Fostering industrial development in Africa in the new global environment

Posted on : Tuesday, 3rd February 2015

 In a special issue of its Economic Development in Africa Report this year, the United Nations Conference on Trade and Development (UNCTAD) collaborated with the United Nations Industrial Organization (UNIDO) to delineate strategies and policy options for Africa to foster its industrial development in the new global environment. The report advocates for African countries to embark on a new industrial policy centered on manufacturing development. By industrial policy is meant government measures that are aimed at improving the competitiveness and capabilities of domestic firms and promoting structural transformation. Without manufacturing development, Africa cannot engage in the structural transformation from low- to high- productivity activities that economists have argued is necessary for sustained and high growth and significant poverty reduction. Such manufacturing development however cannot happen without deliberate government intervention due to the presence of both market and coordination failures.

While the report recognizes that there have been numerous attempts and initiatives in the past to propel industrialisation in Africa, it advocates for an industrial policy that will be based on a new approach. Such a new approach must be strategic in design and yet tailored to specific country's circumstances. It must not repeat mistakes of the past. It must make support by the State to the industrial sector conditional on good performance. It must be based on effective state-business relations and must incorporate a monitoring and evaluation mechanism that identifies lessons learnt from current policy to feed into the next policy-making stage. This feedback loop from current policy to future policy has been a crucial missing link in past industrial policies in Africa.