A senior official of the Economic Commission for Africa (ECA) has told a committee of experts meeting in the Ivorian city of Abidjan ahead of African Finance Ministers to ignore the critics of resource-based industrialization.
ECA Director of Macroeconomic Policy Division, Emmanuel Nnadozie, said that Africa must capitalize on its resource endowment and the commodity price boom to transform its economy and ignore the criticism of resource-based industrialization.
Nnadozie said this when he presented a paper on Friday on “Reaping the benefits of value addition and linkages in Africa” to a committee of experts meeting in Abidjan to identify major issues to be considered by African Finance Ministers due to meet 25 and 26 March.
He said African countries were on an positive development trajectory but that their industrial policies remained weak. He cited import substitution industrialization and structural adjustment programs as among factors explaining Africa’s de-industrialization.
“Massive industrialization, especially commodity-based industrialization, is imperative, possible and beneficial to the continent,” the ECA official stated.
The committee of finance experts began meeting on Thursday to analyse recommendations to the ministers on effective industrial strategies and policies that will support the promotion of value addition and economic transformation.
The joint African Union/ECA meeting of African Finance and Economic Ministers is focusing on “Industrialization for an emerging Africa.”
African countries face serious challenges which will require country specific policy interventions, Nnadozie said, pointing out that global, regional and national dimensions of linkage development must be reflected in resource-based industrialization strategies.
He cited successful cases in Asia and Latin America where, for instance, in Argentina, agricultural resources led to the development of food, beverage and tobacco export industries and Thailand’s export incentives targeted gems, tinned fish, dried and preserved fruit and preserved vegetables.
According to Nnadozie, resource-based industries from Asia and Latin America developed from initially low skills and capital by mobilizing domestic entrepreneurship and implementing effective industrial policies.
“Industrialization favoured skills and capital accumulation and facilitated the development of more sophisticated manufacturing capabilities. Venezuela’s mineral resources led to the development of basic chemicals and metal export industries while Malaysia’s selective policies targeted the expansion of rubber and palm oil production, while supporting domestic palm oil refineries and rubber semi-manufacturing.”
He noted that resource-based industrialization will generate employment, income and dynamic benefits for African countries.
According to experts, governments need to set up the right policies and use the right policy mix to facilitate industrial development, while the private sector, on the other hand, should be confident about its political commitment to industrialization.