Yaounde, 5 August, 2020 (CEA) - Inadequate skills development and low productivity are holding down the competitive and economic diversification potential of Central African countries. However, if they draw inspiration from the experiences of Ethiopia, Japan and South Africa, among others, these countries can retool their human resources to become more developed, prosperous and resilient to external shocks.
This is the overarching message from international experts who participated in a videoconference on the theme: “Skills for Economic diversification in Central Africa: leveraging experiences from successful comparators and building partnerships” recently organized by the Sub-regional Office for Central Africa of the UN Economic Commission for Africa (ECA).
The virtual event was the second segment in a series of interactive meetings leading up to the 36th session of the Intergovernmental Committee of Senior Officials and Experts (ICE) for Central Africa to be held later this year under the theme: “Skills for Economic Diversification in Central Africa”.
During the webinar, the experts examined models that could be adopted by countries of the sub-region in order to help bring about needed economic changes.
Jean Luc Mastaki, Head of Section for Economic Diversification Policy and Reforms of the Central Africa Sub-regional Office of ECA elucidated on the characteristics of an efficient skills system. First, he said, such a system must be responsive to the demands of the market, including industry, businesses, the public sector, the private sector and employers.
He argued that "knowledge production and innovation systems must converge with the needs of potential employers.”
Another feature to consider is a fit for purpose skills supply base. He argued that a skills creation system must provide products ready for use which would match the layers of the division of labor of enterprises.
According to the economist, other specific features of skills efficiency for economic diversification include "the inclusiveness of a system, its accessibility through affordable costs and its openness to the transferability of expertise in a context of free movement".
For this to materialize in Central Africa, there must be efficient transmission channels. In this regard, Special Economic Zones (SEZs) are a key factor as they are tools of industrialization and economic diversification. They are also very fertile skills development hubs.
Mastaki said within the SEZs, industries and training institutes have the possibility of ensuring a continuum from theoretical to practical lessons and mastery of the reality on the ground in companies.
In this regard, he cited two Scandinavian examples that effectively connect training institutions and the industry. These are: the Learning Factory located in the Raufoss Industrial Park in Norway and the partnership initiative between the Oslo Metropolitan University and Small and Medium Sized enterprises (SMEs).
The latter initiative helps Technical and Vocational Education and Training (TVET) institutions to keep an eye on the evolving technologies of productive enterprises in order to adapt their training of students to be ready to supply the skills that go with changing times once upon graduating. Central Africa can take a leaf from these.
The Japanese experience
Speaking from Japan, Shoko Yamada of Nagoya University said Central African countries could focus on a transnational SEZ model.
She posited that they could, for instance, specialize in the processing of mineral and other natural resources in line with their comparative advantages, in such a zone. She said a transnational undertaking of this sort can easily produce a spill-over effect for similar actions in other economic sectors.
Drawing on the post-World War II Asian economic miracle and the development of skills that made it possible, she indicated that 3 key lessons could be learnt from Japan: “positioning technology as an engine of growth, adapting training programs and policies and undertaking accurate diagnoses of skills as a starting point for industrialization and economic diversification.”
Ethiopia’s import substitution formula
Economic diversification hinged on an import-substitution policy has enabled Ethiopia to strengthen its vital economic diversification skills development, said Nabiyeleul Gessese Zellele, an Ethiopian academic specialized in industrial and chemical engineering. The country, he noted, has stopped importing skills (labor), as well as agricultural and industrial inputs in order to produce them locally.
In a move toward economic self-sufficiency, the Ethiopia’s leaders have prioritized three sectors: aviation, agribusiness and leather manufacturing.
He said Ethiopia's prioritization and import-substitution policy has enabled the country to specialize, develop real know-how and export goods and services from these sectors to African and Western markets alike.
Ethiopian leather, for instance, is capturing the fashion industry with the production of high-end shoes. In terms of investments in the sector, joint ventures accounted for 3% of it, foreign direct investment (FDI) 45% and local investment 52%.
Ethiopian Airlines, he went on, is the pride of the African continent. It is the main source of foreign currency inflow into the country.
Today, the country has just brought to market the first fully assembled electric vehicle on its territory. For all of these products and services, the African Continental Free Trade Area (AfCFTA) will be a great enabler, Zellele noted.
Ethiopia’s experience, he argued, makes the case for setting up SEZs in Central Africa, very strong. To set these zones up, he noted that the following objective criteria must be considered: their competitiveness and growth potential, their poverty reduction potential, the likelihood of success and their impact on employment. A key advantage of setting up such industrial hubs is the concentration of companies in a unique location with facilities, which is a great pull-factor of foreign direct investment.
Lessons from South Africa
Given that Central African countries still face technological and engineering challenges, the South African experience was explored.
Saliem Fakir, Executive Director of the African Climate Foundation, demonstrated that through joint ventures with foreign companies, South Africa has benefitted from technology transfer to boost its skills set for economic diversification.
He said though the country is essentially a mining economy, it also exports manufactured products, experiences and knowledge. This is thanks to a functioning manufacturing industry in armaments, oil refining, and cement production.
He narrated how the creation of flagship university engineering programs in the first instance, followed by the setting up of training units in special economic zones helped prepare the country’s skilled workers for industrialization and economic diversification.
South Africa, he went on, lays emphasis on specialized the SEZs. The SEZ of Cape Town, for instance, focuses specifically on activities relating to the green economy.
The country’s high level of expertise in renewable energy production has been made possible by retooling its engineering students.
“It shows that you don't always have to wait for new skills to develop. You can readapt existing skills for new industries,” Fakir explained.
“Central African countries should therefore keep in mind that universities can be slow to fill the skills gap. So we have to think about opportunities such as special training centers,” he argued.
He however cautioned that in spite of South Africa’s skills base on renewable energy, the green economy has suffered a blow due to a political economy dominated by the discourse of coal mining for the generation of power.
Bringing it all together
At the end of the exchange, Antonio Pedro, Director of ECA’s Sub-regional Office for Central Africa, said it was incumbent on countries of the sub-region to earnestly explore these recommendations based on their realities, the most salient of them being setting up special economic zones or clusters. He said the sub-region should also capitalize on the creation of regional value chains.
This requires concerted efforts.
“The industrialization and economic diversification agenda is not the sole responsibility of ministers of industry. Several stakeholders are involved to allow Central Africa to make a qualitative leap towards the desired new and transformed economy,” Pedro added.
“This is the case with the private sector or the technological sector.”
“We must therefore build the most ambitious synergies for a powerful dynamic to boost the skills that will take our subregion to the next level of economic diversification as well as resource-based and trade-induced industrialization,” he concluded.
Abel Akara Ticha - Communication Officer
United Nations Economic Commission for Africa
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