Industries: Is 'Chinese therapy' Africa's answer to stunted growth?

Africa’s industries have been stunted for decades now but there’s a new suggestion that feeding the sector on ‘Chinese steroids’ could possibly breathe some life into the continent’s sedated industrial activity. Burdened with the need to create millions of jobs for the continent’s fast-growing jobless youth, there is real pressure on African governments to find working solutions urgently. It is because of that reason that the continent’s leaders are thinking outside the box; they are ready to try any solution. Tanzanian professor, Humphrey Moshi, floated one such solution on Tuesday during the launch of the 2015 Economic Report on Africa (ERA) held in Kigali. The University of Dar-es-Salaam don lambasted those in the business of flattering Africa by comparing its growth to the likes of Europe and Asia, arguing that this comparative rhetoric only ‘makes leaders too comfortable and ‘feeling good’ for nothing really.’ “We should remember that Africa is still the least developed continent on earth and we should not be blinded by these flattering comparisons that we have the fastest growth,” he said. According to Professor Moshi, although China is eager to work closely with Africa, the continent seems to have no agenda in place to engage the Chinese in a more meaningful and mutually beneficial conversation. “While China’s foreign policy is tailored to engage with us, Africa has no agenda to engage the Chinese; if we had one, for instance, we would negotiate to bring Chinese producers to Africa and set up their factories here,” said the academician. To back his argument, Moshi gave as an example in Ethiopia where the Chinese firm, Huajian Group, brought competitiveness into the country’s shoe industry. The products are fast becoming household names on the continent and beyond. At first, when the Chinese discovered Ethiopia, the local shoe industry players were apprehensive, crying that the ruthlessly hardworking and efficient Chinese had come to finish them. However, Ethiopians soon figured out that they were better off joining the Chinese rather than fighting them. As a result, the shoe industry is a booming industry, not only creating hundreds of jobs, but also earning the country foreign exchange through increased exports. Moshi was one of the three discussants that the United Nations Economic Commission on Africa (UNECA) chose to make sense of the ERA, whose authors made a case for trade-induced industrialisation. Leonard Rugwabiza, Chief Economist at Rwanda’s Ministry of Finance and Economic Planning, had earlier argued that African governments needed to invest in “importing industrial know-how” from the more industrialised countries. In a rather humorous observation, the economist joked that, perhaps, after importing for so long, Africa would gradually learn how to export, but then, he asked, “how long shall it take before we learn?” Getting the Chinese to set up their manufacturing bases here, like the professor suggested, would be one way of transferring industrial know-how to Africa. Get started, learn later Huajian Group in Ethiopia is co-owned by Helen Hai. The story of how she first came to Africa has become so well-known that she is often invited to speak at continental events, one of the most recent being in May at the African Development Bank’s annual meetings held in Ivory Coast. In Abidjan, Hai, who is also the founder of the Made in Africa Initiative and advises the governments of Ethiopia, Rwanda and Senegal on policies for industrial promotion, was on the same panel as Rwanda’s Finance Minister Claver Gatete to discuss how to industrialise Africa. “What matters is to stop talking and actually get started; then we can learn from the mistakes,” said Hai, who is also a goodwill ambassador for the United Nations Industrial Development Organisation. To kick-start her industrial journey in Ethiopia, Hai told the BBC in 2012 that she took 86 Ethiopian graduates to China to teach them how to make shoes. Today, her firm has a programme working closely with the government to equip more youth with skills. Through her Made in Africa Initiative, Hai has also expanded to Rwanda where, through using her Ethiopian model, she has managed to equip hundreds of young Rwandans with shoe-making skills. As a panelist at AfDB’s meetings in Abidjan, Hai read out a letter written to her by a young Rwandan man who had benefited from the training. “Because of you, I can now make shoes, with speed and efficiency that I never thought I would be in position to master it,” wrote the young man. The Huajian Group’s long-term plan is to invest some $2bn in Ethiopia because of what they describe as Ethiopia’s ‘good economic policy.’ The same good and supportive economic policies can be found in Rwanda. Hai’s exploits in Ethiopia actually shows that what the Tanzanian don suggested on Tuesday is not a book theory, but something that can and is actually already being tested in some countries. From shoes, more Chinese could be invited to make other products locally that are currently being imported; this would eventually bring down Africa’s huge import bill and create a more favourable trade balance. Sense of urgency Although industries have strong potential to create more jobs and buttress efforts to create employment opportunities for many a jobless youth, governments need to treat industrial development with a sense of urgency. In 2000, the agriculture sector employed 65% of the total working African population, according to the International Labour Organisation (ILO); this share had minimally reduced to 62% by 2013. Jobs in the industry sector, on the other hand, have remained stunted; in 2000, industry jobs accounted for 8.5% of labour, but this had reduced to 8.4% as of 2013, according to the new report. In Rwanda, the service sector has been eating into agriculture’s share of GDP, which is in line with government’s ambition of building a service-led economy. However, an observer pointed out that the country’s growing service sector should serve to support industrial activity so that both sectors can tap into each other to spur growth. The agricultural sector can as well provide a starting point at industrialisation with experts suggesting that industrialising around the agricultural sector through food processing would not only add value to the existing agricultural jobs, but also create new employment opportunities. Agricultural processing is also in line with demands that African exports need value addition to overturn a trend where only unprocessed commodities are exported in huge volumes, but fetching less value. No wonder, the economic report on Africa observes that Africa’s exports only managed to grow four-fold in a period of between 10-15 years, yet imports remain dominant. For instance, 88% of Africa’s total industrial inputs (intermediary goods) are imported with only 12% sourced from within Africa. editorial@newtimes.co.rw

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Industries: Is 'Chinese therapy' Africa's answer to stunted growth?