ECA urges African countries to transform their economies
Addis Ababa, 6 December 2012 (ECA) – At a one-day event on the theme Accelerating Industrialization for Boosting intra-African Trade at the headquarters of the African Union this week, the Deputy Executive Secretary of the Economic Commission for Africa (ECA), Mr. Abdalla Hamdok, urged African countries to transform the structure of their economies to effectively address development challenges.
In a statement delivered to representatives from international organizations and African governments, Mr. Hamdok said that the renewed focus on industrialization of African economies comes against the backdrop of relatively good economic growth performance over the past decade. However, “it has been driven mostly by non-renewable natural resources and high commodity prices, indicating that the current pattern of growth may not be sustainable.”
He also noted that de-industrialization has been a key feature of Africa’s recent growth experience, and that the share of manufacturing in Africa’s gross domestic product fell from 15 percent in 1990 to 10 percent in 2008.
“Furthermore, Africa’s recent growth has gone hand-in-hand with an increase in unemployment, which is not surprising, given that natural resources account for about 25 percent of Africa’s recent GDP growth but only 1 percent of employment,” he said.
He underscored the need for ‘deliberate and concerted government measures’ to promote industrial development in Africa through industrial policy, and said: “African governments should seize the opportunity created by this changing perspective on the role of the state to promote industrial development through industrial policy.”
“In doing so, however, it is important that the new industrial policy be designed in consultation with the private sector and also reflect the well-known fact that performance targets are required to compel domestic firms receiving state support to do what is expected of them,” he added.
He also underscored the importance of intra-African trade in promoting industrialization in Africa. By focusing on the regional market, domestic firms can exploit economies of scale and improve on their competitiveness, thereby promoting manufacturing development.”
Citing ECA’s research on intra-Africa trade, he said that exports are more diversified towards manufacturing than Africa’s extra-regional exports. “In particular, manufacturing accounts for about 40 percent of intra-African exports compared to less than 20 percent for Africa’s extra-regional exports,” said Hamdok.
Calling on governments to address the demand and supply side constraints in order to boost intra-African trade, Hamdok said that while border measures are important, “they will have no significant impact on intra-African trade if there is no deliberate effort to build productive capacity, particularly in agro-processing and manufacturing.”
Mr. Hamdok concluded by reiterating some key messages from the October 2012 African Development Forum held on the theme, Governing natural resources for Africa’s development and said, “transparency in the management and use of mineral resource wealth, and more involvement of local stakeholders in negotiations with development partners active in the extractive sector, will go a long way towards creating an incentive for better management and use of mineral-resource wealth to promote industrial development in Africa”.
Participants also heard a key message from UN Secretary-General, Ban Ki-moon which stressed that by working together to accelerate Africa’s industrialization and boost intra-African trade, we can ensure a more prosperous and sustainable future for all the continent’s people.
The event featured an exhibition of manufactured products such as Ethiopia’s textile and leather industry. Also present at the occasion were Ethiopia’s State Minister for Industry, Mr. Tadesse Haile, representatives from the African Union Commission, UNIDO and the European Union.
The event was organized by the African Union Commission, UNIDO and the ECA to commemorate Africa Industrialization Day, which is celebrated annually on 20 November.
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