The Travails of Industrialization and Industrial Growth in Africa

The Joint Yearly Summit Meeting of African Union (AU), the United Nations Economic Commission for Africa (UNECA), Addis Ababa, and the African Ministers with responsibility for Finance, Economic Planning, Industry, Trade and Investment, respectively, was held in Abidjan, Cote d’Ivoire on Monday 25th March 2013.  The Theme of the Summit meeting is “Industrialization and Industrial Growth in Africa”   The Conference was devoted to Africa’s challenges or predicament in achieving real accelerated industrialization, industrial growth and or self-sustaining competitive industrial economy in Africa. The Meeting reviewed Africa’s past Industrial, Economic, Finance and Political Policies on industrialization, the development of sustainable competitive industrial and how to use the manufacturing sector of the economy to create wealth, create jobs and generate real employment in African countries. The Meeting also reviewed the past effort to attract foreign investment in Africa as a strategy to speed up industrialization and economic growth in the Continent.  In the light of the above reviews, the Summit resolved as follows, namely:

• that the future industrial growth in Africa is dependent on each country’s industrial transformation ability to allow competitive industrial production base or industrial economy to take root in each African country,
• the need to address the failure of the “import substitution policies” of the 1960s and 1970s following the termination of Colonial Rule in Africa,
• the need to re-examine why the “change from public to private sector -privatization industrial policies of the 1980s and 1990s” intended to reduce Government control of the economy, since it was thought that “Government has no business in business”, now that the resulting “private sector led manufacturing sector” of the economy in Africa has only contributed very little or marginally to the GDP  ranging from 6% in 1970s when the “import substitution policies” were in place to only 14%  in the 1990s when the private sector led industrialization policies held sway,
• the challenges of prevailing political instability, insecurity and corruption on industrialization in Africa, and what should be done to promote savings and real foreign investments into the Continent and for a successful industrialization in Africa and,
• the need to ensure that Africa’s new Policy on industrialization is not dictated and or manipulated by outside forces and or outside economic interests.

The Summit unfortunately laid a lot of emphases on the new Policy or Strategy for Foreign Investments as a cure all of Africa’s industrialization. However, the Summit correctly, in my view, pointed to the imperative of providing sustainable economic development supporting infrastructures such as industrial cluster areas (a concept that needs further study for its implications for a Continent with little domestic capacity for technology innovation), energy and power, in particular, electrical power, security, political stability, and other incentives for foreign investments. Now that Foreign Investments related Industrial Policy in Africa has become the “new-Man” Africa’s Industrial Policy in town. One hopes that the crucial issues such as good governance, corruption and purposeful leadership in Africa can be successfully addressed.

As the Summit came to an end and everybody seems to go home happy and satisfied, there is                                                                                                                                        one major and most critical challenge which the Summit seemed not to address, but which may determine whether there is real industrialization or no industrialization at all in Africa. This challenge, which has to do with industrial infrastructure support, can be characterized as follows, namely:

• having well trained scientists, engineers, technologists, technicians and craftsmen with requisite production skills for industrial goods in particular capital goods including power equipment /machine design and fabrication skills, tool and die making, machining, welding, mold making, instrument making, materials processing, steel re-melting and rolling, casting, among other skills and less preoccupation, as at present, with Academic degrees / Diploma and paper qualifications. The training of the required scientific, engineering and technical manpower for competitive industrial goods production should be undertaken in well-equipped Universities, Polytechnics / Colleges of Technology, Technical Colleges and Crafts Schools, both with relevant teaching and research infrastructure, including engineering and fabrication workshops and laboratories, libraries etc. all requiring heavy financial and related resources investment, it must be understood that modern technology and capital goods production is not a Tea party as found by Europe, North America and Japan, the top World industrial economies.
• having domestic R&D and Technology Development institutions to build and develop domestic endogenous capability and or capacity in Africa’s  economies for the conversion of scientific knowledge and or inventions into industrial goods and for the production of modern techniques  (technologies) of production and services in the economy and to undertake  sustainable technology innovation in Africa,
• having Small and Medium Industrial Enterprises (SMEs) being  established in various areas of industry in both the public and private sectors of the economy to produce the feedstock, for use by large manufacturing industries in Africa, such as power equipment and machine components, engineering tools, transmission cables, insulators, electric motors, small scale electric generators, among others in Africa’s economy and ensuring that SMEs have the type of operational infrastructure, earlier mentioned above for Polytechnics, Colleges of Technology and Technical Colleges to drive technology innovation at their workshop floor of operations, and
• having Modern Business Schools in Africa ready to expand their curriculum to accommodate the training in Africa of Africans in for example Electrical Power Systems Management, (it being known that Electrical Power is the main driver of a competitive manufacturing sector of an industrial economy) and the professional management requirements for globally competitive industrial production and services industries. The Staff of such Business Schools should be dominantly business professionals with long experience and outlook in the building and management of various aspects of business in production and services industries and not necessarily Academics with little or no experience in real business management in a serious industrial economy.

                  Examination of past industrial Policies in Africa:

 In historical perspective, it will be useful to examine Africa’s past industrial Policies, starting with the “Import Substitution and Backward Integration Policy” of 1960s to 1970s for charting the way forward.

        Import Substitution and Backward Integration Industrial Policy of 1960s-1970s:

   The above Industrialization Policy was put in place immediately after the termination of Colonial Rule in Africa. The Policy was to allow African countries including Nigeria to produce in their respective economies some of the industrial goods in particular consumer items which were being imported from industrial nations during the Colonial Period such as beer, beer glass bottles, biscuits, cornflakes (NASCO type), tooth picks, cement, ceramic wares, textiles, asbestos roofing sheets, etc, none of them exportable, and using the abundant primary raw materials in respective African countries to do so. This Policy however failed because it did not address the non-existence of domestic endogenous capability and or capacity required to produce and manufacture the production technologies for these selected consumer items in Africa’s economy. Consequently well over 90 % of the production machinery, equipment, and instruments as well as production personnel were imported.  An attempt in the 1970s for instance to set up a factory in one African country in order to build some domestic capacity to produce through technology innovation, machine fasteners (bolts, nuts and hinges) failed because of Government policy support against the competing importation of foreign produced bolts and nuts. However domestic endogenous capacity building in Africa, for the production, of modern techniques (technologies) of production and services in the economy is key to any sustainable industrialization. Without this domestic endogenous capacity it will be difficult for Africa’s scientists and engineers to undertake the commanding tasks of S&T in Africa’s economy. The “Import Substitution and Backward Integration Industrial Policy” failed in Africa because there were no domestic R&D, technology development/production and technology innovation institutions and agencies to support the “Policy”.

    Lagos Plan of Action (LPA) 1980 to address Africa’s Industrialization:

 In the late 1970s, the OAU (now AU) and United Nation’s Economic Commission for Africa (UNECA) realized the need to build domestic endogenous capability and or capacity to produce modern technologies and globally competitive industrial goods (capital and consumer items) in Africa and decided on a collaborative frame work in view of the heavy financial investments required for such a venture in each African country. This led to the drawing up, during a similar Summit in Lagos of African Ministers responsible for industrial and economic planning, of what came to be called a Lagos Plan of Action (LPA) in 1980.  Among the LPA policy priorities are:

• promoting the development and application of indigenous and other technologies in support of industrialization, the economy and national security of African countries,
• promoting the development and application of indigenous and other technologies for production of industrial goods including industrial materials, equipment, machines, industrial plants, etc. in African countries, and
• developing national capability and or capacity for sustainable technology development policies including technology transfer policies in Africa’s economies.

To implement the LPA Policies, the following African Collaborative technology capacity development Centers were put in place in selected African countries namely African Regional Center for Engineering Design and Manufacture (ARCDEM) located in Nigeria, African Regional Center for Technology (ARCT) in Senegal, African Institute for Technical Training and Research (AIHTTR) in Kenya, African Regional Organization for industrial Standardization (ARSO) in Kenya and African Regional Industrial Property Organization (ARIPO) in Zimbabwe, respectively. It is unfortunate that such laudable Africa’s collaborative initiatives on industrialization in the 1980s were not implemented and were allowed to wither away and die because of lack of political will, financial support and other necessary resources to actualize the laudable “Collaborative Policy”

      Private Sector-Privatization led Industrialization Policy, of 1980s-1990s in Africa:                                                                                                 

This Policy is best remembered by Nigeria’s failed Structural Adjustment Program (SAP) of late 1980s noted by its “cornbread” to substitute wheat imports now being resurrected by “cassava bread” strategy. This Policy is to let Government hands off industrial businesses to private Sector of the economy, which knows what business is all about and limit itself to provision of infrastructures and industrial policies as “Government has no business in business” they said. This Policy did not reckon that the so called Private sector led industrialization and establishments, in which Government is required to limit its role to only Policies in Africa, are no more than the outposts of industrial manufacturing establishments of industrial nations, which source their production technologies and industrial inputs including industrial materials from their home industries and economies in order to sustain their operations in Africa including Nigeria. Such private sector led industrial economy in Africa does not have at their workshop floor of operation the necessary R&D, technology development and technology innovation Divisions which drive industrialization and globally competitive industrial goods production.  It is therefore difficult if not impossible to use such manufacturing sectors operating in Africa to build national endogenous capacity for the production of modern technologies including power production technologies and industrial capital goods in Africa. This explains why such private sector led industrialization has failed up to date to industrialize Africa and or to create an industrial production base or contribute meaningfully to Africa’s GDP. Government itself, in Nigeria, now contracts out all her technology and industrial related projects to industrial nations. In the Summit in Abidjan, it is reported that the Import Substitution Policy contributed only 6% to the GDP while the Private Sector -Privatization Industrialization Policy struggled to contribute 14%, yet it is the Industrial economy that creates enormous wealth, provides most employment to the population, spreads wealth and combats poverty in a nation.  

                   Industrialization through Foreign Investment Policy:

This is a new Industrial Policy in town in Africa, since the turn of 21st century.  The foreign direct investments Policy which need to be fully thought out, and which took a lot of the time at the Summit in Abidjan are necessary and critical, if they are used to drive domestic manufacturing activities in Africa. Foreign investments if properly guided and controlled by Industrial Investment and Trade Policies can be used to build domestic endogenous capacity for production of modern technologies and industrial capital goods mostly missing in Africa’s economies. To achieve this, the Investment Policy must ensure that R&D, Technology development and Technology innovation activities are undertaken at the workshop floor of such industrial establishments in Africa and a mechanism put in place to ensure compliance. If these steps are not taken, such foreign industrial investments will end up as offshore export free zone production centers in Africa. Foreign Investment strategy succeeded in China, India, Brazil and South Korea, because local R&D institutions and agencies are closely linked up with such Foreign Industrial establishments to act as their R&D, engineering design and fabrication of components and spares, technology Innovation etc. take place at the workshop floor of their operations in the investing enterprises, in this way domestic capacity for the production of technologies through the process of learning by producing the relevant is promoted.

  Conclusions and Suggestions for a way Forward to industrialization in Africa:

In my recent Book on “Science, Technology and Economic Activities and Poverty in Africa: (Nigeria’s Experience, 1899-1999, as a Case Study)”, I made the following observations in relation to industrialization and economic activities in Africa, which I believe will assist countries in Africa to reappraise their respective modern technology and industrial development policies to facilitate the leapfrog into fast industrializing and fast growing nations such as India, Brazil and South Korea, namely that:        

• Import substitution industrial policies in Africa of 1960s -1970s failed because these policies did not provide for domestic endogenous capacity building for technology innovation in the national economy nor were there in existence any Research and Development (R&D), Engineering design and fabrication, Technology development and Technology Innovation Agencies to drive industrialization in Nigeria’s economy,
• Nigeria, like the rest of sub-Saharan Africa, saw Science and Technology activities primarily to begin and end with education and research in the disciplines of Science and Technology (Physical, Biological, Agricultural, Engineering and Medical Sciences) and problem oriented scientific research in Agricultural and Medical Sciences, respectively, with total exclusion of R&D, technology development and technology innovation as integral part of S&T activities in Africa’s industrial development,
• the inexplicable exclusion of rigorous R&D, Technology development/ production and Technology Innovation in Nigeria’s and by extension Africa’s economy, the critical and very important aspects of Sciences and Technology activities, is mostly responsible for Nigeria’s continuing lack of endogenous capability and or capacity to apply scientific knowledge and or scientific inventions in the production of the modern techniques of production and services and globally competitive industrial goods in Nigeria’s economy and by extension Africa’s economies, and
• Modern Technology is well known as the mother of Industrial Economy, wealth creation, employment generation and globally competitive industrialization.
• In the light of the above observations, (see also my recent Guardian Newspaper Opinion article, titled “Reversing the Failing Industrial Economy in Nigeria”), I wish to restate, namely that:
• proper integration and coordination of Science and Technology, Education, Industrial/Economic, Finance and Foreign Trade / Investment Policies, respectively, are imperative in order to achieve a coherent policy on industrialization and to create sustainable industrial production base in Nigeria,
• Science and Technology activities should emphasize not only the acquisition of scientific knowledge but also the capacity to apply that knowledge and or the inventions in production of goods and services in the economy and that vigorous endogenous capacity building for R&D, Technology development and Technology innovation in Nigeria’s economy is the way to go and that is what S&T activities are all about in industrial nations in particular, the top industrial nations of Europe, North America  and Japan,
• the resuscitation of Scientific Research Grants to the Academic Staff of the  Universities, where the large reservoir of our Scientific Research Personnel are domiciled, which was initiated in the 1970s when I was Chief Scientist to the Nigerian Council for Science and Technology (NCST) in Federal Cabinet Office, Lagos, and which was abandoned when I left the scene be re-established. The Science Research Grants were used as a strategy to link scientific research in the Universities to the industrial and economic problems of the country, 
• our educational training institutions in Science and Technology, particularly at the tertiary level, need to be reviewed to avoid proliferation of Universities and to allow proper mix of institutions such that the ratio of one University to four Polytechnics / Colleges of Technology to thirty Technical Colleges /Crafts Schools (1/4/30) is established as in industrial nations to enable Nigeria produce in quality and quantity the Scientific, Engineering and Technical Manpower particularly the production of  technologists , technicians and craftsmen including instrument makers, tool makers, mold makers, etc. needed to drive industrialization in Nigeria,
• the need to equip S&T manpower training institutions and the R&D and Technology innovation Agencies, respectively, with adequate Science, Engineering  and Technical Fabrication Infrastructure, including good quality and high standard  teaching and scientific research personnel, (in the case of Universities), and technologists, technicians, and craftsmen (in the case of Polytechnics, Colleges of Technology and Technical Colleges)  and equipment, machines, measuring and control instruments, engineering tools, well equipped engineering design and fabrication workshops, laboratories, production materials, well equipped libraries, etc. for their operations, and particularly,
• to always bear in mind that modern Technology is the mother of Industrial economy and that an industrial economy is the historic instrument for real wealth creation, wealth distribution and for combating poverty in any Nation.