Business & Economy

Can Africa be the workshop of the world?

  • PublishedJune 14, 2013

The phrase ‘Africa must industrialise’ is again in full favour. Every commentator on the continent, national, institutional or individual, is once again convinced that Africa’s path to economic salvation lies in industrialisation.

I remember the same cry being made up and down the continent when I first began writing for the pan-African press over 25 years ago and it has resurfaced at regular intervals. Yet, apart from a few isolated examples, the dream of joining the ranks of industrialised nations has remained a dream. (South Africa was already industrialised before majority rule and in North Africa, the process had begun much earlier than further south and is therefore better entrenched). One does not have to be an economics genius to work out that indeed industrialisation offers the best prospects of sustained growth, job creation and improved standards of living. The question that is much harder to answer is how to industrialise and what type of industrialisation is most suited to both Africa’s needs and its abilities.

This is the question on which many policy makers have stumbled. Do you produce for the national market, the regional market or the international market? Do you aim for import substitution or do you concentrate on exports? Do you support your own industries and raise their performance levels or do you invite foreign industrialists to set up shop in your country? Or do you aim for a combination of both?

The other question is do you have the wherewithal to industrialise on a mass scale? What are the minimum basic requirements to support industrialisation? What should be the government’s role in this effort and what part should be played by the private sector? Of course there are no easy answers nor a magic formula that can be applied across the board. Each African country has its own special circumstances, its strengths and weaknesses. Factors such as geography, the prevailing climate, the traditional modes of living, the presence or absence of natural resources, the levels of literacy, the state of the infrastructure, the access or lack of access to markets, the bureaucratic competence, the legal structure, the political and social stability or lack of and, above all, the quality of governance and leadership all play critical roles in whether a country can successfully industrialise or not. Industrialisation, by its very nature, and particularly so in Africa, involves mixing it up with the world at large and playing by the dominant prevailing rules. The alternative is to close up your economy, raise protectionist barriers and try to live in splendid isolation. This has been tried in Africa and elsewhere and, by and large, has failed. The hard fact is that if someone can make something that he can sell to you cheaper and better than you can do yourself, it does not make sense to make an inferior copy of it in your own backyard.

Squaring the circle

This was the dilemma that faced Singapore in the 1960s. I have just returned from that astonishing little country (please see the supplement accompanying this issue) and was particularly keen to find out how the Singaporeans squared that particularly circle.

They came to the conclusion that the only way out for them was to create ‘a First World oasis in the Third World region’. They would aim to be the best at everything and bend all their energies to achieving this. They would leap-frog their region and go straight to where the action really was – the developed world – and invite the large multinational corporations to set up shop on their soil. They would do everything to ensure that those corporations that accepted their invitation would find their operations more efficient and more profitable based in Singapore than anywhere else in the world, even in their own home countries. The most important component of what Singapore could offer, according to the first Prime Minister of the country, Lee Kuan Yew, was “absolute confidence” in the rule of law and sanctity of contracts. For US corporations keen to tap into the dynamic Asian market but worried about the unstable political landscape, the corruption and arbitrary interpretation of laws that then prevailed in the region, Singapore was indeed a oasis in a turbulent sea and they came in droves. The rest, as they say, is history.

Can African countries take a similar, pragmatic and nimble approach to their own quest for industrialisation? Rwanda, for one, has been working with Singaporeans to create just such a climate and the results have been coming thick and fast.

Can Africa, with its advantages – natural resources close at hand, a young working population and a potentially dynamic hinterland – supplant China as the workshop of the world?

Written By
Anver Versi

Award-winning journalist Anver Versi is the editor of New African magazine. He was born in Kenya and is currently based in London, UK.

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