Regional integration, the solution for boosting industrial production in Africa

Johannesburg, 30 October 2013 -  Regional integration remains one of the solutions for boosting production by the manufacturing industry in Africa. This fact was unanimously acknowledged by participants in the panel discussion on “Competitiveness and Trade Integration”. The discussion was held on Tuesday, October 29, the second day of the eighth African Economic Conference (AEC) taking place in Johannesburg.

During the panel discussion, Henri Atangana Onda, a researcher at the Yaoundé II University of Cameroon, introduced a report entitled “The effect of North-South and South-South trade on industrialization in Africa”. According to Atangana Onda, African countries have a comparative advantage in terms of the work factor.

Between 1980 and 2009, the contribution of the manufacturing industries to Gross Domestic Product (GDP) rose slightly in North Africa: from 12.6 per cent to 13.6 per cent. However, it fell sharply in the rest of the continent: from 16.6 to 12.7 per cent. The speaker was basing his assertions on figures from the United Nations Economic Commission for Africa (UNECA) for 2013.

Trade liberalization has exposed local industries in African countries to competition for which they were poorly prepared.

Consequently, large sections of the manufacturing sector have disappeared during the last 20 years in Africa. That liberalization came too soon to those countries given their level of development.

The speaker cited the difficulties facing industrialization in Africa. Referring to an analysis conducted by the African Development Bank (AfDB), he observed that the underperformance of industries is due especially to the lack of infrastructure, the energy gap, poor governance and fierce competition from products imported from emerging countries such as China.

Trade with Asian countries leads to de-industrialization in some African countries. The market is flooded with poor quality manufacturing goods.

In addition, the speaker stressed that South-South trade may also, in some circumstances, be a cause of de-industrialization for certain countries of the continent.

He quoted the examples of South Africa and Nigeria. Those two “economic giants” could upset the balance of the manufacturing sectors in the countries in their regions unless regulatory mechanisms are implemented by the leaders of the Regional Economic Communities (RECs).

The session also included the reports of Hopestone Chavula, responsible for economic affairs at the Economic Commission for Africa (UNECA). He spoke on the theme of “Trade policies, market structure and performance of the manufacturing sector in Malawi, 1967 to 2002”.

The third subject of the discussion was raised by Joseph Parfait Owoundi. It concerned “Competitiveness and trade integration in the CEMAC countries: comparative advantages and contribution to the trade balance”.

The discussion was chaired by Witness Simbanegabi, Head of Research at the African Economic Research Consortium.

The African Economic Conference was organized jointly by the African Development Bank (AfDB), the United Nations Economic Commission for Africa (UNECA) and the United Nations Development Programme (UNDP). It continues until October 30.

The conference brings together heads of State and experts in business and development from all over the world. They are discussing regional integration in Africa, and its role in strengthening the economic growth and well-being of the continent’s populations.

The conference will also provide the opportunity to reflect on the efforts being made in various sectors and fields, such as finance, road transport, power pools, management of water resources, tax convergence and the free movement of workers.