According to the 2023 Economic Report on Africa, in the last two decades, African economies have been shaken by multiple and recurring global shocks that hit key macroeconomic indicators.
Other major findings state that global economic downturn, elevated inflationary pressures, climate change and declining financial conditions reduced Africa’s growth from 4.6 percent in 2021 to 3.6 percent in 2022, though it was projected to rebound to 4.1 percent in 2023.
In addition, the economic fundamentals of most African economies have not changed much in the last three decades and this is a major concern in relation to the continent’s capacity to withstand and recover from these frequent and severe setbacks. Investment, domestic savings, government revenue and fiscal structure remain same, while urbanisation, population density and unemployment continue to rise.
One main obstacle to Africa’s development is the continent’s industrial infrastructure gap. Inadequate and unreliable electricity grids, poor transportation networks and limited communication systems significantly impede the smooth operations of industrial facilities. Additionally, high energy costs burden manufacturers and make them less competitive in the global market.
In light of these hindrances, Africa has been confined to the profile of a continent brimming with untapped potential yet struggling to translate its resources into tangible economic growth and prosperity.
In this context, the question of industrialisation and its multifaceted benefits looms large: Can it be the silver bullet for unlocking Africa’s true value and propelling it towards long-awaited boom?
Industrialisation is a concept that several may find complex to understand but simply put, it is the process of transforming the economy of a nation or region from a focus on agriculture to a reliance on manufacturing.
Mechanised methods of mass production are an essential component of this transition, and the positive returns include economic advancement, efficient division of labour,and technological innovation.
It is said that industrialisation began in the 18th Century in Great Britain.
The Industrial Revolution ignited a global transformation that continues to shape our world today. Scientific inventions, abundant resources, skilled workers, and supporting policies fuelled the rise of early pioneers like Britain, the United State, Germany, France and even Japan, laying the foundation for a tech-driven, globalised world and its widespread as well as long-standing impact.
Challenges like environmental degradation, labour exploitation and social inequality marred the process, but its immense contribution to macroeconomic growth, modernisation and a better standard of living remains undeniable.
While industrialisation has been a cornerstone of transformation in developed nations, most African countries still lack the bustling facilities and vibrant industrial landscapes that characterise strong economies, in spite of its significant manufacturing capability and promising trajectories.
Despite these setbacks, there is hope. Leading multilateral financial institutions such as Africa Finance Corporation (AFC), African Export-Import Bank (Afreximbank) and African Development Bank Group (AfDB) are lending their voices and resources to facilitate enabling infrastructure and trade towards Africa’s economic growth and development.
The AfDB supports the sustainable development of African countries through its High5 priority areas: ‘Light Up and Power Africa’, ‘Feed Africa’, ‘Industrialise Africa’, ‘Integrate Africa’, and ‘Improve the Quality of Life for the People of Africa’. Driven by its bold vision, AfDB aims to unlock Africa’s industrial potential, targeting a doubling of its industrial GDP by 2025. This ambitious pursuit with a focus on empowering the private sector to spearhead continental industrialisation, is expected to propel overall GDP to $5.6 trillion. Over the next 10 years, AfDB is set to facilitate cumulative investment of $56 billion toward implementing six flagship industrialisation programs.
The AfDB became a shareholder in AFC in 2018, and both organisations have been co-investing in multiple transformational infrastructure projects, including a $350 million long-term line of credit signed in December last year, to support urgently needed financing. The AFC, a proven partner of choice for private sector-led infrastructure investment across Africa, has 42 member countries and has invested $12.7 billion across Africa since inception. Similarly, Afreximbank, mandated to finance and promote intra-and extra-African trade, recently committed $1 billion, as a founding member of a new private-sector focused Alliance for Special Agro-Industrial Processing Zones (SAPZ) to transform Africa’s underdeveloped rural areas into agro-industrial corridors of prosperity. Other founding members include the AfDB Group, the Islamic Development Bank Group (IsDB), the United Nations Industrial Development Organisation (UNIDO) and ARISE Integrated Industrial Platforms (IIP) and its partners.
A growing number of African countries are also recognising the importance of industrialisation and are implementing policies to attract local and foreign investment as well as promote extensive increase in manufacturing. These policies support the development of Special Economic Zones (SEZs), which are geographically defined areas within a country that offer businesses special incentives such as tax breaks, flexible regulations and improved infrastructure.
South Africa launched its SEZ programme in 2007, and with strong institutional frameworks and a clear vision, subsequently grew to 11 designated SEZs by 2021.
Gabon has also built an ecosystem serving its industrialisation goals, playing a crucial role in driving national growth and establishing the country as a leader in the wood processing sector.
There are three SEZs in Gabon all managed by Gabon Special Economic Zone (GSEZ) – GSEZ Nkok, GSEZ Ikolo and Geez Mpassa-Lebombi. GSEZ Nkok was launched in 2010 and brings together 144 companies from 17 countries operating in 22 industrial sectors, including a cluster dedicated to wood processing.
According to available 2023 data, Gabon’s forestry economy grew by almost 400 percent between 2010 and 2021, jobs in the sector increased from 8,400 in 2010 to 30,000 in 2022, and contribution to the national GDP from the timber sector rose from 116 billion FCFA to 444 billion FCFA in 11 years.
These achievements have seen Gabon transition from a mere log exporter to a leading global producer and exporter of veneer. GSEZ is a public-private-partnership entity between ARISE Integrated Industrial Platforms (IIP) and the Government of Gabon.
ARISE IIP is a leading pan-African developer and operator of tailor-made and sustainable Integrated Industrial Platforms and SEZs across Africa.
The organisation identifies industrial gaps in African countries and unlocks value in key sectors by enabling local transformation as well as maximising production, efficiency and cost, which in turn generates local value addition.
ARISE IIP’s public-private-partnership model with governments and investors enable the company to execute large scale projects that transform value chains and industrialise countries in an environmentally sustainable way. On the heels of its success in Gabon, ARISE IIP has expanded its reach to Benin, Togo, and Chad where it is already recording equally solid results.
In 2022 alone, ARISE IIP processed 1,088,714m² of wood in Gabon. In Togo, the country is now leading in organic soya exports to Europe, as well as indian and American markets, and produces 50,000 tonnes. of soya in a year out of ARISE IIP’s SEZ, Plateforme industrielle d’Adetikopé (PIA). Over the period of 2022 and 2023, over 196,000 Made-in-Benin clothes produced at ARISE IP’s Glo-Digbé Industrial Zone (GDIZ) were sold abroad, while 102,000+ were sold locally. Also in Benin, 1,000 Beninese are trained. in textile trade while working in the zone.
Set on its commitment to drive industrialisation and make Africa thrive, this sustainability advocate/awardee has been called upon to establish an SEZ in Sierra Leone and is also in various stages of discussions and development with Rwanda, Congo-Brazzaville, Democratic Republic of Congo, Côte d’ivoire, and Nigeria.
In parallel, Nigeria is one of the countries in Africa seeking to leverage industrialisation and SEZs to unshackle its economic treasure-trove. At the last Nigerian Economic Summit held in Abuja, President Bola Tinubu mentioned that it is possible for the Nigerian economy to grow to 51 trillion by 2026 through construction of megacities, fully connected road, rail, gas, and fibre optic networks, and the establishment of thriving industrial zones in every part of the country before 2030.
It is no surprise that ARISE IIP once again entered into a public-private partnership in 2022, this time with the Ogun State Government of Nigeria to design, finance, build and operate industrial Platform Remo (IPR) an integrated, world-dass and sustainable Free Trade Zone (FTZ) in Sagamu, Ogun State.
Strategically located within the Remo Economic Development Cluster, an AfDB Designated Special Agro-Industrial Processing Zone (SAPZ) and an aerotropolis; Gateway International Airport the second international airport in South-West Nigeria, IPR presents promising prospects. Its plans include industrial, commercial, residential and logistics zones, natural gas supply; storage solutions, operations and maintenance facilities and other key utilities. Said possibilities further skyrocket, when one considers ARISE IIP’s track record of success, as well as Ogun State’s 1.2 million hectares of arabie land and its prime positioning interconnecting Lagos, the rest of Nigeria and West Africa (aptly nicknamed Gateway to Nigeria’).
Do we dare to believe that the future of Africa’s industrialisation is bright? Of course, existing challenges must be overcome or mitigated, constructive effort and investment must continue and technology, regional cooperation, and e-commerce must be embraced. But in view of global disruptions to established supply chains and trade routes, is this finally a timely opening for Africa to emerge as one of the strongest and fastest-growing industrial regions in the world, backed by its abundant possession of land, labour and raw materials?
For Nigeria and Africa as a whole, can our industrialisation ambitions and roadmap weather the storms of global inflation, trade disruptions, and climate change? Will 2024 be a defining year to demonstrate resilience and forge a sustainable industrial path? While historical models like China’s SEZs offer valuable insights, can Africa implement unique models tailored to its diverse landscapes and resources? Will partnerships and collaborative efforts stall attendant risks and accelerate industrial growth in 2024 and beyond?