Africa needs to revitalise manufacturing – UN report

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Governments in Africa need to adopt new policies to ramp up manufacturing if the continent is to eliminate widespread poverty and create jobs to avoid conflict, a UN official said.

Africa accounts for 1 percent of global manufacturing, and its labour intensive manufacturing — seen as a vital first step in early industrialising economies — is in decline, the UN “Economic Development in Africa Report 2011” said on Monday.
“The process of deindustrialisation is actually gaining ground in Africa more so than the other way round,” Supachai Panitchpakdi, secretary-general of the UN Conference on Trade and Development (UNCTAD), told a news briefing, Reuters reports.

Governments need to reverse this trend if Africa is to provide jobs for a growing population and avoid social conflict, said Kandeh K Yumkella, director-general of the UN Industrial Development Organisation (UNIDO).
“These economies must diversify. They must move into labour-intensive manufacturing to create jobs for the youth … without jobs there will be conflicts and chaos,” he told the news briefing.

Manufacturing’s share of African gross domestic product (GDP) fell to 10.5 percent in 2008 from a peak of 15.3 percent in 1990, the joint report by UNCTAD and UNIDO said.

The high cost of doing business, red tape, a shortage of skills and unreliable energy supply played a part in the decline, said Yumkella, a former trade minister of Sierra Leone.

BEYOND COMMODITIES

Commodity exports alone cannot create enough jobs for the 7 million to 10 million young Africans entering the labour market each year, the U.N report said.

Struggling to shake off the global financial crisis, Africa must undergo a structural shift towards industrial sectors if it is to weather future economic headwinds.

The report urged states to adopt an active role in promoting industrial production, by steering investment into manufacturing that can provide long-term growth.

Other strategies to spur manufacturing should include effective state-business support, getting rid of regulatory obstacles and putting in place a framework to evaluate policies, the report said.

But it also stressed that development of manufacturing must not come at the expense of agriculture. Instead governments should seek to create mutually beneficial links between the two sectors.