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Africa’s only way out of poverty is to industrialise

The World Bank projects that by 2030, almost all the people in extreme poverty will live in sub-Saharan Africa.

African industrialisation has to be among the most important things happening in the world right now. The vast continent, with more than 1.2 billion people, is home to an increasing fraction of the human beings who are still mired in extreme poverty:

By 2030, the World Bank projects that almost all the people in extreme poverty will live in sub-Saharan Africa. The reason is twofold. First, Africa’s population is growing rapidly:

Second, Africa has lagged in the industrialisation necessary to generate mass employment. The lack of strong, stable governments — a legacy of colonialism — has made it difficult to provide the education, infrastructure, court systems and other public goods that help prepare countries for the leap from subsistence farming to factory work. Well-meaning Western aid and international development agencies couldn’t fill the gap. Meanwhile, nations in East Asia and Southeast Asia became the world’s factories before Africa did.

But late doesn’t mean never. Rising labour costs in China, and the threat of US tariffs, are finally causing manufacturers to diversify their supply chains. Some of their factories will go to Vietnam and Bangladesh, two rising stars of the developing world. But those countries won’t be big enough to replace China, which means that if manufacturers really want to keep costs down, many will have to look to Africa.

This process is already well underway. In her book “The Next Factory of the World: How Chinese Investment Is Reshaping Africa,” Irene Yuan Sun — a development-aid worker turned McKinsey & Co researcher — describes the wave of private Chinese investment sweeping the African continent. This investment often goes overlooked by the international press, which tends to focus on China’s splashy government-backed infrastructure projects and loans. But what Sun describes is something else — Chinese businesspeople moving to Africa and building privately owned factories.

In 2017, Sun’s research team estimated that there are about 10 000 such factories on the continent, and the number is surely higher now. Nigeria, Zambia, Tanzania and Ethiopia have the largest concentrations, but many other countries are in the mix. Although China still has less total capital invested in Africa than in other regions, it’s catching up fast:

That foreign direct investment — and manufacturing more generally — is one reason African growth is taking off:

The picture Sun paints of Chinese capitalism in Africa is not always a pretty one. She cites anecdotes of corruption, pollution, overwork, injuries and managers’ disdain for local workers — phenomena that seem universal to every country in the early stages of manufacturing. But Sun argues powerfully that this ugly, costly process is still the only way that countries can escape poverty.

The programs of liberalisation and deregulation offered by Western countries in the 1990s under the name of the Washington Consensus failed to produce the desired results. Development aid from rich countries has done some real good (and occasionally some bad) in Africa, but hasn’t been enough to change the continent’s basic economic conditions. And with a few small exceptions like Botswana, natural resources have generally been more of a curse than a blessing. The only thing that reliably seems to transform poor countries into rich ones seems to be the so-called flying geese theory — the idea that manufacturing moves in waves, looking for the next cheap, politically stable production base.

Now the geese are finally flocking to Africa. This isn’t the neo-colonialism that some fear — indeed, Sun finds that Chinese factories overwhelmingly employ local African workers rather than imported Chinese laborers. Nor is there any sign that automation has made labor-intensive manufacturing obsolete. In other words, there is every indication that the process that brought Europe and Asia out of poverty is starting to work in Africa.

The question for the US and other developed countries is how they can help African industrialisation continue. An industrialised Africa is in America’s best interests. First of all, with Chinese costs rising, African factories are necessary to keep the prices of clothes, electronics and other goods from rising too much. And while some may claim that African competition is taking jobs from American manufacturers, the truth is that if that manufacturing were done in the US, it would be mostly automated.

Even more importantly, African development is the key to a stable world. An underdeveloped Africa, with an exploding impoverished population, would fall prey to climate disasters and wars. That would create global tensions, as the US, Russia and other powerful countries jockey for influence over war-torn regions, as has happened in Syria. It would also create waves of refugees, knocking at the doors of rich countries — as Syria has, but on a much larger scale.

In order to forestall this grim future and give hope and security to the world’s neediest people, the US and other rich countries need to encourage imports of African-made goods. The African Growth and Opportunity Act, passed in 2000, was a good start, but more can be done. Market access ensures stable demand, which provides an incentive for Chinese and other entrepreneurs to invest and build for the long term. 

African industrialisation will complete the great transformation that began more than two centuries ago in Britain — the mass movement of humanity from indigence to material security. This is the last frontier of poverty reduction.

© 2019 Bloomberg L.P
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How about population control? The chart shows Africa’s population quadrupling by 2100. How will mechanisation effect this supposed industrialisation? Industrialisation requires high level of technical education. China is producing a million engineers a year, where will the engineers in Africa come from?

Cuba 😉

So why is the anc and other African political figures so hell bent on hindering growth?

Every square meter of government land should sold off or auctioned for min R250 per m2 with a 2 or 5 year building clause, subject to maximum of 5000m2 per an individual and no transferable for at least 10 years whilst ensuring property rights as the corner stone of every constitution.

This would spur investment on a level never seen before.

Perhaps the USA is right in clawing back its Aid grants to African counries leaving them exposed to civil wars, famine and uncontrolled diseases.. This seems to be the only way to control over population – after all the West was cleaned out by the flu and plague epidemics before getting onto the path of Industrialisation!
The alternative, using your argument of China as the prime example of success, seems to be converting to a Communist philosophy with Capitalistic economic fundamentals ( those at the top living the high life whilst the rest of the population suffers) something one political party in South Africa aspires too! They weren’t called the Red Chinese for nothing!
Beware what you wish for. In my opinion…… Industialisation of Africa will come at a very high price.

A young man inherited a fortune from his late uncle. This young man lives on the street, as a beggar. He suffers from a rare brain disease that affects his cognitive ability and causes memory loss. Therefore, he cannot remember his PIN. He has all this money just sitting in the bank, but he is unable to access it. So, he is dependent on foreigners for his survival.

This is the story of Africa. Africa is the continent that is blessed with the richest mineral wealth on earth. There is an abundance of gold, cobalt, platinum, diamonds and oil. Africans inherited an enormous treasure, but they cannot remember the PIN. They are unable to extract the wealth, so they live as beggars instead. To them, it is as if the wealth does not even exist.

The secret code, the PIN that is needed to extract the wealth, is called “private property rights”. Every nation that uses this PIN is wealthy, every nation that forgot this PIN is poor.

Now the real question is this – How do you help people who suffer from the destructive mental disorder called collectivism, to remember the PIN? I gave up.

Hope it wasn,t VBS Bank as his Comrades cleaned it out , without even knowing his PIN !!

So why is the anc and other African political figures so hell bent on hindering growth?
Simple answer, Power.

Every square meter of government land should sold off or auctioned for min R250 per m2 with a 2 or 5 year building clause, subject to maximum of 5000m2 per an individual and no transferable for at least 10 years whilst ensuring property rights as the corner stone of every constitution.

This would spur investment on a level never seen before.

Great opinion piece. Parents in SA should equip their children to take advantage of this phenomenon. The only way Africa can rise up will be when te world just simply drags it along – like Sun is suggesting. It’ll be the best place to do business and prosper.

I knew it ! Africa is on the rise ! In 2100 I will be just 124 and will be enjoying the fruits of my long term investments in this continent 🙂

It will be easy for you young chaps, I will be nearly 160. Thanks to the NHS which the ANC is going to introduce I am certain that I will have no problem enjoying my old age 😉

Africa”s biggest de industrialisation force is corruption and wrong policy.

in more than 40 years of independance Africa is still poor and this time it is not the Western world’s fault. The West did take a lot of wealth out of Africa but these countries will not say a word of all the money donated every year.

Africa must stop moaning, groaning and blaming…stop the leader is the king mentality…and the bad news is..capatilism or someting close to it WINS..

In a 100 years the East will be blamed and not the West as Africa sells itself to China.

Europe and the West developed Mercantilism, large scale industrialization and international trade in the 1700’s and built empires.

Asia always had market capitalism and borrowed the best tools of industrialization in the 1900’s and rapidly grew out of poverty.

Post Colonial Africa in general, chose collectivism and borrowed socialism for whatever sad reason and went back to civil war and poverty.

The only African states that will benefit are those who embrace the best economic practices of west and east. Except Botswana and a handful of others, not much to be hopeful about anytime soon.

An absolute lack of values stands in the way of prosperity. That is why corruption flourishes so well in Africa.

First industrial revolution was all about water and steam power which enabled mechanization. This era ended in 1840 after which the second industrial revolution started as a result of the availability of electricity which enabled ……..

Eskom can’t produce STEAM using modern technology?

Sorry Noah, it has never happened in Africa and never will.

Our clever revolutionary masters are not looking for solutions, they are looking for ways to stay in power.

i’d like to see how you can industrialise by taking a bunch of over fed and unproductive politicians an their friends, giving them land and money for free and call it Black industrialist program…don’t whether to cry to laugh.

Africa has minerals below the ground and other vast natural resources. It has EVERYTHING it needs to be the most prosperous “nation” the world has ever seen. It simply will never be because its inhabitants are cursed with a “poor me” laziness and inability to look over the horizon of this very day. Africa was deservedly colonised and is being deservedly re-colonised by the Chinese. They are going to make the European colonial powers look like kind and gentle folk when they get full control

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