Industrialise, Africa's Least Developed Countries urged

By Correspondent David

African Development Bank (AfDB)

The African Economic Outlook 2014 released yesterday has called on the continent’s Least Developed Countries (LDCs) to create a more favourable production environment and wealth through industrialisation by formulating appropriate policies, strategies and programmes.

The report released by the African Development Bank (AfDB), mainly focuses on Global Value Chains and Africa’s Industrialization.


It states that Africa’s participation in global value chains is currently limited to lower value activities although opportunities exist for upgrading to higher ones.

It added that Africa’s share in global trade in value added grew from 1.4 per cent in 1995 to 2.2 per cent in 2011.

The report however stresses on the close relationships between the importance of industrialization and value addition for the local products as a way of reducing imports to Africa.

“Raising value has been the main topic all over the world. The time has come for African countries to refuse being only a market for the imported products.
African countries should put in place strategies of not exporting raw materials as it reduces employment opportunities and foreign currency,” read part of the report.

The document says the challenges facing most African countries in attaining structural revolution is the lack of favourable environment for business, inadequate infrastructure, but also African producers lacking creative skills to compete with imported products.

The report suggests that, African countries can further integrate into the global value chains by opening to trade, targeting regional and emerging markets, modernising infrastructure, promoting local entrepreneurship and investing in education for its people.

The report shows that the continent has continued to make progress in human development, with lower poverty levels, rising incomes and improving rates of school enrolment and health coverage, but arguing that further gains could be achieved by empowering people and ensuring environmental sustainability.

It cautions that, for the value chains to effectively integrate the poor and marginalised, including women, public policies and inclusive business models should facilitate access to productive assets such as land and financing, enhance productivity, and improve the resilience of small producers.

Launching the report, Deputy Minister for Industry and Trade Janet Mbene said like other African countries, Tanzania’s value chain remains low mainly on account of its economic structure.

Mbene said that industry accounts for 25 per cent of the Gross Domestic Product (GDP) and the important industrial sub-sectors are manufacturing whose share in GDP is around 10 per cent while the construction sector has a share of about 7.3 per cent in the GDP.

She said that the potential for Tanzania to integrate into the Global Value Chain lies in successful exploitation of trade linkages with regional trading partners as well as careful exploration of natural resources including minerals and natural gas to ensure economic development and employment creation.

The Deputy Minister said the high growth average of 7 per cent per year is not sufficiently broad based and poverty levels remain high.
She noted that the recent Household Budget Survey indicates that 28.2 per cent of Tanzanians are poor and that poverty remains more prevalent in rural areas than in cities and towns.

“The key to achieving broad based growth lies in the transformation of the rural economy largely through significant improvements in agricultural productivity and value addition,” she said.

Commenting on the report, Tanzania Private Sector Foundation (TPSF) Executive Director Godfrey Simbeye said there have been a lot of good reports aiming at bringing economic revolution in the country but there has been little implementations by the government.

He called for the formation of a National Competitive Council in which all issues related to economic growth, Global Value Chain and business environment can be coordinated.

According to him, in order to attract more Foreign Direct Investment (FDI) there should be a coordinated environment under one body.
“Through the Public Private Partnership we can formulate the Council to add value for local products and services to create more employment and investors,” noted Simbeye. 

SOURCE: THE GUARDIAN