promote international investment, trade policies and the role of improved information exchange and more efficient communications to investors. Specialized high level discussions included members of the Global Information Infrastructure Commission.

The Ministers issued the Declaration on Accelerated Trade and Investment in Africa, which they and I commend to your attention since they addressed such critical issues as domestic savings policies, steps to expand trade and investment within Africa and beyond, and on ways to strengthen and accelerate National Information and Communications Infrastructures.

For the future, in collaboration with partners, ECA will:

- First, assist African governments to formulate and implement policies for investment promotion targeted to the industrial sector, organise investment fora, and support privatisation efforts through the dissemination of best practices;

- Second, support the African Capital Markets Forum. The objective of the African Capital Markets Forum, which was launched at the ECA-sponsored Reviving Private Investment Conference, held in June 1996, in this very Conference Centre, under the distinguished patronage of His Excellency, President Jerry Rawlings, is to promote cooperation among African capital market institutions. It will also serve as a forum where African capital market institutions can exchange ideas on improving access of industrial and commercial entrepreneurs to financing;

- Third, assist African countries to develop and use their institutions and to expand and diversify exports and facilitate enterprise development;

- Fourth, help countries to promote measures to spur financial intermediation so essential for industrialization, and promote and strengthen subregional trading and payments arrangement, essential to the growth of larger markets and economic spaces in the region; and

- Fifth, advise and encourage African governments to adopt policies that promote an information and communications infrastructure by coordinating the African Information Society Initiative, making development, trade and investment information available through new information technologies.

Mr. Chairman,

Honourable Ministers,

Distinguished Delegates,

The African continent today is at a crossroads. It is showing great promise. But it has significant constraints -- not least of which is that industrialization is a weak link in Africa's development. Thus, for us here today -- senior government policy makers, private sector entrepreneurs, leaders of opinion and civil society, and representatives of regional and international organisations -- we must redouble our efforts in support to Africa's industrialization.

The blueprints for the task are in the various national development strategies of governments, in the business plans of the industrial entrepreneurs, and in the work programmes of international and regional organisations. Now we must translate those plans into action.

In other words, it is time to act. We should act with the vigour of the determined, with the commitment of the purposeful, and with the zeal of those wanting to be part of a great endeavour. The greatest undertaking for Africa is to move from the backwaters of development to the frontier of industrialization. I hope that the outcome of this meeting can truly mark a turning point in the direction of Africa's industrial development in the 21st century.

Thank you for your kind attention.