Can manufacturing be Africa’s route out of poverty?

Historically speaking, there have been windows of opportunity where low-income agrarian countries have been able to become “high-income urban economy in one or two generations”. For many European countries it was after the Industrial Revolution. For Japan it was after WWII, and their growth allowed other Asian countries like South Korea, Taiwan, and most recently, China, to follow in their footsteps. And now, Charles Robertson, the chief economist of Renaissance Capital, believes that for the first time in its history, Africa now has the human capital to take part in its own industrial revolution.

Africa has already seen quite a growth in manufacturing. H&M, the Swedish retail-clothing firm, sources material from Ethiopia. Also in Ethopia, the Chinese shoemaker Huajian opened a factory in January 2012 with two production lines and some 600 workers. Today, they have 3,500 workers in Ethiopia producing more than two million shoes a year. Meanwhile in Nigeria, General Electric is building a $250m plant to make electrical gear. And Mobius Motors, a Kenyan firm started a few years ago is building a cheap, durable car for rough roads.

Domestic manufacturing is growing, as well. Seemhale Telecoms of South Africa is planning to make affordable cell phones for the African market. Angola is building its own arms industry. Ali Lamu designs and create purses from recycled dhow sails on the Kenyan coast and sells them online.

With the right policies and resource management, could the trajectory of Africa’s manufacturing economy continue this way, transforming Africa into a high-income urban economy for the next generation? Justin Yifu Lin thinks so. Check out his article published in the World Economic Forum.

Categories: Economy/Markets

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