AFRICA-ECONOMY: Poles of Development

By Gustavo Capdevila Reprint | | Print |

Gustavo Capdevila

GENEVA, Jan 26 1996 (IPS) - The economic take-off of Africa could be launched from four industrial development poles – South Africa, Nigeria, Kenya and the Ivory Coast – with a strategy which would not exclude policies fostering national industries.

With their relatively more developed factories and infrastructure, these countries could be converted into poles and bridge-heads for receiving a flow of foreign investments, according to experts.

Another last resort for Africa would be the possibility that petroleum producing countries encourage investments in internal activities in the oil and gas field, so as to stimulate industrial development.

The idea, launched in 1995 by the U.N. Economic Commission for Africa (ECA), was picked up again by Nigerian economist H. Ontiri in a research paper delivered to a recent seminar of the U.N. Conference on Trade and Development (UNCTAD).

Of the four countries suggested as locations for the industrial development poles, South Africa already has a recognised sphere of influence with its neighbours, as well as growing relations with the rest of the African countries.

South African exports posted a 50 percent increase in only two years, reaching a value of 2.5 billion dollars in 1994. In the same period imports tripled, passing from 220 million dollars to 664 million.

All predictions agree that the integration of the Republic of South Africa into the regional economy will expand its participation in intraregional trade and investments.

In West Africa, Nigeria and the Ivory Coast account for about 70 percent of intraregional exports. It is estimated that the rapid growth of these two countries may burgeon into a decisive force for the development of the whole region.

On the other side of the continent a corresponding role would fall to Kenya for the subregion of East Africa.

Concerning development of industries derived from petroleum, the ECA report warns that there must be no enclaves in such economies, they must have at their disposition raw materials, human resources, local markets and auxiliary services.

Only Algeria, Egypt and Nigeria would probably meet these conditions, the sine qua non of an industrial development propelled by petroleum as its driving force.

Ontiri in his research paper maintains that the main feature of Africa’s reaction to underdevelopment will have to be a strengthening of national policies in order to increase the continent’s international competitivity and attract direct foreign investment.

The Nigerian economist, however, does not reject the granting of specific support for a wide range of national industries like textiles, footwear, food, plastics and others which have shown themselves to be promising in their ability to increase the competitivity of their products in both domestic and foreign markets.

This support should be destined essentially to assisting local industries to consolidate and explore new commercial opportunities.

The African industrial sector which pretends to revitalise itself is presently characterised by structural weaknesses like low productivity, under-utilisation of installed capacity, inadequate industrial investments, marked dependence on foreign sources of raw materials, technology and other inputs.

The 1995 ECA report indicates that Africa’s industrial performance, which was of scarce significance in the context of world trade, has deteriorated still more in recent years.

The continent’s participation in the world’s industrial value added rose from 0.7 percent in 1970 to one percent in 1982, but fell back to 0.8 percent in 1994.

In many African countries the majority of industrial plants are working at less than 30 percent of their installed capacity.

It was hoped that the structural adjustment programmes would revive industrial growth and promote exports, but their effect on the industrial sector has been negative, unleashing fierce polemics over the consequences of trade liberalisation in Africa, lamented Ontiri.

Africa’s export sector continues its virtual dependence on commodities, as clearly demonstrated by a statistical breakdown by individual items taken from the U.N. Monthly Bulletin of Statistics.

In 1993 food, beverages and tobacco accounted for 19.4 percent of exports, edible oils, fats and other raw materials except petroleum 9.1 percent, mineral combustibles and derivatives 57.3 percent, chemicals 4.1 percent, machinery and transport equipment 2.5 percent, other manufactures 7.6 percent.

Ontiri identified the economic woes of Africa in the slow growth of its Gross Domestic Product and uncertainty for the future, the scarce progress being made by industry, the relatively static structure of trade, the limited progress in diversification and a drop in participation in world trade.

To remedy the situation, the Nigerian economist proposed a rapid improvement in productivity backed by a massive expansion of the infrastructure and clear advances in the development of human resources.