Credit: UNIDO

By Li Yong
VIENNA, Sep 23 2019 (IPS)

When world leaders gathered in New York for the 70th session of the General Assembly back in 2016, and proclaimed the period 2016-2025 as the Third Industrial Development Decade for Africa (IDDA III), it reaffirmed the importance of industrialization in supporting Africa’s own efforts towards sustained, inclusive and sustainable economic growth and accelerated development.

Since the launch of this Decade, and the call for the UN Industrial Development Organization (UNIDO), to develop, operationalize and lead the implementation of IDDA III together with our partners, the African Union Commission, the New Partnership for Africa’s Development and the Economic Commission for Africa, much has evolved in the region.

The continent’s collective GDP is expected to stand at $2.6 trillion, and consumer spending estimated at $1.4 trillion in 2020, with 50 per cent of Africans living in cities by 2030. These figures show the astounding prospects for a continent that is the most youthful.

Digital transformation is also growing – the World Bank has estimated that digital transformation will increase growth in Africa by nearly 2 percentage points per year and reduce poverty by nearly one percentage point in Sub-Saharan Africa.

The potential of digital technologies for socio-economic development is being taken up and has led to many technology-based start-ups and tech hubs in Africa. The African Continental Free Trade Area (AfCFTA), the largest free trade area in terms of participating countries, is expected to lead to greater exports, higher value-addition in manufacturing and services, and to bring about a more diversified intra-African trade opportunity for the continent with benefits spilling over to small and medium-sized enterprises in Africa.

Despite growth rates in Africa still not having reached the 7.0 per cent that would be required to pull the continent’s populations out of poverty, optimism for Africa has not diminished. Extreme poverty in Africa has started to decline, and it is anticipated that if the trend continues, the number of Africans living in extreme poverty will reduce by 45 million by 2030.

The rapid deployment of advanced technologies through the Fourth Industrial Revolution provides a window of opportunity to help transform the landscape of manufacturing in Africa.

LI Yong. Credit: UNIDO

The UNIDO Industrial Development Report 2020, a forthcoming flagship publication on the Fourth Industrial Revolution, to be launched in November this year will show that advanced digital production technologies applied to manufacturing production offer huge potential to advance economic growth and human well-being whilst safeguarding the environment.

This study taps into existing knowledge on the priorities for digitalization for Africa and highlights a two-pronged approach for manufacturing to remain a valid and feasible development path: one of which refers to the need for Africa to enhance readiness for the more digital future, whilst building industrial capabilities, through improved access to broadband and developing technical skills and technology hubs.

The limitation in basic infrastructure, including access to clean, reliable and affordable energy, human capacities and skills, will need to be addressed. Autonomous systems in manufacturing are likely to bring about higher demand for human capital qualified in science, technology, engineering and math (STEM).

Such growing demand polarizes the labour force by increasing the share of employment in high-wage jobs and decreasing the share of employment in middle-or-low wage jobs. It can deprive Africa of job opportunities, where low-paid jobs are concentrated and human capital with strong digital skills is in shortage.

Due to the lack of access to new technologies, knowledge, information, and infrastructure, the technology and skill gaps between Africa and developed countries could be widened with the rapid onset of the Fourth Industrial Revolution, potentially implicating local small and medium-sized enterprises that will also require more support in technological training and enterprise innovation to be competitive in the global market.

UNIDO will aim to support its Member States in Africa to transform into “more diversified knowledge-based economies” through cooperation in technology transfer, innovation, and infrastructure development. We will further leverage on our ongoing Programme for Country Partnership (PCP) to mobilize resources for inclusive and sustainable industrial development.

This includes supporting the development of necessary physical information and communications technology infrastructure, which is pivotal for the digitalization requirements of the Fourth Industrial Revolution.

As we support the development of Africa’s industrial base, working in collaboration with our partners in the UN development system, such as FAO, ILO, ITC, UNCTAD and UNEP, we will continue to support the creation of green and decent jobs through initiatives such as the Green Job Programme. Drawing on our knowledge base and expertise in industrial development, there is scope to further explore the application of digital technology and mini-grids to support clean, reliable and affordable electricity access in Africa, which will not only serve electricity demand for households as well as for productive use.

We will also learn from our experiences in digital learning platforms to support human capital development. In Southern Africa, UNIDO and the Government of Finland have piloted programmes in virtual reality training, which are being replicated in Malawi, Zambia, and Zimbabwe.

By using mobile 3D teaching platforms, virtual reality is helping forestry students learn to operate chainsaws in a safe environment. In Liberia, UNIDO, with the support of the Government of Japan and in partnership with the Japanese company Komatsu, has deployed connected technology and innovation in its production facilities, which has enabled labour market-oriented training programmes in excavator operation and basic service training to be provided, particularly for youth and women.

As world leaders gather in New York again for the General Debate of the 74th session of the United Nations General Assembly, September 23-27, alongside the historic SDG Summit, to take stock of where we are and what we need to do to achieve the 2030 Agenda for Sustainable Development, UNIDO together with its key development partners, the African Union Commission, the UN Economic Commission for Africa, the African Development Bank, the Afro Champions Initiative, the African Export-Import Bank and the International Telecommunications Union will leverage its partnership to support innovation and infrastructure development in Africa.

*LI Yong, Director General of the United Nations Industrial Development Organization (UNIDO), has had an extensive career as a senior economic and financial policy-maker. As Vice-Minister of Finance of the People’s Republic of China and member of the Monetary Policy Committee of the Central Bank for a decade, Mr. Li was involved in setting and harmonizing fiscal, monetary and industrial policies, and in supporting sound economic growth in China.

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By Li Yong and Hong Joo Hahm
Oct 5 2018 (IPS)

The business case for making our economy more sustainable is clear. Globally, transitioning to a circular economy – where materials are reused, re-manufactured or recycled-could significantly reduce carbon emissions and deliver over US$1 trillion in material cost savings by 2025.(1) The benefits for Asia and the Pacific would be huge. But to make this happen, the region needs to reconcile its need for economic growth with its ambition for sustainable business.

LI Yong

These imperatives underpin the 5th Green Industry Conference held in Bangkok this week, hosted by the United Nations Industrial Development Organization (UNIDO) in partnership with the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Royal Thai government. High-level policymakers, captains of industry and scientists gathered to discuss solutions on how to engineer waste and pollution out of our economy, keep products and materials in use for longer and regenerate the natural system in which we live.

The goal is to embed sustainability into industries which we depend on for our jobs, prosperity and well-being. Action in Asia and the Pacific could make a major difference. Sixty percent of the world’s fastmoving consumer goods are manufactured in the region. Five Asia-Pacific countries account for over half of the plastic in the world’s oceans. The region’s material footprint per unit of Gross Domestic Product is twice the world average and the amount of solid waste generated by Asian cities is expected to double by 2025.

Hong Joo Hahm

With these goals in mind, the United Nations is working with governments and businesses to support innovation and upgrade production technologies to use less materials, energy and water. UNIDO is engaged across industrial sectors, from food production to textiles, from automotive to construction. Over the past twenty-five years, its network of Resource Efficient and Cleaner Production Centres has helped thousands of businesses to “green” their processes and their products. The Global Cleantech initiative has supported entrepreneurs to produce greener building materials. Industrial renewable energy use is being accelerated by the Global Network of Sustainable Energy Centres. New business models such as chemical leasing help reduce chemical emissions. And the creation of eco-industrial parks has contributed to the sustainable development of our towns and cities.

In Asia and the Pacific, the UN is intensifying its efforts to reducing and banning single use plastics. The Platform for Accelerating the Circular Economy is implementing programmes to reduce plastics consumption, marine litter and electronics waste, and encourage sustainable procurement practices. UNESCAP is identifying opportunities in Asian cities to return plastic resources into the production cycle by linking waste pickers in the informal economy with local authorities to recover plastic waste and reduce pollution.

The 5t h Green Industry Conference is an opportunity to give scale to these efforts. The gap between our ambition for sustainability and many business practices is significant. So it’s essential for best practice to be shared, common approaches coordinated, and success stories replicated. We need to learn from each other’s businesses to innovate, sharpen our rules and increase consumer awareness. Let’s step up our efforts to build a circular economy in Asia and the Pacific.

(1) World Economic Forum, Towards the Circula r Economy. Available from http://www3.weforum.org/docs/WEF_ENV_TowardsCircularEconomy_Report_2014.pdf

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By Li Yong
VIENNA, Sep 24 2018 (IPS)

Since the turn of the millennium, Africa has experienced a steady and unprecedented economic growth.

However, poverty continues for people across the continent, especially in the sub-Saharan region. Unemployment and inequality have remained high. The rural population and the urban poor, women and youth, have not benefited from economic growth.

African policymakers realize that, for the benefits of growth to be shared by all, there needs to be a structural transformation of the economy. Specifically, there is an acknowledgement that its composition should change, with increased shares of manufacturing and agro-related industry in national investment, output, and trade.

Manufacturing, thanks to its multiplier effect on other sectors of the economy, has always been one of the most important drivers of economic development and structural change, especially in developing countries. Manufacturing is an “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.

Recognizing this, the United Nations has proclaimed the period 2016-2025 as the Third Industrial Development Decade for Africa (IDDA III) in order to increase global awareness and encourage partnerships to achieve inclusive and sustainable industrialization.

Today, Africa has exceptional opportunities for industrialization.

In the next few decades, Africa will become the youngest and most populous continent in the world with a working age population expected to grow by 450 million people. Or close to 70 per cent of the total, by 2035.

With a rapidly growing population, and one of the world’s highest rates of urbanization, the middle class is on the rise too. This will drive consumption of consumer goods, creating a market worth USD 250 billion, set to grow at an annual rate of 5 per cent over the next eight years.

Industrialization, diversification and job creation in Africa, however, cannot happen without continental economic integration. The recent signing of the historic agreement for an African Continental Free Trade Area (AfCFTA) by 49 out of 55 countries creates an opportunity for inclusive and sustainable economic development, moving away from structural stagnation and commodity-based economics.

The AfCFTA agreement will create the world’s largest single, integrated market for goods and services, and a customs union that will enable free movement of capital and business travelers in Africa.

This will provide great business opportunities for trading enterprises, businesses and consumers, unlocking trade and manufacturing potential and further enhancing industrialization in Africa.

With the AfCFTA agreement, exports of processed or intermediate goods will increase rapidly, further opening the way to Africa’s economic transformation to dynamically-diversified economies and globally competitive industrial production locations.

Higher trade among African countries will also strengthen African regional value chains, making it easier for local small and medium-sized enterprises, which account for around 80 per cent of Africa’s businesses, to build competitiveness, supply inputs to larger regional companies, and participate in and upgrade to global value chains.

This will give unprecedented opportunities to exploit the full agri-business potential of the continent. Strengthening the continent’s agro-industries can generate high social and economic returns, create jobs in rural areas and for young women and men, as well as responding to the urgent need to ensure food security and poverty reduction.

By taking bold actions in advancing the agenda of the AfCFTA, using it as one of the best means of promoting industrialization, African countries are well-positioned to build an Africa that can become a strong link in today’s interdependent global economy.

Structural transformation, however, is never automatic. Political goodwill and commitments are a first important step; but a multi-pronged, action-based approach with partnerships at the heart, along with concrete industrial policies, is needed for this to become a reality.

That is why UNIDO has developed an innovative country-owned, multi-stakeholder partnership model to provide governments with a platform to bring together various stakeholders, including development finance institutions and the private sector, to mobilize large-scale resources, accelerate industrialization and achieve a greater development impact.

Using this Programme for Country Partnership (PCP) approach, and helping governments to identify priority sectors based on prospects for job creation, strong links to the agricultural sector, high export potential and capacity to attract investment, UNIDO has already started assisting Ethiopia, Senegal, Morocco and other countries in Asia and Latin America in achieving their export goals and enabling the manufacturing sector to compete on the increasingly globalized market.

Now more than ever, such innovative schemes and mechanisms for enabling partnership building and resource mobilization for sustainable industrial development are needed to address the urgent need for structural transformation in Africa and seize the opportunities offered by the AfCFTA.

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By Li Yong
VIENNA, Sep 18 2017 (IPS)

Since 2000 the continent of Africa has recorded impressive rates of economic growth. This remarkable performance has been largely driven by the prolonged commodity boom and development assistance. While the continent shows great diversity in the socio-economic trajectories of its countries, growth rates have generally masked an underlying lack of structural transformation, which is needed to achieve socially inclusive and environmentally sustainable development.

Wherever industrialization has occurred, it has been a reliable force in steering economic diversification, and has contributed to developing, strengthening and upholding the framework conditions for competitive economic growth and development.

Over several decades, some developing countries – mainly in Asia – have been able to industrialize. Despite repeated attempts, Africa has not. If we look at the shares of global manufacturing value added for 2014 we see that the Asia and Pacific region’s share was 44.6%, whereas Africa’s share was just 1.6%. Sub-Saharan Africa is still the world’s least industrialized region, with only one country, South Africa, being considered industrialized.

African countries cannot achieve sustainable development without an economic structural transformation. They seek to change the structures of their economies by substantially increasing the shares of industry – especially manufacturing – in national investments, national output, and trade. African countries realize that they must undergo this structural transformation in order to address a range of interconnected challenges.

One of these is the growth of the population. More than half of the continent’s 1.2 billion-strong population is under the age of 19, and almost one in five are between 15 and 24 years old. Each year, 12 million new workers join the labour force. The continent’s young people need the tools and skills to take their lives into their own hands. Industrialization is the key to ensuring that the continent’s fast-growing population yields a demographic dividend.

Another associated challenge is migration. Many of Africa’s most ambitious and entrepreneurially minded young people feel compelled to join migration flows to the North. No country can afford to lose this potential. Migration remains a complex issue but industrialization can address one of the root causes by creating jobs in the countries of origin.

In addition, the threat posed by climate change hangs heavily over countries where agriculture remains the primary employer. Africa needs to apply and develop green technologies and channel investments into resource efficiency and clean energy. These investments can lower the cost of bringing power to rural areas, while contributing to global efforts to mitigate climate change.

Africa must industrialize, and it must do so in a socially inclusive and environmentally sustainable manner. Previous efforts to foster sustainable economic transformation in Africa have failed, and the need for a new approach is clear. What is needed now is a broad-based and country-owned process that leverages financial and non-financial resources, promotes regional integration, and mobilizes co-operation among Africa’s development partners.

This is the motivation behind the United Nations General Assembly’s proclamation of the period 2016-2025 as the Third Industrial Development Decade for Africa (IDDA III). The United Nations Industrial Development Organization (UNIDO) is leading the new approach for the IDDA III. We are fully supporting the focus on partnerships for resource mobilization, and offer an already tried and tested example of how to implement the approach: the Programme for Country Partnership (PCP).

UNIDO’s PCP combines technical assistance with policy advice, standards and investments leveraging to support the design and implementation of industrialization strategies and instruments that can make a sizeable impact on a country’s development.

Launched in 2014, the model is being successfully implemented in two African countries – Ethiopia and Senegal – as well as in Peru. The PCP is aligned with each country’s national development agenda and is a multi-stakeholder partnership model. It is designed to build synergies with ongoing government and partner interventions, while mobilizing funds and leveraging additional investment towards sectors with high growth potential.

The PCP focuses on a select number of priority sectors or areas that are essential to the government’s industrial development agenda. Priority sectors are typically selected based on job creation potential, availability of raw materials, export potential and ability to attract investment.

The PCP approach is designed to create synergies with partner programmes/projects relevant for industrial development in order to maximize impact. One particular area of focus is strategic partnerships with financial institutions and the business sector in order to leverage additional resources for infrastructure, industry and innovation, as well as knowledge, expertise and technology.

Mainstreaming of the PCP approach to other African countries can be a significant contribution to the successful implementation of the Third Industrial Development Decade for Africa. UNIDO stands ready to support Africa on its path to inclusive and sustainable industrial development.

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Credit: Bigstock

By Li Yong
VIENNA, Sep 30 2016 (IPS)

World leaders are recognizing the crucial role of industrialization in eliminating absolute poverty and promoting sustainable development. This was especially evident at the recent G20 Summit in Hangzhou, China, which I attended as a member of the delegation of the United Nations Secretary-General, Ban Ki-moon. The gathering demonstrated the growing consensus on the need for renewed efforts to facilitate inclusive and sustainable industrialization as one of the main drivers of economic growth and structural transformation in Africa, and especially the least developed countries (LDCs).

Before the summit, the United Nations Industrial Development Organization (UNIDO), which I currently head, received a request from the G20 Presidency to take the lead on a report on Industrialization in Africa and LDCs.

LI Yong

The report, which benefited from contributions from other international organizations and financial institutions, highlights the important benefits of inclusive and sustainable industrial development. This extends to inclusive and sustainable structural transformation and industrialization for diversifying the economy, creating jobs and building equitable societies, without prejudice to the environment. It also shows the benefits of leveraging trade in intermediate goods, investment, and regional and global value chains.

The report also highlights the new Programme for Country Partnership approach, which UNIDO is currently piloting in Ethiopia, Peru, and Senegal, as a model for pursuing inclusive and sustainable industrialization at the country level. This approach brings together actors in a multi-stakeholder platform to coordinate and optimize the contribution of each other. The objective of such a partnership is to accelerate and deepen the impact of the national industrial development agendas.

The report recommended that the G20 Group of leading economies promotes inclusive and sustainable industrialization through various mechanisms, such as knowledge-sharing platforms for peer-to-peer learning, the sharing of best practices, policies, measures and guiding tools as well as multi-stakeholder discussions.

Other recommendations included calls for the G20 to support agriculture and agribusiness development; to deepen, broaden and update the local knowledge base; to encourage industrialization through trade and deeper regional integration, and to promote the new industrial revolution, including the internet of things, big data, cloud computing, 3D printing, nanotechnology and biotechnology, in order to improve productivity.

The summit in Hangzhou demonstrated the commitment of G20 countries to achieving the Sustainable Development Goals. These 17 goals, and their associated targets, frame the 2030 Agenda for Sustainable Development with the vision and ambition to both achieve a balance among the environmental, social and economic dimensions of sustainable development, and to integrate them into a universal and transformative framework for global cooperation and action.

A communiqué issued by G20 Leaders announced a package of policies and actions designed to achieve strong, sustainable, balanced and inclusive growth. These include the launch of the G20 Initiative on Supporting Industrialization in Africa and LDCs. The communiqué also emphasized the need to tap into the potential of new sources of growth and to harness the opportunities brought about by innovation, the new industrial revolution and the digital economy.

It became evident during the interactions at the summit that the business community has a major role to play in the uptake of new innovative technologies and business practices. However, government support in addressing market failures is also crucial for increasing the social and environmental impact of new technologies and practices along the value chain.

Translating the G20’s commitment to investment in sustainable development into reality will depend on the ability of governments to create the right mix of incentives for private financing, as well as on the roles of leaders in leveraging multi-stakeholder partnerships in a coordinated and effective way.

I am especially pleased that the consensus reached in Hangzhou is based also on the principle of inclusiveness, ensuring that economic growth serves the needs of everybody and that no one is left behind. This is reflected in the support that the G20 Member States expressed for the initiative on industrialization in developing countries, especially in Africa and LDCs.

I was pleased to see G20 leaders reiterate the support for enhancing the role of small and medium sized enterprises (SMEs), and women and young people in business growth. This includes the participation of SMEs in global value chains, an issue discussed during the B20 Summit. Therewith, the G20 has recognized the interconnectedness of economic development and the importance of public-private partnerships, and linking the business community to policy makers.

The world needs our joint commitment to defeat poverty and create shared prosperity. This is why we must all join hands and turn this commitment into action.

For further information, please see:

G20 Leaders Communiqué Hangzhou Summit
B20 2016 Policy Recommendations to the G20

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Smelter at the El Teniente mine, which produces 37 percent of Chile’s copper. Credit: Marianela Jarroud/IPS

By Li Yong and A.L. Abdul Azeez
VIENNA, Oct 30 2014 (IPS)

As representatives of the United Nations Industrial Development Organization (UNIDO), we are sometimes asked whether industrial development is still relevant to a world which many observers have claimed over the past decades to have entered the “post-industrial age”. Our answer is always an emphatic “yes”, shaped both by the evidence of history and current events.

In the wake of recession and sluggish growth, policymakers globally are increasingly recognising the merits of industrialisation, both in developing and in richer countries.

The European Union, Japan, the United States and a few other countries have given greater prominence to reindustrialisation in their respective economic policies in recent years, while both middle-income countries and least developed countries have cited industrialisation as vital for their future prosperity.An integrated approach to society’s most urgent challenges must address all three dimensions of sustainable development - economic, social and environmental.

UNIDO promotes industrial development as the primary vector through which poverty can be eradicated, by enhancing productivity, stimulating economic growth and generating associated increases in incomes and employment. We cooperate with governments and private sector actors to harness the investments necessary to strengthen the productive and trade capacities of our member states.

History has shown that industrialisation has an immense potential to propel upward social mobility; as a result of the Industrial Revolutions in England and the United States in the 19^th and 20^th centuries, millions of people were lifted out of poverty. Latterly, industrialisation has been central to the booming growth enjoyed by East Asian economies, and especially China, where GDP per capita has risen over 30-fold since 1978.

However, UNIDO recognises that while industrialisation has often been the motor for positive economic change, this has sometimes been achieved at the expense of social inequality and environmental degradation. Industrialisation must therefore be embedded in a socially equitable and environmentally sustainable policy framework if it is to achieve the desired developmental impact.

An integrated approach to society’s most urgent challenges must address all three dimensions of sustainable development – economic, social and environmental. At UNIDO’s 15^th General Conference in Lima, Peru, in December 2013, the organisation’s 172 member states unanimously adopted the Lima Declaration, giving UNIDO a mandate to promote Inclusive and Sustainable Industrial Development (ISID) as the principal means of realising their industrial development policy objectives.

The achievement of ISID represents UNIDO’s vision for an approach that balances the imperatives of economic growth, social cohesion and environmental sustainability.

The world is united in regarding poverty eradication as the overarching objective of development, and UNIDO’s member states have placed it at the core of ISID. Industrial development has been shown to be a key driver of processes which make a difference to the world’s poorest citizens.

Research from UNIDO demonstrates that countries with a larger share of industry in their economies perform better with regard to a wide range of indicators corresponding to social well-being, such as income inequality, educational opportunities, gender equality, health and nutrition. The contribution that ISID could make to youth empowerment through skills development and youth entrepreneurship is now widely recognised.

Similarly, environmental sustainability is also central to ISID. UNIDO promotes Green Industry and the use of clean technologies in industrial production; greater resource and energy efficiency; and improved water and waste management. Not only do these measures reduce harmful emissions and waste, but they also offer a significant potential for increased competitiveness and employment opportunities.

ISID also prioritises creating shared prosperity. This means that the benefits of growth must be inclusive if they are to improve the living standards of all women and men, young and old alike. Employment opportunities, particularly in the industrial and agro-industrial sectors, must be available to all members of the workforce, thus building greater prosperity and social cohesion.

As we approach the end of the Millennium Development Goals (MDG) framework in 2015, the international community has been reflecting on how best to address outstanding challenges. Although the MDGs achieved some remarkable successes, for example in terms of halving extreme poverty and increasing access to education and sanitation, much still remains to be done in order to achieve “the world we want”.

The post-2015 development agenda currently being discussed by the international community aims to address the many development issues that still need to be resolved. The Open Working Group, which was tasked with formulating the Sustainable Development Goals (SDGs) that will be at the core of the post-2015 development agenda, has recognised the importance of inclusive and sustainable industrialisation by including it as one of the 17 Goals it has proposed, clustering it in Goal 9 with resilient infrastructure and innovation.

Given the ambitious scope of the post-2015 development agenda and experience gained over MDGs, the focus of international deliberations has now shifted from the determination of the SDGs to addressing the means of implementation.

Recognising the budgetary constraints imposed by the prolonged period of stagnant growth and recession experienced in many countries, the recent report of the International Committee of Experts on Sustainable Development Financing acknowledged the necessity of mobilising alternative resources for the implementation of the SDGs, including those of the private sector.

UNIDO has already worked extensively on securing greater engagement from private industry in international development, and over the past year was honoured to have been selected to co-lead the United Nations System’s consultations on engaging with the private sector. As the organisation mandated to promote industrial development, which is quintessentially a private-sector activity, we are well-placed to partner with and promote private enterprise, and look forward to achieving increased progress in this field in the future.

Industrialisation has consistently transformed living standards throughout modern history. ISID is the next phase in its evolution. The overarching goal of the post-2015 development agenda is to eradicate poverty and improve the quality of life of the world’s poorest citizens.

This is a challenge which UNIDO is well-placed to meet in partnership with governments, the global development community, business and civil society.

Edited by Kitty Stapp

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