Africa Industrialization Day 2017: Strategic investment in cross-border infrastructure will advance Africa’s trade, industrial capacity
Industrialization is a primary driver of economic growth and job creation, and will be pivotal in efforts to achieve the 2030 Agenda for Sustainable Development and the African Union’s Agenda 2063.
This year’s Africa Industrialization Day highlights the links between industrial development and Africa’s moves towards establishing a continental free trade area. These are mutually supportive endeavours. Strategic investment in cross‑border infrastructure will advance both trade and industrial capacity. Promoting green technologies and low‑carbon solutions can create compelling opportunities for increased commerce and industrialization alike.
Small and medium enterprises, which already contribute 80 per cent of the continent’s gross domestic product and support 90 per cent of all jobs, will remain key actors. Governments, business and civil society will need to forge partnerships to spur innovation and create incentives to power sustainable growth.
It will also be critical to unleash the capacities of Africa’s young people and to strengthen African institutions. Both the 2030 Agenda and Agenda 2063 recognize these imperatives.
On Africa Industrialization Day, I reaffirm the continued strong commitment of the United Nations to support Africa’s industrialization, the implementation of a continental free trade agreement, and the building of inclusive, resilient, peaceful and prosperous societies for all.
– António Guterres, UN Secretary-General
Africa Industrialization Day 2017
African Industrial Development: A Pre-Condition for an Effective and Sustainable Continental Free Trade Area (CFTA)
In 1989, the General Assembly proclaimed 20 November as “Africa Industrialization Day” to mobilize commitment from the international community to the industrialization of Africa.
Since then, UNIDO – as the specialized agency of the United Nations for promoting inclusive and sustainable industrial development – has been leading this celebration through organizing outreach events on the topic including in Vienna and New York. The goal is to raise awareness of the importance of industrialization in African development and to galvanize international support from stakeholders, including governments, the private sector, academia and civil society.
As in previous years, UNIDO, in collaboration with the Office of the Special Adviser on Africa (OSAA) and the Office of the Permanent Observer of the African Union to the United Nations (AU), will celebrate Africa Industrialization Day by organizing a high level event. This year’s celebration will be under the theme “African Industrial Development: A Pre-Condition for an Effective and Sustainable Continental Free Trade Area (CFTA).” The event will take place on Monday, 20 November 2017.
The purpose of this day is to raise global awareness regarding the industrialization challenges faced by the continent with regards to industrialization and to mobilize both African leaders and international Organizations to advocate for the accelerated and sustainable industrialization of Africa.
As 2016 marked the beginning of the Third Industrial Decade for Africa (IDDA III), this year’s AID continues to play a special role in promoting the acceleration of sustainable industrial development in Africa, of which integration between government policies and the private sector is a critical component.
The African continent is the second most-populated continent in the world, home to over 1.2 billion people, or 16% of the world’s population. Despite this, Africa currently only accounts for less than 2% of international trade and global manufacturing. In order to curb these numbers, and allow the African continent to assume its role in the international system, it is paramount to focus on Africa’s inclusive and sustainable industrial development. In order to overcome poverty, and lead their countries to prosperity, African countries need to therefore focus on inclusive and productive sector-led growth which is critical to lifting people out of poverty, and allowing vulnerable communities to benefit from and contribute to the economy.
The important contribution of inclusive and sustainable industrial development (ISID) in helping Africa overcome its critical development challenges is clearly recognized in the 2030 Agenda for Sustainable Development, within Sustainable Development Goal 9 (SDG9), calling to build resilient infrastructure, promote sustainable industrialization and foster innovation, and Agenda 2063, encompassed in Aspiration 1 of the First Ten-Year Implementation Plan, under “a prosperous Africa based on inclusive growth and sustainable development”.
To realize their potential, African countries need to achieve a level of industrialization that allows them to implement a Continental Free Trade Area (CFTA), as adopted by the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, in order to expand intra-African trade through better harmonization and enhance competitiveness at the industry and enterprise level.
The objective of this year’s Africa Industrialization Day is to raise awareness of the importance of African industrial development in implementing a successful CFTA, and therefore further growing Africa’s economy and supporting the eradication of poverty. The event will take into consideration the role that industrialization plays in enhancing market competitiveness, and elaborate on the necessary steps to be taken in order for African countries to realize their potential.
The Continental Free Trade Area (CFTA) was launched by African Heads of States in 2015 to create a single market for Africa. As the first flagship project of the African Union’s (AU) Agenda 2063, the CFTA aims to open the economies of fifty-four African countries to trade, combined possessing a population of more than one billion people and a gross domestic product of more than US $3.4 trillion.
When implemented, the CFTA will significantly help to drive structural transformation and poverty eradication in Africa. The CFTA will enable the free movement of business persons and investments, expand intra-African trade, resolve challenges of multiple and overlapping memberships, and enhance competitiveness at the industry and enterprise level.
However, the success of the CFTA in facilitating structural transformation and poverty eradication also depends on the ability of countries to industrialize. Trade liberalization can help countries exploit opportunities for scaled production, continental market access and better reallocation of resources, but not without key contributors to industrialization such as upgrading productive capacities, increasing technological transfer and institutional capabilities, prioritizing strategic industrial sectors where Africa has comparative advantages, and investing in relevant infrastructure improvements. In order for the CFTA to create structural transformation, coherent, rapid and robust industrial policy strategies must be implemented at the country level.
Over the years, African Governments have regularly committed to a process of industrialization that has failed to significantly materialize. This failure is linked to the many structural impediments and supply-side constraints that preclude enterprises in the continent from achieving productive efficiency and competitiveness. Most African countries are small and vulnerable economies that do not have large domestic markets to enhance exports; not surprisingly, enterprises in these countries remain at the bottom of global value chains, and efforts to integrate them into the value chains have had limited success.
Africa’s industrialization efforts have occurred alongside commitments by African Governments to a process of deeper integration and the lifting of tariff and non-tariff barriers. The Lagos Plan of Action (1980) and the Abuja Treaty (1991) established regional economic communities (RECs) for the purpose of achieving greater economic integration. These groups of individual countries in sub-regions would then become the stepping-stones for African continental integration. Deep integration is envisaged in terms of a single common market, and economic and monetary union.
The Abuja Treaty provides for the stabilization, by 2007, of tariff and non-tariff barriers, customs duties and internal taxes in each of the eight RECs recognized by the African Union (AU); it also provides for the establishment, by 2017, of a free trade area (FTA) and customs union in each REC. To date, many RECs have not yet established FTAs. Only EAC and ECOWAS have established a customs union that is in operation; and only EAC, ECOWAS, COMESA, and SADC have FTAs that are in operation without problems. Much work still remains to be done to meet these targets.
Over the years, these measures have made little progress in boosting regional trade. They have also focused more on eliminating trade barriers and less on developing productive capacities, particularly in manufacturing and agro-related industries. And yet, without a robust industrial sector it is highly unlikely that a country or region can achieved prosperity and a decent socioeconomic life for its people. The CFTA stems, in part, from the realization that regional integration is stultified and not equitably pursued amongst all African regional economic communities (RECs), and that intra-Africa trade is at critically low levels compared to African trade with outside partners.
The CFTA’s success will depend, among other things, on how effectively regional economic communities (RECs) are able to streamline their respective free trade areas (FTAs) to be aligned with a future continental free trade area (CFTA). Regional integration has the potential to create opportunities for intra-African trade, but these opportunities cannot be exploited without expanding the industrial base.