Industrialization in Africa and least developed countries: A report to the G20 Development Working Group by UNIDO
In the run-up to the 11th G20 Summit taking place in Hangzhou, Zhejiang, China, on 4 and 5 September, the United Nations Industrial Development Organization (UNIDO) published a new report on Industrialization in Africa and Least Developed Countries: Boosting growth, creating jobs, promoting inclusiveness and sustainability.
The report was prepared at the request of the G20 Development Working Group (DWG), which has been meeting during the year. The G20 DWG has been working to achieve a wide consensus on issues including promoting the implementation of UN 2030 Agenda for Sustainable Development and a comprehensive evaluation of G20 development commitments, strengthening the coordination between the DWG and the other working groups, strengthening policy consistency, supporting the industrialization of African and least developed countries, and strengthening inclusive business cooperation.
The UNIDO report, which benefited from contributions from other international organizations and financial institutions, highlights the important benefits of inclusive and sustainable structural transformation and industrialization for diversifying the economy, creating jobs and building equitable societies. It also shows the benefits to Africa and least developed countries (LDCs) of leveraging trade in intermediate goods, investment, and regional and global value chains.
In order to further its development agenda, the report recommends that the G20 group of leading economies promotes inclusive and sustainable structural transformation and industrialization in Africa and LDCs through various mechanisms, such as knowledge-sharing platforms for peer-to-peer learning; the sharing best of practices, policies, measures and guiding tools; and multi-stakeholder discussions.
Other recommendations include calls for the G20 to support agriculture and agribusiness development; to deepen, broaden and update the local knowledge base; to encourage industrialization through trade and deeper regional integration; and to promote the New Industrial Revolution, including the Internet of things, big data, cloud computing, 3D printing, nanotechnology and biotechnology, in order to improve productivity, reduce energy and resource consumption, and thus protect the environment and increase resource efficiency and effectiveness.
UN Secretary-General Ban Ki-moon, who spoke on 5 September at the G20 Summit session on Inclusive and Interconnected Development, said: “The G20 Initiative on Supporting Industrialization in Africa and LDCs will strengthen their inclusive growth and development potential. The UNIDO report provides a comprehensive framework in this regard. Increased investments in infrastructure and industry, access to finance, sharing and transfer of technologies, trade facilitation, capacity building and improving enabling environments can support the transformation needed.”
There are four main reasons for Africa, and least developed countries (LDCs) in particular – 34 in Africa, 13 in Asia and the Pacific, and one in Latin America and the Caribbean – to industrialize:
Without industrializing, it is unlikely that Africa and LDCs can meet the Sustainable Development Goals by 2030, particularly SDG 9 on industry, innovation and infrastructure.
Inclusive and sustainable industrial development is associated with job creation, sustainable livelihoods, innovation, technology and skills development, food security and equitable growth – some of the key requirements for eliminating poverty by 2030.
Rarely has a country evolved from poor to rich without sustained structural transformation from an agrarian or resource-based economy towards an industrial or service-based economy. This transformation is important to ensure wealth creation through increased economic integration and productivity.
Millions of young people enter the labour market in Africa and LDCs every year. Industry, by providing decent jobs and by expanding the fiscal revenues needed for social investments, can boost capacity for the much-needed inclusive development.
This report highlights the important benefits of inclusive and sustainable structural transformation and industrialization – for diversifying the economy, creating jobs and building equitable societies. It also shows the benefits to Africa and LDCs of leveraging trade in intermediate goods, investment, and regional and global value chains. Such chains can be served by micro, small and medium-sized enterprises, using their relative advantages in flexibility, innovativeness, personalized contacts, quality of products and creating new opportunities for the international sourcing of scarce specialized skills. Enterprises from Africa and LDCs may be able to learn from the experience of other developing countries, especially in Asia.
Africa and LDCs should move away from the “generalized” industrial policies that have proved ineffective over the last three decades. They also need to build strong institutions and viable investment climates. And they need to realize the full potential of public-private partnerships (PPPs) and the opportunities for collaboration among industry, governments and other stakeholders. The report offers recommendations for national policy as well as regional and global collective actions to advance industrialization and end poverty and hunger.