Thirty-seven African countries have become more industrialised over the past eleven years, according to a recent report from the African Development Bank, the African Union and the United Nations Industrial Development Organisation (UNIDO).
South Africa held top position, with Morocco in second place followed by Egypt, Tunisia, Mauritius, and Eswatini.
And Djibouti, Benin, Mozambique, Senegal, Ethiopia, Guinea, Rwanda, Tanzania, Ghana, and Uganda all improved in the rankings.
According to the report, the top performers are not necessarily those with the biggest economies, but those countries that generate high manufacturing value-added per capita, with a substantial proportion of manufacturing goods bound for export.
North Africa remains the most advanced African region in industrial development, followed by Southern Africa, Central Africa, West Africa and East Africa.
Over the years, diversification and industrialisation have been seen as vital components for economic growth and development in Africa. The continent is rich in natural resources, but over-reliance on commodities has led to vulnerability to external shocks and limited growth opportunities.
Many African countries have embarked on policies aimed at promoting diversification and industrialisation to reduce the reliance on primary commodities and develop their manufacturing sectors.
North Africa
A significant driver of industrial development in North Africa has been the growth of the automotive sector. Morocco, Tunisia, and Algeria have all invested heavily in building modern, state-of-the-art automotive factories that have attracted major international companies such as Renault, Volkswagen, and Peugeot.
Ghiyta Iraqi, Managing Partner of LEX Africa member I&I Law Firm in Casablanca, said Morocco has recently boosted industrial development by entering a new phase of its evolution, resolutely turned towards the challenges of the future.
“The Made in Morocco strategy was developed to promote innovation and improve the competitiveness of the Moroccan industrial sector. In the automotive sector, two innovative projects with the Made in Morocco label have currently come to confront Morocco as a competitive platform for automotive production, namely Neo Motors and NamX,”
Meanwhile, Tunisia has focused on developing various industries leveraging its proximity to Europe. The country has also invested in renewable energy, with several large-scale solar and wind power projects underway.
According to Amina Larbi, partner at LEX Africa’s Tunisia member Medlar Lawyers and Legal Advisors, the country’s foreign trade accounts for 94% of its GDP. “Wire and cable manufacturing continues to be Tunisia’s main export industry, followed by textiles, petroleum by-products, olive oil, vehicle parts and plastics.
“During the month of January this year, Tunisia recorded a 21% increase in exports, compared to January 2022,” said Larbi.
Notwithstanding these successes, North Africa still faces significant challenges with industrialisation, including political instability in some countries.
Southern Africa
Southern Africa is another region making progress with diversification and industrialisation.
The UN subregion of Southern Africa consists of five countries in the southernmost part of the continent: Angola, Botswana, Lesotho, Mozambique, Namibia, South Africa, Swaziland, Zambia, and Zimbabwe. The region is rich in valuable minerals deposits.
In Angola, major efforts are being made to create rural industrial parks, special economic zones and free trade zones, according to Pedro Marques, trainee lawyer at LEX Africa member FBL Advogados in Luanda.
Angola is also investing in infrastructure, with a recent development plan for the expansion of its electricity grid, which aims to help leverage the country’s agricultural and industrial development and contribute to the diversification of the national economy.
South Africa, the region’s largest economy, has been focusing on promoting the manufacturing sector as a key driver of economic growth. The government has set up the Industrial Policy Action Plan (IPAP2) to grow a developmental economy and arrest the decline in manufacturing.
In Zambia the government has established the Zambia Integrated Forest Landscape Project (ZIFLP), aimed at promoting sustainable forestry and agroforestry practices, reducing the country’s reliance on copper exports and promoting the growth of the agricultural sector. The ZIFLP is an initiative supported by the government in partnership with the World Bank at a total cost of $32.8 million.
Central Africa
In Central Africa countries such as Cameroon, Chad, and the Central African Republic have all made efforts to attract investment in manufacturing, with a focus on textiles, agro-industry, and construction materials. These efforts have been supported by initiatives such as special economic zones and tax incentives for investors.
The region has also seen progress in the development of renewable energy. Countries such as Cameroon, Gabon, and the Democratic Republic of Congo have all invested in large-scale hydropower projects, which have helped to reduce dependence on fossil fuels.
Central Africa has also been exploring opportunities to develop its transportation infrastructure, with projects such as the Trans-Central African Highway and the Congo-Ocean Railway aimed at improving connectivity within the region and with neighbouring countries.
Nonkundla Maso, consultant at LEX Africa member PLA Africa Law in DRC, said in relation to industrial development, “According to the International Monetary Fund’s (IMF) Public Investment Management Assessment (PIMA) report published in January 2023, the overall development rating of the DRC is estimated at 8.6 % in 2023.”
The DRC has several manufacturing facilities including the PANACO company, which specialises in the construction of assembly panels, MV lines, electrical installations and industrial instrumentation. And a papermaking factory is to be set up with a monthly production capacity of 150 000 tons of paper. It mainly exports mining products such as copper, cobalt, diamonds, and gold as well as wood products and coffee.
West Africa
West Africa is another region that has seen significant progress in promoting diversification and industrialisation. In Nigeria, for instance, the government has set up the Nigerian Industrial Revolution Plan (NIRP), which aims to establish industrial clusters and the provision of incentives for manufacturers.
The NIRP defines clear goals, governance structures, and monitoring frameworks, and identifies quick-wins for immediate implementation.
Meanwhile, Ghana is focusing on agro-processing and light manufacturing. The government has established the One-District-One-Factory (1D1F) initiative, the vision of the President, Nana Addo Dankwa Akufo-Addo, aimed at promoting the establishment of factories in every district across the country.
The initiative has attracted foreign investment, with some Chinese companies setting up factories in the country.
East Africa
In East Africa, countries such as Ethiopia, Kenya, and Rwanda have set up policies aimed at promoting the manufacturing sector as a key driver of economic growth. Ethiopia, for instance, has set up industrial parks across the country, which has attracted foreign investment in the textile, leather, and agro-processing industries.
Kenya, on the other hand, has focused on developing its Special Economic Zones (SEZs) to promote industrialisation. Kenya’s Vision 2030 is a long-term development agenda aimed at transforming the country into an industrialized, competitive and prosperous nation by 2030. Its focus in this regard is on comprehensive reforms and development in key sectors including infrastructure, science, technology, and innovation, public sector reforms, tourism, agriculture, trade, manufacturing, BPO and ICT, financial services, and education and training and is strategically aligning to boost and attract investment.
Specific priority areas for industrial development, such as agro-processing, textiles and apparel, construction, automotive industry, pharmaceuticals, and renewable energy are part of the country’s main focus. Special Economic Zones and industrial parks have been established to facilitate investment, support manufacturing activities and promote economic diversification.
Overall, promotion of local industries, creation of employment opportunities and embracing sustainability for economic growth and improved quality of life continues to drive the Vision. The manufacturing, BPO, and ICT sectors and investment in this regard is considered crucial for employment creation and industrialization, while financial services continue to enhance access to capital and promote entrepreneurship. Education and training to equip the workforce with necessary skills is also a priority.
LEX Africa member, Kaplan & Stratton, added that the Kenya Industrial Transformation Program (KITP) “aims to enhance the competitiveness and productivity of the manufacturing sector in Kenya. It focuses on areas such as agro-processing, textiles and apparel, leather, construction materials, and automotive assembly. The programme includes measures to improve infrastructure, streamline regulations, enhance access to finance, and promote innovation and technology transfer.”
Rwanda has also made impressive strides in promoting diversification, to reduce the country’s reliance on coffee and tea exports. The government has also invested heavily in ICT infrastructure.
Its status as a tech hub is likely to gain a major boost following the establishment of Kigali Innovation City, which is designed to accommodate world-class universities, research and development centres, technology companies and innovative start-ups.
Rwanda’s industrial sector has grown on average at 10% per year since 2000, and manufacturing now accounts for 15% of GDP, according to Deogratias Nteziryayo, a Junior Associate at LEX Africa member Certa Law Chambers in Kigali.
“Rwanda has also made progress in diversifying its manufacturing base, with a growing number of companies producing goods for export,” he added.
Meanwhile, LEX Africa member Katende, Ssempebwa & Co Advocates in Kampala, said Uganda’s quest for strong industrial growth and development is also on an upward trajectory as latest data sets suggest that Uganda has over 5,000 operational industries in several sectors.
In conclusion, many African countries have been promoting diversification and industrialisation as key drivers of economic growth, although there is still a long way to go, and many challenges to be addressed. These include the need to invest in infrastructure, provide access to finance for SMEs, and address the skills gap in the labour force.
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