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Is manufacturing dead across Africa? Dangote and Ford didn’t get the memo…

By Nicholas Norbrook
Posted on Monday, 19 April 2021 18:18, updated on Tuesday, 20 April 2021 11:53

South Africa's cement manufacturers are struggling at home. REUTERS/Siphiwe Sibeko

The large investments made by Nigerian companies like Dangote Group or BUA Group, or the decision by US auto giant Ford to pour money into South Africa, prove that there is life left yet in the manufacturing industry on the continent.

Doubts have been growing over Africa’s ability to rely on a well-­trodden route out of poverty: manufacturing basic goods.

An influential paper by economist Paul Krugman in 2015 suggested that the returns from industrialisation were slowing down.

Rwanda’s President Paul Kagame has speculated that Africa may have missed the window for low-end manufacturing because “we waited too long to act”. China’s ‘Made in China 2025’ initiative has turned the eastern powerhouse into the world’s largest purchaser of robots for industry.

In Africa, manufacturing has grown at 2.5% over the past 20 years, compared to China and other countries, like Vietnam, where the number sits between 15% and 20%. And while industry provided a fifth of output on the continent in the 1970s, it now represents only a little over a tenth of Africa’s GDP. “It’s premature de-­industrialisation,” says Richard Kozul-Wright, director of globalisation at the United Nations Conference on Trade and Development.

So, what to do? McKinsey’s Africa chair Acha Leke says this is a question preoccupying many at present. “Do we look at a different model? Do we, for example, try to leapfrog into services?”