ERA 2014

Dynamic Industrial Policy in Africa: Innovative Institutions, Effective Processes and Flexible Mechanisms
African countries require high and sustained economic growth to make significant progress in reducing poverty, generating employment opportunities for young people and engendering development. No country has achieved rapid and sustained economic growth without structural transformation, generally characterized by the movement of production from low to high productivity activities and sectors. A prosperous and expanding industrial sector including more manufacturing and resource processing is crucial for the structural transformation of African economies. In spite of the continent’s huge untapped human resources and natural endowments and more than a decade growth turnaround, the lack of structural change has limited Africa’s long-term growth prospects as well as the impact of growth on social development. As the 2013 edition of this report argued promoting greater industrial diversity and sophistication in Africa requires increased value addition and processing of primary commodities. Progress in industrialization and structural transformation across African countries, however, remains mixed and generally limited. In particular, the manufacturing sector in Africa remains rather small and has been on the decline in several countries in terms of its share in GDP. Most African economies are commodity based and tend to export primary commodities with little processing or value added. While this can lead to higher growth when commodity prices are rising, it is not likely to be sustainable nor does it lead to the type of structural transformation needed in