When it comes to industry in Africa, the figures are depressing. For more than 30 years, the share of manufacturing value added in the continent’s gross domestic product (GDP) has failed to take off.

From 16.9% in 1990, this fell to 9.7% in the 2010s, before creakingly rising to 11.3% in 2019. Since then, it has stagnated hopelessly at 11.5%, with industrial employment suffering the same fate, stuck at 13% of the total workforce. Dangote Industries may be about to get Africa’s largest industrial project off the ground… but “we need a refinery size project each year to get the economy back on track”, says an advisor to Nigeria’s president.

“This under-performance needs to be qualified: industry has remained at the same level with a GDP that has doubled in 20 years, which reflects progress, and its spectrum has widened via the connection to services, transport and tourism,” says Carlos Lopes, a Bissau-Guinean economist, who is also former head of the UN Economic Commission on Africa and an expert on the continent’s industrialisation.

“For a long time, the subject was taboo because it was associated with the stigma of an interventionist state. It took intense lobbying to make it a priority,” he says. Today, at a time when Covid-19 has led to a return to favour of industrial policies throughout the world, industrialisation is more than ever a major challenge for African economies.

And with good reason. Only North Africa, the continent’s powerhouse thanks to the industrial successes of Egypt and Morocco and, to a lesser extent, Algeria and Tunisia, stands out. The sub-Saharan zone continues to lag behind, weighed down by a South African industrial base in decline, due in particular to the chronic lack of electricity.

Elsewhere, there are a few success stories – Ethiopia and Mauritius in textiles, Kenya in agribusiness, Nigeria in cement and now refineries – but these are still too few and far between. So what are the levers that will enable the ‘Made in Africa’ tag to reach its full potential?

1. Strategy

To succeed in battle, you need a strategy. Experience and research have shown that there is no miracle recipe, no blueprint from Asia or elsewhere. It’s up to each country to define its action plan in the light of its ambitions, its resources, its comparative advantages and its ability to fit into what are now global value chains.

“For smaller countries, I recommend prioritising a maximum of two sectors. Some of them, like Gabon with its timber and Benin with its textiles, are already on this path,” says Lopes. “For larger economies, such as Morocco, Nigeria or Egypt, we can aim for four to five value chains. In the case of South Africa, the focus should be on maintaining its level of competitiveness.”

Unsurprisingly, the roadmap is different in North Africa, where industrialisation is well under way. “It’s all about continuing to move upmarket to increase value creation, in particular through industrial 4.0 policies. What’s more, the relocation of global value chains is a prime opportunity for accelerating industrialisation in the region, not to mention the new international opportunities – in the Middle East in particular – on which manufacturers are increasingly positioning themselves,” says Jonathan Le Henry, partner and head of Strategy& (a member of the PwC network) in North Africa, and the author of a 2019 report on industrialisation.

Africa’s strong demographic growth, the importance of the agricultural sector, and international dynamics like global warming, technological developments, brings two other lessons. Firstly, on a continent with strong agro-industrial potential, which is seeking to consolidate its food sovereignty, and where half the population works in the primary sector, it is vital to capitalise on the relationship between industry and agriculture.

On the other hand, with many light industries leaving China in search of cheaper labour, Africa has a card to play – against India in particular. According to a study published in October 2022 by the French Development Agency (AFD), the textile, clothing and leather sectors could create some 30 million jobs.

2. Business climate

Whatever the country, once the strategy has been set, it is vital that this becomes a national priority, endorsed by all government departments – not just the ministry of industry – and deployed in close collaboration with the private sector. Here again, there is no instruction manual.

Another salient point is that efforts like these will not pay off unless the business climate on the continent improves. “If production conditions are uncompetitive in Africa, it is much more because of political instability, corruption, logistical and energy difficulties than because of the level of qualifications or the cost of labour. Hence the need to improve the fluidity of the economy and investment conditions,” says Professor Marc Lautier, co-author of the AFD study.

Ethiopia, Kenya, Rwanda, Benin, Togo, Côte d’Ivoire, Senegal and Mauritius have all taken steps in this direction – from simplifying the process of setting up a business to granting tax incentives and cutting red tape – with the result that foreign investment has increased and industrial estates have taken off.

3. Infrastructure

The average cost of electricity in Africa is four times higher than elsewhere in the world. The density of asphalt roads is only 2km per 100km2, compared with 25km in Asia and 122km in Europe, and freight rates are high in congested ports. “Inadequate infrastructure is the most immediate constraint on industrialisation,” says the African Development Bank (AfDB) in its latest assessment, from 2022, of the continent’s progress in terms of industrial development.

Despite considerable investment in recent years through partnerships between governments, international development institutions and the private sector, the needs remain enormous. And funds are hard to come by. While $150bn should be spent each year on transport, electricity networks and other infrastructure, the ADB estimates that barely half this sum is mobilised.

While African countries are pulling out all the stops in their national programmes to build roads and increase electricity production, they also have every interest in betting on regional organisations to roll out cross-border projects. Better negotiation of public-private partnerships (PPPs), accelerated development of industrial and special zones, digitalisation of services, and automation of ports are all solutions that have proved their worth and deserve to be widely implemented.

4. Financing

Alongside infrastructure, the other long-identified stumbling block that needs to be addressed is access to finance. This issue affects both governments – whose revenues are limited, with a tax take in Africa of 16% compared with an average of 35% worldwide – and private players, who are confronted with the reluctance of commercial banks, as evidenced by the insufficient volume of credit granted and the high interest rates charged.

We need to find mechanisms to facilitate loans so that more financial flows can be channelled into industry

“A number of institutional funds, including pension funds, are not being properly exploited. They should be used for national development and to finance industrialisation,” says Lopes, who is also calling for the modernisation of tax administrations.

The private sector has long been waiting for the banking sector to turn the corner. “We need to find mechanisms to facilitate loans so that more financial flows can be channelled into industry,” says Jean-Marie Ackah, chairman of the Avos group. In particular, he advocates extending the duration of loans (to 10 years from the current five or six) for industrial activities, where the return on investment is longer than in services or trade.

In North Africa, while the situation is less tense, finance is also a concern. “Given the ambitions of industrial policies, we need to be creative in developing the conditions needed to accelerate private equity,” says Le Henry, who hopes to see an increase in the number of incubators and seed funds.

5. Training

The final challenge to be met is to train an ever larger and younger population, so that it has the skills needed for current and future industries. In the majority of African countries there is a shortage of technicians, engineers, computer scientists and tech profiles, while large numbers of historians, sociologists and others with arts degrees remain unemployed.

The creation of vocational training centres, modernisation of the university and higher education system, the importance of apprenticeships, education in new technologies, second chance schools are all reforms which could address the issue. The AfDB warns that the gap between the needs of industry and the skills of the population “will widen as technology continues to transform manufacturing practices”. Ackah echoes this and warns it is a long road ahead, saying: “In this area continuous, long-term action is required, lasting at least 10 years, before results can be obtained – in other words, a well-trained, efficient workforce.”