By Prof. Semakula Kiwanuka
The historical pattern of the economic growth and development of nations is that industry and manufacturing were at the centre. I am, therefore, forced to ask the question why Sub-Saharan Africa (SSA) has never undergone an industrial and manufacturing revolution despite repeated declarations and summit communiqués by heads of state during the past 50 years?
As a background, I draw attention to major shifts in human economic activities which came to be called Industrial Revolutions. These are identified as follows. The so-called First industrial revolution took place at the end of the 18th Century (1784). Its main characteristics were steam powered and mechanized production equipment or machines. The Second Industrial Revolution occurred 100 years later (1874).
Its characteristics were electric power, mass production processes and division of labour. The Third Industrial Revolution took place in our own time (1969). Its major characteristics have been the digitalization of technology (IT) and automated production processes.
The theme of the recently concluded World Economic Forum (2016 at DAVOS) was the Fourth Industrial Revolution is billed to build on the Third. The major characteristics of the Fourth Industrial Revolution will be Cyber Physical Systems.
In this article and despite the hype of Africa rising, I argue that what has been described as the Fourth Industrial Revolution is not SSA’s next challenge because the Region, except South Africa has never undergone an industrial revolution on a scale which transformed economic production processes in Europe, Russia, USA, Japan etc and more recently in S.E.Asia. Countries which undergo industrial and manufacturing revolutions are generally rich.
Hence the expression Rich Industrialized Countries. Three decades ago, such an expression referred to Western Europe, the USSR, Japan and North America. Today the rich nations have been joined by the so-called Asian Tigers of Taiwan, Singapore and South Korea and China is on the way.
The role of the state
In answering the question why SSA has never undergone industrial and manufacturing revolutions, we must draw attention to the role and commitment of government leaders in pursuing industrialization policies. That is what I have called The Role of The State.
The examples from governments of post war Europe and the USSR are proof of that the state must be a key player. To recover from the ravages of World War II, political leaders in these countries regarded industrialization and manufacturing as the dynamic forces which would speed up economic recovery, rapid job creation and modernization.
The ideology for rapid economic recovery and growth through sustained ind Sub-Saharan Africa (SSA)ustrialization driven by government was advocated not only by politicians, but also by development economists and other academics.
Hence economic theories such as the BIG PUSH by Professor Ronstein Rodan who advocated massive investments and government commitment to overcome bottlenecks. To show that industrialization was in vogue, there were expressions such as “industrial man” etc.
After their independence in the 1960s governments of South East Asia such as Singapore, South Korea and Taiwan embraced the same ideology that industrialization was dynamic force for economic transformation.
In the case of SSA the question why 50 years of independence, plus repeated declarations such as the LAGOS PLAN OF ACTION (1980), plus numerous Heads of State Communiqué’s, SSA is still unindustrialized. We must try to look for the root causes, while acknowledging that the failure to industrialize is not due to absence of blue prints or elaborate government policy documents in the Ministries of Industry etc.
Today we live in an era of NATIONAL VISIONS with target dates to which we add international blue prints issued by the United Nations. For example, The 2014 UN Economic Commission for Africa Report declared that industrialization was key for Africa in order to bring about structural transformation.
But as we have shown in spite of the numerous communiqués etc, industrialization has remained elusive, the manufacturing sectors are still embryonic and employment remains a major challenge because the service sector lacks the capacity to create enough jobs.
At this year’s World Economic Forum, it was stated that the technological revolution was not yielding jobs. Phillip Jennings, the General Secretary of the UN Global Union told a New York Broadcasting network CNBN that “I have not found one report saying that there will be more people in work as a result of this technological revolution.
Because SSA has not undergone an industrial and manufacturing revolutions, economic productivity as well is low. Hence SSA’s marginal participation in international trade despite the openness of markets in Europe under EBA, USA under AGOA, Canada, India, Japan etc. even the agricultural sector where SSA would have exploited a comparative and even a competitive advantage is still at subsistence levels. Consequently SSA’s contribution to international trade is less than 3%.
Not too long ago, I wrote that SSA and Africa had an export crisis of raw products including crude oil and minerals and the bulk of agricultural products such as coffee. Hence as a result of consequently SSA’s absence of an industrial and manufacturing revolution means that the Regions contribute only 2% of the world’s demand of manufactured goods. The contrast with the East Asia Tigers was and still is phenomenal because these countries have expanded their manufacturing base and so has their export share of world trade.
Undermining the role of the state
As we discuss SSA’s failure to industrialize, it’s worth noting that in the early years of independence, some political leaders used the state to undertake or promote industrialization as Obote did with Jinja.
In Ghana, the Nkrumah government embarked on state enterprises with factories such as the foot wear and meat factories, tanneries and fruit (mango) canning factories. Unfortunately when bad governance and dictatorships became the order of the day, governments in many African countries were overthrown by the military whose regimes were worse.
In Uganda Amin drove the economy to its grave. Because the military regimes were the epicenters of bad governance and massive economic mismanagement, most African economies collapsed between the 1970s-1980s. Its important however to note that it was not necessarily militarism which undermined the industrialization policies because countries like Tanzania, Malawi, Zambia, etc remained then as now largely unindustrialized despite the fact that they were under civilian leadership.
Over there it was a combination of bad governance, unprogressive ideologies such as UJAMA in Tanzania and poor economic management which led to the balance of payments crisis, currency devaluation and near collapse of many African economies. Thus by the 1980s, industrialization had gone off SSA’s development agenda.
External influences on Africa
While we note that SSA’s internal problems arising out of bad governance, dictatorship, militarism, economic mismanagement undermined whatever industrialization policies there may have been, we need to recognize the ideological changes which were taking place in Europe etc as these countries recovered from the ravages of war, ideological changes in various degrees began to undermine the role of government as a dynamic key player in driving industrialization and economic development.
For example in UK and the USA, the 1980s and 1990s were dominated by conservative ideologies championed by Prime Minister Thatcher and Ronald Regan. Their political ideology influenced western financial institutions such as the World Bank and the IMF.
During this same period the collapse of most African economies necessitated assistance from institutions such as the World Bank and the IMF which were now under heavy influence of the free market ideologies spearheaded by western leaders.
The dictates of the World Bank and the IMF, was liberalization which greatly undermined the role of the state as a key player in national economic development.
What lessons can SSA learn from south East Asia?
For SSA to undergo a real industrial and manufacturing revolution, the role of the State must be restored. Governments must be active players beyond communiqués at the Head of State Summits, or periodic ideological verbalizations. Post war Europe, Russia and Japan under went massive industrialization because their political leaders were committed beyond communiqués and fat reports.
SSA can draw lessons from South East Asian countries which were at the same level of development (late 1950s and early 1960s) at the time of Africa’s independence. Describing industry policy in East Asia, The UN Economic Commission for Africa Report 2014, (Lessons for Africa). had this to say. Industrial policy was a politically driven policy, not just a piece of paper.
Turning to China whose economic transformation during the past two decades has been phenomenal, the Report noted that Industrial policy in China involved at times strong arm tactics of the state.
The lessons for SSA are that government commitment as a key player must go beyond the existence of the Ministry of Industry or blue prints. To implement dynamic industrial policies, infrastructure of transport, reliable utility services e.g. electricity and water at affordable tariffs are a must. To these we must add logistics of roads, railways, ports and harbours and telecoms. Industrial Parks or estates, free zones or economic processing zones (EPZ) etc are part and parcel of an enabling environment.
Just as the Tigers did, African governments must attract FDI in the Industrial Sector and provide targeted tax holidays, despite the controversy which surrounds the latter.
I end this article with an appropriate quotation from The Economic Commission for Africa Report (2014), that “Industrialization is an imperative to foster structural transformation, job creation and poverty reduction.”
The writer was former minister and ambassador to the United Nations and United Arab Emirates