Industries boom: AfDB report finds small African economies industrialize fastest

Morocco, Egypt, South Africa, Mauritius, and Tunisia are Africa’s most industrialized economies but it is the other countries, which have improved the most over the past 10 years, that have made the greatest efforts to move away from economic dependence on extractives toward value-adding sectors.

The countries that showed the greatest progress over the past decade are Senegal, Ethiopia, Benin, Tanzania and Uganda, according the 2022 Africa Industrialization Index, recently published by the African Development Bank (AfDB). Senegal now ranks an impressive 7th in the continent, up from 14th in 2011, while Ethiopia moved up to the top half of the standings, from 31st to 25th. Benin jumped a whopping 14 places to 18th, while Uganda rose 5 to 20th and Tanzania rose 6 to 21st.

Historically, all these countries’ economies relied on the export of raw commodities, notably gold, phosphate, oil, coffee, cotton or metal ores, with minimal, if any, local processing. However, a common thread that has emerged across these rising African economies is entrepreneurial innovation and an increasingly deliberate strategy by the government to facilitate private investment into value-adding industries.

These industries enable larger-scale job creation, provide avenues to develop new product lines, and generate spill-overs across different types of firms and to other parts of the local economy. The promotion of value-adding sectors by government can play an important role in the industrialization process. For example, Senegalese government has sought to promote greater value addition in the economy through its Plan Emergence Senegal, with its flagship Diamniadio Industrial Park opened in 2018. Also, Ethiopia has actively pursued industrialization over the past decade, spearheaded by the Prime Minister’s Office and a handful of other key government agencies. Finally, Uganda, Benin and Tanzania have all achieved notable progress following an agro-industrial path.

A common message across these countries – as well as other countries that registered an improvement in their Index ranking, such as Ghana, Mozambique, and Rwanda – is that focus and facilitation around specific industries that have the potential to attract investment, create jobs and boost exports, is essential.