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African countries must create ’pockets of excellence’

African countries should foster pockets of manufacturing excellence to facilitate trade and enable the African Continental Free Trade Area rather than compete. FILE IMAGE/ANA

African countries should foster pockets of manufacturing excellence to facilitate trade and enable the African Continental Free Trade Area rather than compete. FILE IMAGE/ANA

Published Dec 11, 2020

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DURBAN - African countries should foster pockets of manufacturing excellence to facilitate trade and enable the African Continental Free Trade Area (AfCFTA) rather than compete.

Chief executive of the South African Electrotechnical Council , Chiboni Evans told the 7th annual Manufacturing Indaba yesterday that every country was trying to increase its local content.

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“From the South African perspective, the Department of Trade, Industry and Competition (DTIC) has changed how South Africa operates throughout the continent with what we call an investment-led approach. So when we engage our counterparts, we are not merely selling a product, but seeing how we create local value addition in those countries and in the sectors and spaces we operate,” said Evans.

She said African countries also needed to be looking at where they could create regional centres of excellence in various sectors.

“For instance, a number of years ago Africa made a conscious decision that it wanted to be a centre of excellence for world manufacturing, so from the South African government perspective it wanted to be a centre of excellence in rail manufacturing.

“We then engaged Prasa (Passenger Rail Agency of South Africa), which developed programmes... to build more than 560 passenger rail trains over 10 years and more than 1 060 freight trains. That would create a fortified manufacturing base in South Africa and make the country a manufacturing base where other countries can come to purchase rail stock from.”

She said the DTIC had been working in the agro-processing space with Zambia in soya and ground-nuts and created agro-processing and export opportunities.

Deloitte managing director of emerging markets and Africa, Dr Martyn Davies, said to discuss manufacturing in Africa, it should be remembered that average growth in manufacturing value add to gross domestic product (GDP) in all countries globally was equal to 18 percent and anything below was underperforming.

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Davies said a majority of countries in the continent were below the average.

“The average in sub-Saharan-Africa is just breaking the double digits at about 10%,” Davies said.

Discussing the importance of manufacturing, Davies said he did not know any economy in the world that had succeeded without industrialising.

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“There is no sector like manufacturing that is able to create structural employment. It converts intellectual property in an economy. As a source of scale it results in services. As services grow, the economy becomes self-sustaining.”

He said that countries with high manufacturing value add to GDP tended to have a relatively good Gini coefficient and more equality.

“In resource-driven economies predominantly you find that they are almost bathed in inequality because of the lack of ability to disperse commodities widely throughout the economy. With manufacturing we can address this issue,” said Davies.

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He said South Africa was an outlier with inequality as it had significantly haemorrhaged manufacturing in the course of the last generation or so and have moved down from roughly 23% to24% to where it was today at around 13 percent

He said that it was important how African economies thought about their value chains, supply chains and to ultimately capture their share of global manufacturing.

The two-day conference was attended by industrialists, technological experts, high-level executives and government officials from across Africa.

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