How can Africa achieve sustainable industrial development?

Li Yong
Director General, UN Industrial Development Organisation
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In less than eight months, close to a quarter-million migrants, many from Africa, have arrived in Europe by sea – more than in all of 2014 – and the tide shows no signs of stopping. Some are fleeing wars and persecution; others, mostly young people, are seeking economic opportunities. Addressing the migration crisis thus requires efforts not only to address instability in source regions, but also to alleviate poverty and create employment. The key to achieving the latter goal is industry.

Over the last decade, Africa has recorded an annual average growth rate of 5%, with some countries reaching more than 7%. But that growth, based mainly on commodity exports and extractive industries, has demonstrated a limited capacity to drive socioeconomic transformation, not least because most of its benefits have accrued to a small share of the population.

Africa has the tools it needs to change this – beginning with a massive untapped labor force. Indeed, some 60% of Africa’s unemployed are young people. An estimated 23 million more young people will be joining African labor markets this year, and the continent’s total workforce is expected to increase by 910 million from 2010 to 2050.

Of course, a large labor force means little without quality jobs. That is why African countries should aim to build industry-driven economies, capable of providing such jobs, as well as opportunities for social inclusion, including reliable access to clean energy, adequate food, and safe water.

Throughout modern history, industrialization has been the most effective driver of structural poverty reduction, owing to its capacity to expand employment opportunities, boost productivity, and increase wages. No developing country has achieved the economic growth necessary to become a developed country without industrializing.

Some African countries are already on the right track. In the town of Dukem, outside of Addis Ababa, the Ethiopian authorities have established the Eastern Industrial Zone – the first industrial park of its kind in the country – which has created more than 50,000 new jobs in just a few years. Similarly, the governments of Ghana, Nigeria, and Senegal, among others, are working to build industrial sectors that are diversified, globally competitive, environmentally sustainable, and capable of improving their people’s living standards significantly. This approach should be emulated across Africa over the next decade.

International support can play a vital role in this effort. Fortunately, the need for inclusive and sustainable industrialization is reflected in the Sustainable Development Goals, which will be officially adopted by the United Nations later this month.

In practice, this means that efforts to advance industrialization in Africa must be embedded within a robust social and environmental policy framework. A focus on corporate social responsibility could help to ensure that the benefits of industrialization are shared, while energy- and resource-efficiency requirements could help to safeguard sustainability. And, as the SDGs recognize, resilient infrastructure and incentives for innovation are also crucial.

Of course, achieving this goal, not to mention the other SDGs, will be expensive, costing an estimated $3.3-4.5 trillion per year. Given budgetary pressure in many donor countries, official development assistance is on the decline and cannot be relied upon to fill this need. Indeed, as a report by the International Committee of Experts on Sustainable Development Financing points out, the spectrum of funding for future international development frameworks must be broader than ever.

The key is effective multi-stakeholder partnerships that bring together all major players in the development process, including governments, bilateral and multilateral development agencies, national and international development finance institutions, the private sector, civil society, and even academia. The private sector, in particular, has the capacity and expertise to contribute substantially to international development efforts, through investments, loans, and even philanthropic resources provided by transnational corporations, financial institutions, foundations, and other sources. And traditional North-South resource flows need to be augmented by triangular and South-South cooperation, as well as regional economic integration.

By 2050, Africa is expected to be home to more than two billion people. The tools that the continent needs to achieve inclusive and sustainable industrial development are available. Africa’s leaders, with robust support from the international community, must use them.

This article is published in collaboration with Project Syndicate. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Li Yong is Director General of the United Nations Industrial Development Organization.

Image: Workers level the earth on the Mombasa-Nairobi highway construction project in Athi River, 20 km (12 miles) from Nairobi, November 18, 2009. REUTERS/Elizabeth Nganga

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