Upgrading African manufacturing

MA XUEJING/CHINA DAILY

China can help Africa raise the status of 'Made in Africa' in the global industry and supply chains

For developing countries in Africa, a robust manufacturing industry is an important driver for sustainable economic development. Yet the continent's manufacturing industry remains marginalized in the global industry and supply chains. At the macro level, the added value of Africa's manufacturing sector accounted for only 2 percent of the global total from 2012 to 2019, much smaller than the 25 percent of East Asia, according to statistics released by the United Nations Industrial Development Organization. Manufacturing industry's share in the continent's GDP dropped from its peak of 14.9 percent in 1990 to 10.6 percent in 2019.During the same period, the share of Africa's manufacturing sector in industry declined from 45.2 percent to around 35 percent, much lower than the world's average of 44.3 percent.

The continent's manufacturing sector still faces the problem of unbalanced and inadequate development. Some manufacturing industries rely heavily on natural resources, and thus have low added value and productivity, and weak connection with other economic sectors. Countries highly dependent on resources-related industries, such as Nigeria and Angola, are vulnerable to the fluctuations in global commodity prices. Low-end manufacturing industries, such as textiles and apparel, leather and metal products, have seen rapid growth over recent years, making up nearly 40 percent of Africa's manufacturing sector, but still lower than other developing regions. In addition, medium and high-end manufacturing industries such as transportation equipment, electronics and medicine have vast room for development. After the launch of the African Continental Free Trade Area, African countries need to improve their manufacturing capacity in fields ranging from automobiles, smartphones and computers to garments and accessories, to reap the maximum benefits of a unified market.

Africa's manufacturing companies are generally small in size and lack technological and managerial expertise. These enterprises are loosely linked with upstream and downstream companies, and have weak industrial support capacities. The COVID-19 pandemic has dealt another blow to the already fragile manufacturing sector of Africa. Factories are forced to halt production due to pandemic prevention and control measures, shortage in materials caused by disrupted supply chains and declining new orders.

Overall, Africa faces unfavorable internal and external conditions to strengthen its manufacturing sector. In this context, China is committed to helping Africa improve its independent manufacturing capacity.

Industrial parks have been jointly built by China and nearly all the African countries having diplomatic ties with China. An increasing number of China-financed industrial parks and economic and trade cooperation zones have been built in Africa, with their operations covering various fields--resources, logistics, construction materials, textiles and garments, equipment manufacturing, home appliances and agricultural production.

For instance, the Suez Economic and Trade Cooperation Zone in Egypt has developed into an industrial complex with five pillar industries--oil industry equipment, high and low-voltage electrical equipment, textiles and apparel, new construction materials, and mechanical engineering. It has realized an agglomeration effect, drawing upstream and downstream industries to settle in the cooperation zone.

Another example is Ethiopia, whose industrialization path was not smooth before drawing on Chinese experience. With the help from Chinese experts, Ethiopia has formulated development plans and related laws and regulations for its industrial parks, where labor-intensive industries have provided large amounts of jobs to the country. The unemployment rate of the country decreased from 26.4 percent in 1999 to 17.4 percent in 2014. These industrial parks have injected strong impetus into the economy of Ethiopia. At the inauguration ceremony of Jimma Industrial Park in December 2018, Ethiopian Prime Minister Abiy Ahmed said that the industrial park, constructed by a Chinese company, will boost the industrialization drive of west Ethiopia, and create more jobs for locals.

China is also helping African countries lower their transaction costs and create a sound environment for developing their manufacturing sectors. Good infrastructure, a sound legal environment and a safe financial system are essential requirements for a country's industrial development. As an old Chinese saying goes, if you want to become rich, you must first build a road. China has constantly deepened cooperation with Africa in building infrastructure. So far, China has helped Africa build over 6,000 kilometers of roads and 6,000 km of railways, nearly 20 ports, more than 80 large power plants, over 130 medical facilities, 45 gymnasiums and about 170 schools.

China's continuous investment in African infrastructure has laid a solid foundation for building the continent's free trade zone and attracting international capital. Over recent years, the construction of new digital infrastructure, such as that for 5G, artificial intelligence, industrial internet and internet of things, has become a new driving engine for the world's economic development. China and Africa have proposed a plan for a digital innovation partnership to enhance the continent's capacity for digital infrastructure building. According to the Dakar Action Plan (2022-24) adopted at the Forum on China-Africa Cooperation held in November, 2021, China will help Africa build 10 programs related to the digital economy, and support the development of railways, roads, shipping, ports, aviation, and communications networks in Africa, thus paving the way for the continent's industrial development.

The pandemic has complicated Africa's task of realizing industrialization. The 2035 Vision for China-Africa Cooperation has infused a dose of certainty and impetus into the long-term cooperation between the two sides. China fully respects the will of African countries and actively promotes third-party and multilateral cooperation in order to raise the status of Africa in global industry and value chains.

Ma Hanzhi is an assistant researcher at the China Institute of International Studies. Jin Jiaying is a teacher at the Ningxia Polytechnic. The authors contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn