A RECENT joint report by the United Nations Conference on Trade and Development (UNCTAD) and the United Nations Industrial Development Organisation (UNIDO) has recommended a new industrial policy that would induce economic transformation for African countries to make any significant headway in poverty reduction and solving their economic problems.
The report revealed that Africa now accounts for only about one per cent of global manufacturing and cannot realistically hope to reduce widespread poverty if concrete and effective steps are not taken by governments to expand this vital economic sector.
In Nigeria's case, Dr. Patrick Osakwe, a senior economist from UNCTAD, while launching the "Economic Development in Africa Report 2011" at the West Africa Institute for Financial Management (WAIFEM) yesterday, recommended that the country build its foreign exchange reserve during a period of boom rather than go borrowing in times of economic distress.
"Resorting to borrowing from IMF (International Monetary Fund) and other agencies is not really an effective option as these loans come with conditionality. To build a reasonable development process in African countries, governments have to evolve a strategy where they are not dependent on external lenders. Countries must be able to own the industrialisation process," he said.
The report recommends that African governments should avoid exchange rate overvaluation, do more to mobilise domestic resources to fund industrial development, and align their monetary and fiscal policies with the objective of industrial development
The report, titled "Fostering Industrial Development in Africa in the New Global Environment," also stressed that continuing attention must be paid to agriculture. It stated: "To promote manufacturing, development must not be achieved at the expense of the agricultural sector. Agriculture has been and will continue to be a major source of revenue, employment and foreign exchange earnings, in the short to medium term. African countries should create mutually reinforcing linkages between agricultural and non-agricultural sectors of their economies."
It also calls for practical, well-designed approach to industrialisation that is adjusted to specific country circumstances and based on extensive discussion, including feedback from businesses and entrepreneurs.
With Africa losing ground in labour- intensive manufacturing, Osakwe pointed out that the share of labour-intensive manufacturing activities in Manufacturing Value Added (MVA) fell from 23 per cent in 2000 to 20 per cent in 2008. However, the report noted that the continent has made some progress in boosting technology-intensive manufactures, such as chemicals. The share of medium and high technology activities in (MVA) rose from 25 per cent in 2000 to 29 per cent in 2008.
He further said no country has achieved high and sustained economic growth without going through a process of structural transformation, characterised by a shift of production and exports from low to high productivity goods. "This suggests that what a country produces and exports matter for growth and development," he submitted.
The Guardian