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Fostering investment in infrastructure key for Africa’s industrialization

22 March, 2021
Fostering investment in infrastructure key for Africa’s industrialization

Addis Ababa, Ethiopia, March 22, 2021 (ECA) - Sustainable industrialization is a feasible growth engine for Africa to build forward better in the aftermath of the coronavirus pandemic. Governments, however, need to invest in critical technological infrastructure and supportive policies to deliver economic development in the backcloth of the disruptive COVID-19 pandemic. 

This was the consensus of African policy makers attending the annual Economic Commission meeting for African Ministers of Finance, Planning and Economic Development (COM2021) which opened in Addis Ababa Monday. 

African ministers spoke during a high-level panel discussion on the theme of the fifty-third session of the Commission, focusing on ‘Africa’s sustainable industrialization and diversification in the digital era in the context of COVID-19’. 

The COVID-19 pandemic has hit Africa hard, triggering a recession in 25 years which has weakened economies and increased debt burdens.  

Is industrialization still a viable strategy for economic growth in the digital era on the back of increased automation and the rising skills intensity of limited industrial work to absorb more than 170 million young people set to enter the job market in the next decade? Does climate change diminish viability of traditional pathways to industrialization in the face of growing shocks and can African countries chart new green routes to economic growth and diversify from current fossil fuel dependence and commodities? These were pressing questions that underlined the panel discussion. 

“Sustainability, industrialization, diversification and digitization are the right strategies for Africa to recover from the disastrous impact of COVID-19 and to build more resilience, sustainable and inclusive growth and development,” lead speaker, Rwanda’s Minister of Finance and Economic Planning, Uzzeil Ndagijimana, told the panel. He stressed that these industrialization strategies need investment in vaccine production, good governance, access to cheap long-term financing, improved business environment and promotion of inter African trade.  

Mr. Ndagijimana noted that Africa was vulnerable to fluctuations of international commodity prices and unfavourable trade because it continued to depend on the export of raw materials to developed and emerging countries and importing finished goods. 

“Concrete measures are need to accelerate industrialization and diversification of African economies,” he said, adding the continent needs to take advantage of its growing young labour force and increased market through African Continental Free Trade Area (AfCFTA). 

“It is time for Africa to shift from the position of supplier of raw materials to supplier of semi and finished products in the global trade,” said Mr. Ndagijimana, emphasizing that industrialization was one of the key pillars of the national strategy for transformation in Rwanda. The country is developing industrial parks and smart satellite cities and expanding technical and vocational training schools. It has established a Development Fund to support SMEs as well as an Innovation Fund to support young talent in digital technologies.  

“Africa is making progress in digitalization technologies and has talented and enthusiastic youth, but more efforts are needed in terms of hard and soft infrastructure, capacity building and ease of access finance for young entrepreneurs,” Mr. Ndagijimana noted. 

For his part, the Director General of the United Nations Industrial Development Organisation (UNIDO), LI Yong, underscored that the road to Africa’s industrialization was challenging but African economies had opportunities to steam ahead. 

Citing findings from the UNDIDO Industrial Development Report 2020, Mr. LI said industrialization should be promoted in Africa because many countries on the continent were still an untapped market for digital technologies. 

“This situation, which is quite challenging for developing countries, that is why the road to industrialization for Africa is very challenging especially under current situation of COVID-19 crisis,” he observed, emphasizing that Africa needs robust digital infrastructure to associate with the new Fourth Industrial Revolution and skilled labour market. 

Houlin Zhao, the Secretary General of the International Telecommunications Union (ITU), was pleased to see Africa prioritising digitalization. He said COVID-19 has made Africa recognise the importance of ICTs despite the digital divide.  Africa has low internet connection and in the African cities almost 30 percent households have internet while in rural areas it is 6 percent, noted the ITU Chief.  

It will cost $100 billion to connect all of Africa on-line by 2030. Private sector investment and public partnerships are key to achieve this. 

“I am very optimistic that because Africa has put ICT high on their agenda and talked of one common market and lone digital Africa market…Africa is not a long way behind others,” Mr. Zhao said, calling for the upgrading of current technologies, investment, and innovation in the continent. 

Ethiopia’s Finance Minister, Ahmed Shide, told the panel discussion that while Africa was largely focused on the export of primary commodities and imports of finished products, it was time to change tack and drive economies using digital technologies. 

“In today’s era, industrialization is not just creating linkages between and among sectors but also requires an innovative approach, supported with emerging technological opportunities. In this regard, the internet revolution and utilization can be an important tool for industrial development in Africa,” he said. 

Contributing to the discussion, Egypt’s Deputy Minister of Planning and Economic Development, Ahmed Kamaly, said prior to COVID-19, his country has embraced a stabilisation and reform strategy which prioritised manufacturing and ICTs, leading to positive economic growth. 

“African countries want to change their status to be consumers of technology and digital production to be producers of these very important products and sectors. If we do not do this, it will have important repercussion on inequality and digital divide,” he said.  

For his part, Albert Muchanga, the African Union Commissioner for Economic Development, Trade, Industry and Mining, noted that the AfCFTA would support industrialization and digitalization through broadening of markets and manufacturing sectors.  

“For the market to work, it needs to be supported with agro-processing and services. We have mobilised the private sector to do just that,” Mr. Muchanga said, adding, “We need to promote inclusive and sustainable industrialization. If we leave someone behind, then there will be no faith in the AfCFTA.” 

The African Union Commission has worked with UNIDO to develop a mapping exercise on regional value chains across Africa.  

COVID-19 had disrupted supply chains, Mr. Muchanga noted, adding that the African Union Commission was developing ‘Made in Africa’ standards that will be used as criteria for countries to supply goods and services to the African market. 

Issued by:
Communications Section
Economic Commission for Africa
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Addis Ababa
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