Page 9 - NILE EXPLORER

four unique trajectories of industrial oil price increases, commodity price 3.5 percent annually from 2005 to
development, and identifying specific decreases, real interest rate rises, 2014-faster than it has in the rest of
opportunities in each country based on withering public coffers, and the the world. Some countries, such as
the size and level of competitiveness of limitations of domestic markets-were Nigeria and Angola, have experienced
their manufacturing markets. major factors in industrial decline in the an increase in output of over 10 percent
region. per year.
Modern industry contributes
significantly to the accumulation of Since the late-1990s economic growth As a result, the value of production
physical and human capital. It provides rates in Africa reached impressively high in sub-Saharan Africa increased,
relatively well-paid jobs for large levels (even during the 2008-2009 global from $75 billion in 2005 to over $130
numbers of unskilled or under-educated financial crisis). Yet, until recently, billion over the last decade. Moreover,
workers-particularly those who are not growth in manufacturing has lagged manufacturing exports have increased
integrated in the formal economy-which behind that growth except in just a few even more rapidly than total output,
increases household income and, hence, exceptional markets. at a compound annual growth rate of
domestic demand. In 2017, manufacturing’s share of sub- 9.5 percent, with shipments of heavy
In this way, industry generates Saharan Africa’s total GDP was just manufactures-such as transport vehicles,
appliances, electronics, and industrial
substantial backward and forward under 10 percent. In terms of two other equipment-expanding by an impressive
linkages with other sectors, providing indicators of industrial development- 14 percent.
a wealth of opportunities for suppliers, manufacturing value added (MVA)
distributors, retailers, and business and manufacturing exports-Africa lags The proposed AfCFTA is key to this
services. far behind the rest of the world, even strategy. It creates a single continental
among developing countries. In 2017, market for goods and services as well
For example, the inputs needed for sub-Saharan Africa’s MVA was only as a customs union with free movement
different kinds of industrial production about $145 billion dollars, of capital and business travelers. The
AfCFTA will accelerate continental
integration.

By promoting intra-African trade,
the AfCFTA will also foster a more
competitive manufacturing sector and
promote economic diversification. The
removal of tariffs will create a continental
market that allows companies to benefit
from the economies of scale.

If successful, Africa’s manufacturing
sector is predicted to double in size, with
annual output increasing from $500
billion in 2015 to $1 trillion in 2025 and
creating an additional 14 million stable,
well-paid jobs.
If all 55 counties join, this will be one
Inside a car manufacturing plant of the world’s largest free-trade areas
generates demand for agriculture, In contrast, developing countries in East in terms of the number of countries,
mining, and other raw materials, as Asia are far ahead and nearing OECD covering more than 1.2 billion people
well as for energy and information members. Due to natural resource and over $4 trillion in combined
technologies, while it increases the wealth in Africa, much of the region’s consumer and business spending. The
supply of products for consumer industrial production remains centered potential for the CFTA is big for both
markets, construction, and other sectors. on resource-based manufacturing. structural transformation and poverty
Resource-based manufacturing
Moreover, in macroeconomic terms, a alleviation in Africa.
strong manufacturing sector is argued accounts for approximately half of total Some studies show that by creating a
to improve a country’s external account MVA and manufacturing exports. pan-African market, the CFTA could
balance by decreasing imports and Investment in manufacturing has also increase intra-Africa trade by about
diversifying exports, thereby increasing been uneven, with almost 70 percent of 52 percent, resulting in an increase of
resilience to external shocks as compared the continent’s manufacturing activities African manufacturing exports. Right
to reliance on primary commodities.6 now concentrated in just four countries. now, on average, manufacturing only

Though African manufacturing grew In fact, most of Africa’s total MVA is represents about 10 percent of total
in the immediate post-independence driven by the higher level of industrial GDP in Africa, lagging behind other
period, largely shaped by state-led and development in North and South Africa. developing regions. A successful CFTA
protectionist policies, by the mid1980s, Despite these worrying trends, could play a large role in reducing this
a series of external shocks-including manufacturing in Africa has grown gap.

The Nile Explorer 008 | 9