Opening statement by Mr Antonio Pedro, Executive Secretary ad interim, UN Economic Commission for Africa
H. E. Ms. Gourouza Magagi Salamatou, Minister of Industry and Youth of the Republic of Niger
H. E. Ms. Nardos Bekele-Thomas, Chief Executive Officer of AUDA-NEPAD
H. E. Ms. Pamela Coke-Hamilton, Executive Director of International Trade Center
H.E. Albert Muchanga, Commissioner for Economic development, Trade, Tourism, Industry and Minerals
Distinguished Colleagues and Participants,
Ladies and Gentlemen:
It gives me great pleasure to be here with you today representing the UNECA …
Let me express our gratitude to the Government and people of the Republic of Niger for their warm hospitality.
Excellencies, Ladies and gentlemen:
We have always known that Africa’s sustainable transformation requires sustainable industrialization.
Thirty-three years ago, on 26 July 1989, the Assembly of Heads of State and Government of the Organization of African Unity decided that the 20th of November be commemorated as the Africa Industrialization Day every year.
The very first aspiration under the AU’s Agenda 2063 is to build “A prosperous Africa based on inclusive growth and sustainable development” for which beneficiation of Africa’s natural resources, manufacturing, and industrialization are the key success factors. Likewise, Sustainable Development Goal 9 (SDG9) of the 2030 Agenda puts sustainable industrialization at the centre of global efforts to promote prosperity while protecting the planet.
The Russia-Ukraine crisis we are in and the devastating Covid-19 pandemic we are recovering from have cruelly reconfirmed the accuracy of our diagnosis and prescription, but also the yawning gap between our lofty ambitions and our paltry performance in this crucial field.
But, today, I believe we stand at a turning point where we leave this inconvenient truth behind us and open a new chapter in African economic history. I do not say this out of wishful thinking or blind optimism. I have good reasons behind it.
The adoption of the Agreement Establishing African Continental Free Trade Area (AfCFTA) in 2018 and its speedy entry into force in 2019 demonstrates that Africa is finally ready for takeoff.
The AfCFTA gives Africa the unique opportunity to replace its small and fragmented markets with a large single market in which goods, services, capital and people can move freely oblivious of internal boundaries.
A product made in Africa will immediately benefit from the preferential, effectively duty- and quota-free, terms of access to a market of 1.3 billion people.
That is the most powerful incentive industrialists can have to invest in a manufacturing plant based in Africa. The good news is that we are seeing African industrialists being the champions of endogeneous growth and structural transformation. To achieve transformational change though we will need more of this and at larger scale.
That, then, is also one of the most powerful arguments for the AfCFTA – that the AfCFTA serves Africa’s industrialization cause more than probably anything we have tried before. In our Economic Report on Africa 2015: Industrializing Through Trade we had established the tenets of trade-induced industrialization. This is what we argued for in 2017 when in Central Africa we adopted the Douala Consensus on Economic Diversification through Resouce-driven and Trade-induced Industrilisation and launched the “Made in Central Africa Agenda”, building on ERA 2015 and ERA 2013 on “Making the Most of Africa’s Commodities: Industrialisation for Growth, Jobs and Economic Transformation”. In other words, we have all the theoretical underpinings and frameworks to make it work.
But, of course, powerful an incentive as it is, the AfCFTA Agreement alone cannot guarantee African industrialization. It needs to be implemented. And it needs to be implemented by each of its individual State Parties in such a way as to promote industrialization and sustainable development across the Continent.
There is yet another reason why industrialization is critical for Africa. Today, primary products – whether extractive or agricultural – account for the bulk of our exports to the rest of the world, while processed products dominate our imports. In far too many cases, we export the raw product and reimport the same thing in processed form – thereby exporting African jobs to others and effectively paying for the wages of foreign workers.
Between 2016 and 2021 fuels accounted for the largest share of African’s total exports, ranging from 29% to 43% in any given year, and averaging 37% over the period. At a more granular level, petroleum and petroleum-related products comprise the largest percentage.
On the other hand, Africa’s internal trade, is much more balanced. Trade in mineral fuels averages only around 20% of intra-African exports. In its place manufactured goods and food items make up a significantly larger share of intra-African trade reducing Africa’s reliance on exports of raw materials. On average, between 2016 and 2021 manufactured goods represented a 44% share of total intra-African exports. Food items likewise averaged 20% of exports over the period and showing that internally Africa is significantly less reliant on raw and extractive materials.
Industrialization is not an option for Africa; it is an imperative. Simply put, by adding value to our raw materials here on the Continent, we can convert our resources to the real blessings they are rather than allow them to continue to be a curse imposed on us. And the AfCFTA provides the best possible launch pad for African industrialization.
At the same time, we also need to realize that industrialization is a process, and a long one at that, not an event. And, of course, we should be mindful that industrialization is not the business of Ministries of Industry alone. Instead, implementation of true industrial policy requires a whole of government and beyond approach and action, aligning industrial, trade and other sector policies and putting science technology and innovation at the centre of it to ensure that we remain globally competitive beyond our initial endowments and comparative advantages.
As we pursue our industrialization drive, and do so in a single-minded fashion, in the short term, as we export commodities, we have to change the paradigms. . For a Continent like ours, exporting primary commodities should not mean taking prices set by others forever, which exposes us to the vagaries of commodity price fluctuations, triggering macro-economic instability and other ills.
At least in areas where Africa enjoys significant market shares already, such as cobalt in DRC or cocoa in Côte d'Ivoire and Ghana, Africa must dictate market prices, not accept prices set by others.
Today, we are a price taker – and not a price setter – even in these products because we are not collaborating enough, and indeed because we are not implementing the AU Commodity Strategy. It is long overdue that we do so!
As we drive industrialization, let’s also realize that industrialization needs resources.
A well-thought out and coordinated commodity strategy, implemented in a coordinated fashion, is one of the routes for Africa to gain a fair share of the resource rent in the short term and to mobilize the resources necessary to finance its industrialization agenda in the long term. But, as articulated in the Africa Mining Vision, for sure, our priority should be to move beyond resource extractivism and focus on making the most of our resources in pursuing resource-driven sustainable industrialization and economic diversification.
In sum, let me conclude by restating one important point: the AfCFTA is a wonderful tool in itself, but also – and especially – because it puts in place all the necessary conditions for transformational investment, industrialization and sustainable development in Africa.
I thank you very much for your kind attention.