The
Africa Continental Free Trade Area (AfCFTA) is now three months old
after it was launched by the African Union (AU) during a summit of Heads
of States in Nigerian capital, Niamey.
With this
launch, the continent was ready to sing one song of becoming the world’s
biggest economic bloc whereby member states will jointly market their
products and commodities in Africa.
In the AfCFTA, the
AU sees fruits of the Abuja Treaty, and sets the ball rolling towards
realising the objectives of the Agenda 2063. The continent of over 1.2
billion people with 450 million of them being employable youth aged
between 15 and 35 (AfDB, 2018), creating opportunities is key for the
leaders of the member states.
With the AfCFTA, the
times when Africa was the final consumer of commodities produced from
across the world especially Asia, Europe and the Americas, are poised to
be washed under the carpet so that African raw materials are processed
at home and sold elsewhere as finished goods.
Much as
the continent missed out on the Industrial Revolution in Europe and
America between 1760 and the 1840s, most of the raw materials originated
from Africa which is endowed with mineral deposits and other natural
resources needed for manufacturing.
Currently, most
African countries have opened their doors to industrialisation. Much as
the proprietors are foreign investors whose main aim is profit
repatriation, they employ some of the nationals in their factories and
also sell the products on the local market.
To change this narrative, the African Union Commission through
the Department of Trade and Industry (DTI) has risen to the occasion to
promote industrialisation as part of the key drivers of the AfCFTA and
Agenda 2063.
“The main framework for Continental
Industrialisation is the Accelerated Industrial Development of Africa
(AIDA) programme and its Plan of Action,” said Mr Rongai Chizema, the
DTI Technical Adviser. He was speaking during a one-week media
orientation workshop on Africa Industrialisation, at the AU headquarters
in Addis Ababa, Ethiopia last week.
According to Mr
Chizema, for the AfCFTA and Agenda 2063 to be a reality, African
countries ought to take a step from the continuous exploitation by the
developed world by setting up industries so that the continent itself
becomes a market.
Road to industrialisation
He believes that to achieve the goal of industrialisation, the continent must add value to what is produced locally through developing Agro-Industries and minerals.
He believes that to achieve the goal of industrialisation, the continent must add value to what is produced locally through developing Agro-Industries and minerals.
The continent has
abundant agricultural products especially in the sub-Saharan Africa
where majority of the population are cultivators who must be encouraged
to move from subsistence farming to commercial agriculture.
Mr
Chizema said; “We want to change the super structure of exploitation of
the minerals that are taken to Europe and brought back as high value
goods. The political economy of industrialisation is rooted in the
manner in which colonisation was configured. That has not changed in
present day Africa and the change has been belated. But we could do it
now.”
Abundant raw materials
Africa has abundant treasure in its natural resources. Some of them are extractives such as minerals of different types and value their rivers which are ever flowing to support electricity generation and the agro-processing products.
Africa has abundant treasure in its natural resources. Some of them are extractives such as minerals of different types and value their rivers which are ever flowing to support electricity generation and the agro-processing products.
Unlike, Europe, Asia and the
Americas where the industrialists look out to Africa for the source of
raw materials, the Continent has more than enough. But what is lacking
is machinery and the requisite skills.
Ms
Ron Osman Omar, the Acting head of the Industry Division at the AU,
says that time is now for Africa to feed and enrich its own people using
the available resources. She says Africans must stop being exploited by
the outside world by driving Agenda 2063 with industrialisation.
“Though
abundantly endowed with natural resources, including many industrial
minerals and agricultural resources (that is hosting the most arable
land in the world), the continent remains food insecure, and poor,” she
said.
“This is mainly due to the fact that resources
continue to be exported with no local value addition and processing. The
persistent lack of industrialisation is a dent or drag on the African
economies, which remain largely dependent on agriculture and unprocessed
commodities that add little value,” adds Ms Ron.
Africa versus the world
Comparing the continent with the rest of the world (which pick supplies from Africa), Mr Ron says on average, Africa’s industrial sector generates $700 (Shs2.6m) of Gross Domestic Product (GDP) per capita, which is less than a third of the same measure in Latin America, $2,500 (Shs9.3m) and a fifth of $3,400 (Shs12.6m) in East Asia.
Comparing the continent with the rest of the world (which pick supplies from Africa), Mr Ron says on average, Africa’s industrial sector generates $700 (Shs2.6m) of Gross Domestic Product (GDP) per capita, which is less than a third of the same measure in Latin America, $2,500 (Shs9.3m) and a fifth of $3,400 (Shs12.6m) in East Asia.
Despite the
agriculture sector not producing for industrialisation, the main raw
materials required from Africa are minerals and hides and skins.
Middle Income status
On the Ugandan perspective, industrialisation is one of the key drivers for the country to achieve Middle Income status.
On the Ugandan perspective, industrialisation is one of the key drivers for the country to achieve Middle Income status.
President
Museveni has been emphasising it alongside Commercial Agriculture,
Services and Information and Communications Technology (ICT).
At
least 22 industrial parks are being developed in strategic towns across
the country. However, much of the investments in manufacturing are by
foreigners who enjoy several incentives including a five-year tax
holiday, provision of land and doing feasibility studies.
President
Museveni who speaks passionately about integration of Africa to make it
a strong market has already announced bans on exportation of some
minerals without value addition. Copper ore will not be exported when
mining resumes at Kilembe Mines in the Western part of the country.
“On
the issue of Kilembe (mines), I will not allow what the Canadians were
doing. Just blistering copper. We need it to be purified up to 98 per
cent. What we call cathode copper. We want to see cables and
transformers all made here,” Mr Museveni said during the
Presidential-Investors Roundtable meeting at State House, Entebbe early
this year.
Protecting local market
To protect the market for local products, the government has also increased import duty on every product that can or is being produced in Uganda so that local manufacturers seize this opportunity to be the first point of call.
To protect the market for local products, the government has also increased import duty on every product that can or is being produced in Uganda so that local manufacturers seize this opportunity to be the first point of call.
Imports of office furniture and
some construction materials have been banned to promote the ‘Buy Uganda,
Build Uganda’ policy such that local products have market.
Leather industry: changing the narrative
The leather industry is something the continent has not highly embraced because Africa still imports more leather than it would export.
The leather industry is something the continent has not highly embraced because Africa still imports more leather than it would export.
Prof
Mekonnen Hailemariam from the Africa Leather and Leather Products
Institute (ALLPI) emphasises that to change the narrative on the
exploitation of the leather market, governments should emphasise the
establishment of leather industries.
“Our continent is
weak in the aspect of getting final products. We need to develop
different leather policies and support human capacity development,” he
said.
ALLPI, said Prof Mokennen, has been used a case
study for other continents who sent their personnel to Addis Ababa to
learn more so that they can develop their leather institutions.
He
revealed that, in 2018, the global value for trade in leather products
was $258b ( about Shs944.4 trillion) with Africa importing products
worth $5.4b (Shs19.7b) compared to exports worth $2.55b (Shs9.3b).
The continent is not short of quality. But it lacks the quantity of raw materials to make the leather industry self-reliant.
Information
from the ALLPI indicates that, with support from experts in Turkey,
tests on the quality of hides and skin from Uganda, Ethiopia, Sudan,
Zimbabwe and Zambia have returned “amazing” results in the past few
years.
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