Can the SDG target to industrialise be achieved in resource-rich Africa countries?
19 Jun 2017 by Degol Hailu and Chinpihoi Kipgen
Sustainable Development Goal (SDG) 9 on industry, innovation and infrastructure has among its targets to promote “inclusive and sustainable industrialization”.
The indicators selected to measure the achievement of target 9.2 on industrialization are: 1) Manufacturing value added as a proportion of GDP and per capita; and 2) Manufacturing employment as a proportion of total employment.
To see how far this SDG target will be achieved, we have analysed the performance of seven resource-dependent countries in sub-Saharan African (SSA) that have prioritized diversification and industrialisation in their national development plans and strategies. The countries are Angola, Botswana, Republic of the Congo, Equatorial Guinea, Mauritania, Nigeria and Zambia.
Their plans and strategies aim to process raw commodities domestically; invest resource revenues to support industrial development in other economic sectors; and share the infrastructure developed for oil, gas and mining with the manufacturing and agricultural sectors.
Equatorial Guinea’s national development plan, Horizon 2020 (launched in 2007) and Angola’s 2025 Strategy (launched in 2008), for instance, stress the development of other sectors to achieve diversification and industrial development. This is indeed good news.
However, these seven countries do not have positive track records in translating their mineral and hydrocarbon wealth into industrial development. At the height of the commodity boom in the first decade of the 2000s, they collected significant amounts of resource revenues. Export earnings from oil, gas and mining increased from an average of US$4.9 billion in 2000 to US$22.9 billion in 2010.
However, in the same period, the manufacturing sector’s contribution to GDP contracted from 6 percent to 5 percent. In Zambia and Mauritania, the manufacturing sector contracted by about 2 percent or more; while in Equatorial Guinea and Nigeria, it stagnated at less than 1 percent and 6.5 percent, respectively. By 2014, per capita manufacturing value added in the seven countries remained low at US$193 compared to the African average of US$214 and a global average of US$1,662.
Similarly, there were no significant improvements in the diversification of their export baskets. In fact, the baskets became more concentrated by the end of the boom period. The average Concentration Index – which ranges from 0 to 1, with 1 indicating that a country’s exports are highly concentrated in a few products – increased from 0.68 in 1999 to 0.74 by 2011. Exports of medium and high technology manufactured goods such as chemicals and electrical equipment also stagnated at around 2.5 percent of total exports over the same period.
The aspiration to industrialize also goes beyond national level ambitions. In the African Union’s Agenda 2063, the wish is to see economies that are “structurally transformed to create shared growth, decent jobs and economic opportunities for all”. The African Mining Vision (AMV) aspires to see a sector “that has become a key component of a diversified, vibrant and globally competitive industrializing African economy”.
The articulation of industrialisation strategies at the continental and national levels is a worthwhile exercise. That is why UNDP’s Africa Regional Programme supports countries to integrate and implement the principles set out in the AMV into their national plans and strategies.
This policy work is carried out in partnership with the African Union Commission (AUC), the African Minerals Development Centre (AMDC) and the African Development Bank (AfDB).
But, a lot remains to be done on the formulation and implementation of industrial policies if we are to meet the SDG target to industrialise by 2030.