Africa needs to industrialize to create jobs – AfCFTA Secretary General

The Secretary-General of the African Continental Free Trade Area (AfCFTA), Wamkele Mene, says the African continent needs to industrialize to be able to create jobs for its people, especially the job.

He made the call while making a presentation at an Honorific Public Lecture organized by the University of Professional Studies, Accra.

Speaking under the theme: “Creating The Next Generation of Entrepreneurs through AfCFTA,” he said in the population of Africa was young and growing fast, and with a population of about 1.3 billion, Africa was the second-highest of any region after Asia.

He stated that due to rapid rural-urban migration the population in cities will triple by 2050.

“It was estimated that the African labour force would swell by more than 170 million people between 2010 and 2020. If there are no productive jobs for these people, the fight against poverty will be lost given that the most important determinant of whether someone in Africa is in poverty, or not, is whether they have a job”, he said.

According to him, the indications are that 10 to 12 million young Africans join the labour force each year, yet the continent creates only 3.7 million jobs annually.

By 2035, Mr Mene noted that more young people will be entering Africa’s workforce each year than in the rest of the globe combined, according to the IMF.

Many countries, businesses and organisations have begun to address this problem, using tools from progressive policy-making to innovative finance. However, over 60 per cent of young people across Africa remain unemployed, he noted.

He recounted that “When countries in North America, Western Europe and Asia experienced similar demographic pressures in their past, industrialization enabled them to create jobs and welfare simultaneously. Indeed, the African Union (AU)’s Agenda 2063 recognizes industrialisation as essential for the realization of the goal of “A Prosperous Africa Based on Inclusive Growth and Sustainable Development.”

Thus, he said, industrialisation features prominently in the AU’s First Ten-Year Implementation Plan (2014-2023) and earlier in the AU’s “Action Plan for Accelerated Industrial Development of Africa.”

“Africa’s industrialisation policies rest on manufacturing, thanks to its multiplier effect on other sectors of the economy. Manufacturing is the “engine of growth” that enhances higher levels of productivity and greater technical change, thus creating more jobs with higher wages for both women and men.

However, industrialisation in 21st century Africa calls for innovative strategies that go beyond sectoral approaches that target only manufacturing. Africa can industrialise by promoting all economic sectors that have the potential for high growth and employment creation. Certain tradable services and farming activities such as horticulture and the agro-industry production methods, for instance, have become comparable to those of conventional manufacturing. These activities produce higher quantities of goods (at lower marginal costs) which can then be exported, increasing competition and productivity.

The potential of non-manufacturing sectors for industrialisation becomes more important in the context of the Fourth Industrial Revolution, where robots tend to replace low-skilled workers in manufacturing activities.”

“Thus, Africa’s innovative industrialisation strategies should include high-potential entrepreneurial activities to accelerate industrialisation. Start-ups and small and medium-sized firms with high-potential can complement the growth of large companies in driving Africa’s industrialisation.”

Touching on the new age of entrepreneurship in Africa – the resurgence of technological start-up entrepreneurship in Africa, he said “Industrialization in Africa can therefore not happen without its entrepreneurs and also continental economic integration. Entrepreneurship and small and medium enterprises (SMEs) are critical to every economy by creating innovative goods and jobs, promoting a competitive environment and economic growth, and facilitating income distribution.”

According to him, “SMEs have a critical role to play in accelerating economic development, serving the unmet needs of African markets, and especially creating jobs. The World Bank, for example, estimates that SMEs are responsible for 77 per cent of all jobs in Africa and as much as half of GDP in some countries. Surveys have revealed that in Ghana, for instance, micro, small and medium enterprises account for 92% of businesses and contribute about 70% of Gross Domestic Product (GDP). In Nigeria, SMEs account for 96% of businesses, 48% of GDP and 84% of employment, while in South Africa, the second-largest economy in Africa, account for 91% of businesses, 34% of GDP, and 60% of employment.”

“SMEs are involved in all sectors of industrial development, from mining, manufacturing, service industry to agriculture, fishing to climate change. However, most are involved in the service industry sector where they account for two-thirds of employment levels. The presence of SMEs in all sectors of the economy signifies their critical role in steering development. They are, indeed, the engine that drives African economies and the stepping stone to industrialisation.”

“And entrepreneurship is a key driver of economic growth as it allows young people to participate in the labour market and stimulates job creation. Research shows that new businesses that entrepreneurs create have the potential to drive and shape innovation, speed up structural changes in the economy and introduce new competition – thereby contributing to productivity.”












Source: DGN

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