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Manufacturing – the key to the industrialisation of Africa

Manufacturing in Africa - source The Africa ReportThe industrialisation of Africa has been challenged by the global economic impediments and self-inflicted misplacement of priorities over decades. Despite the historical set-backs, African industrialisation has recorded significant growth in countries such as South Africa while many others are still reliant on importation of goods and services they can produce locally.

With the scheduled launch of the African Continental Free Trade Area(AfCFTA) in January 2021, there is measured optimism that large-scale manufacturing could finally activate rapid industrialisation of African countries.

The key boon of manufacturing is that it absorbs large swaths of workers and places them into productive and decent paying jobs.

In the next few editions of OctoberFirst Consulting’s newsletter, we will examine the most crucial drivers of growth and investment in manufacturing namely:

(1)    Human capital (talent and productivity),

(2)    Cost & Supplier networks, and

(3)    Domestic demand

 

This newsletter edition will focus on Human Capital:

 

Manufacturing Potentials in Africa.

Based on the recent World Bank report on AfCFTA, “US$2.5 trillion in exports is projected in 2035 for Africa, US$823 billion are in manufactures; US$690 billion in natural resources; US$191 billion in agriculture; and the remaining US$256 billion in services. Of the total growth in exports of US$560 billion, the increase in exports of manufactures represents some US$506 billion—an increase of US$220 billion within Africa and US$286 billion with the rest of the world”.

Furthermore, Irene Yuan Sun, author and consultant, considers Africa to be “the world’s next great manufacturing center” potentially capturing part of the 100 million labour-intensive manufacturing jobs that will leave China by 2030.

 

Equipping the future workforce:

The Economist recently concluded that Africa “is well on its way to developing the human capital that is required to industrialise.” Standards of education on the continent are improving, and the share of the population completing a primary education has risen continuously over the past 40 years.

In order to tap the full potentials of Africa’s human capital, policymakers should adjust education curricula to ensure that skills are adapted to the market. The school curricula should be focused on skills acquisition, development of capacity for entrepreneurship and self-employment.

There are three key pathways to achieve the needed paradigm shift in curricular development across Africa.

 

1. Business training at an early age and skills upgrading: Policy-makers in Africa should consider introduction of business-related subjects in early learning stages in schools.

It is important that upcoming generations are broad-minded with a reasonable understanding of fundamentals of business from the start. It is equally vital for the current workforce in Africa to keep upgrading their skill sets to keep up with evolving global best practice. It is no longer enough to graduate with a higher education certificate and limited real-world skills to compete in the global market place.

 

2. Better promotion of science, technology and mathematics: There is a huge disconnect with the promotion of science & tech-inclined courses in higher education in many African countries. The Australian Government recently introduced discounted tuition fees for higher education courses that are science and technology-based. Such policy is a deliberate and calculated initiative designed to drive the uptake of science-based courses.  The global economy has witnessed giant leaps in technology-based innovations which confirms that science and technology will remain major drivers of rapid economic growth and quick pathway to wealth generation. There is a great need for the continent to produce a new breed of science and technology compliant workforces that are ready to move manufacturing in Africa to the next level.

 

3. Vocational and on-the-job trainings: Apprentice programs and vocational trainings are largely under-developed in many countries in Africa. There is a strong cultural obsession with university degrees as the ultimate gateway to well-paying jobs. On the contrary, Western nations and South East-Asian countries thrive in apprentice and on-the-job training programs. To generate the skilled manpower needed to drive sustainable growth in the manufacturing sector in Africa, policy-makers need to re-think vocational training programs and add enticing incentives for enrolments and completion of programs.  The inherent benefits will be priceless in the years ahead.

 

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