Thirty-seven of the 52 African countries have become more industrialized in the past 11 years, according to a new report from the African Development Bank, the African Union and the United Nations Industrial Development Organization (UNIDO).
The Africa Industrialization Index (AII) report provides a country-level assessment of the progress of 52 African countries on 19 key indicators. The report will allow African governments to identify comparison countries to compare their own industrial performance and identify best practices more effectively.
The African Development Bank, the African Union and UNIDO jointly launched the inaugural edition of the IIA on the sidelines of the African Union Summit on Industrialization and Economic Diversification in Niamey, Niger.
Score industrialization through a variety of metrics
The 19 indicators in the Index cover the performance of manufacturing, capital, labor, the business environment, infrastructure and macroeconomic stability. The index also classifies the industrialization of African countries in three dimensions: performance, direct determinants and indirect determinants. Direct drivers include endowments such as capital and labor and how they are deployed to drive industrial development. Indirect drivers include enabling environmental conditions, such as macroeconomic stability, strong institutions, and infrastructure.
South Africa maintained a very high ranking over the 2010-2021 period, closely followed by Morocco, which was ranked second as of 2022. Rounding out the top six over the period are Egypt, Tunisia, Mauritius and Eswatini.
Abdu Mukhtar, Director of Industrial and Commercial Development at the African Development Bank, represented the institution at the launch event. He said that while Africa had shown encouraging progress in industrialization over the period 2010-2022, the Covid-19 pandemic and Russia’s invasion of Ukraine had set back its efforts and highlighted gaps in production systems. “The continent has a unique opportunity to resolve this dependency by further integrating and conquering its own emerging markets.”
He added: “The African Continental Free Trade Area is creating a once-in-a-lifetime single market opportunity for 1.3 billion people and the total aggregate consumer and business spending of up to $4 trillion creates an opportunity to enhance their trade and production and finally reap industrial competitiveness from regional integration as other regions have done”.
The African Development Bank has invested up to $8 billion in the last 5 years under its Industrialize Africa High-5 priority. “In the pharmaceutical sector alone, we intend to spend at least $3 billion by 2030,” Mukhtar said.
Building a productive industry will be an integral part of Africa’s development, offering a pathway to accelerated structural transformation, formal job creation at scale, and inclusive growth. However, Africa’s share of global manufacturing has declined to the current level of less than 2%. More proactive industrial policies are seen as critical to reversing the trend, but they require intensive knowledge and a detailed understanding of the constraints and opportunities each country faces.
Manufacturing value added is more important than the size of the economy
Among the other key findings of the report:
- During the coverage period, Djibouti, Benin, Mozambique, Senegal, Ethiopia, Guinea, Rwanda, Tanzania, Ghana, and Uganda moved up five or more places in the ranking.
- The best performing countries are not necessarily those with the largest economies, but rather those countries that generate high per capita value added in manufacturing, with a substantial proportion of manufactured goods destined for export;
- North Africa remains the most advanced African region in industrial development, followed by Southern Africa, Central Africa, West Africa and East Africa.
Synergies with the African Industry Observatory
The Africa Industrialization Index was one of two new tools launched during the event. The second and complementary African Industry Observatory, launched by UNIDO and the African Union, will serve as a central online knowledge platform to collect, analyze and consolidate the quantitative data required for qualitative analyzes of national, regional and international industrial trends. pancontinentals. predictions and comparisons.
Chiza Charles Chiumya, Acting Director for Industry, Minerals, Entrepreneurship and Tourism at the African Union Commission, said: “These tools will greatly enhance our industrial policy making and help attract the required focus that industrialization needs from both the policy makers as well as the private sector, who will now see clearly where the continent has opportunities”. Chiumya represented AU Trade and Industry Commissioner Albert Muchanga.
“The African Industry Observatory and the African Industrialization Index will help consolidate inter-agency cooperation, strengthen the policy dialogue influence of each institution to accelerate industrial development and enhance knowledge of industrial development dynamics,” Victor said. Djemba, Head of UNIDO’s Africa division.
The African Union Special Summit on Industrialization and Economic Diversification and the African Union Special Session on the African Continental Free Trade Area are currently taking place in Niamey, Niger, until November 25, 2022. The theme of the Summit is: Industrialization of Africa: Renewed commitment towards inclusive and sustainable industrialization and economic diversification.
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