Africa industrialization growing, but too slowly

AUDA-NEPAD, the development agency of the African Union responsible for coordinating and executing priority regional and continental development projects that promote economic integration in Africa just released the Second Continental report on the implementation of Agenda 2063. The document tracks the progress made towards the goals and targets set out in Agenda 2063, the 50-year strategy adopted in 2013 by the African Union (AU) on the occasion of the 50th anniversary celebration of the Organisation of African Unity (the predecessor of the AU).

Agenda 2063 indicates seven key objectives (referred to as ‘aspirations’) as key areas where major efforts are needed in order to promote prosperity in Africa and drive economic development and the integration of African countries into the world economy. Its implementation relies on ten-year implementation plans that identify priority areas, set specific targets, and define strategies and policy measures required to achieve the goals set out under Agenda 2063, defining the relevant monitoring and evaluation criteria and assigning responsibilities to the various stakeholders responsible for the achievement of planned results. The First Ten-Year Implementation Plan of Agenda 2063 covers the period 2014-2023.

The Second Continental report reveals that Africa still lags behind in its industrialisation progress, as the contribution of the manufacturing sector as a proportion of GDP remains low, reaching in 2021 an average at continental level of only 11%, missing the target assigned by the First Ten-Year Implementation Plan, which was 15% to be achieved by the end of last year. Disappointing is also the contribution of tourism to the African GDP, as this reached a continental average of only 2%, even though such underperformance is mainly attributed to various restrictive and containment measures, such as border closures and lockdowns that African countries put in place in the fight against the COVID-19 pandemic. Similarly, the Continent did not achieve its target in the share of research and development expenditure as a proportion of GDP, recorded at about 0.45% against the 2021 target of 1%.

Contribution of Manufacturing and tourism as proportion of African GDP in 2021

Among African countries, the report mentions the case of Ethiopia, where the contribution of the manufacturing sector to the GDP reached 6.9% in 2020 from 4.3% in 2013, an increase that has been slow due to the low competitiveness of Ethiopia’s manufactured products in the global market, and a decline globally in the demand for Ethiopia’s merchandise export items. Egypt similarly, recorded a slow increase in the manufacturing value added as a percentage of GDP, reaching 16.1% in 2020 from 15.8% in 2013, while in Sierra Leone the manufacturing value added as a percentage of GDP rose in eight years only of 0.2 percentage points (from 1.6% in 2013 to 1.8% in 2019).

On the other hand, particularly interesting are the performances of an East African country: Tanzania, that has managed to maintain constant high growth rates of around 7% over the past decade despite the Covid-19 pandemic. In July 2020, the country graduated as a lower middle-income status (according to the World Bank Atlas method), due to continued efforts by the Government to strengthen the mining sector, improved transportation services, and significant progress registered in the implementation of various development projects, including roads, railways, airports and electric power projects.