How Local Manufacturing Can Strengthen African Economies

Title: How Local Manufacturing Can Strengthen African Economies.

The African case was always one of extraction in terms of the hegemonic narrative of the economy over the decades. The continent also manufactures the raw materials that are oil, minerals, cocoa, cotton and exports the products to the outside world. Those contents reappear as finished products, which are in many cases unaffordable to the common citizens. It is a cycle which has made others rich and Africa, exposed to both global price shocks and foreign economic preference decisions. But a shift is underway. On the continent, there is a new generation of manufacturers that is showing that Africa is capable of processing its own resources, generating employment, and establishing prosperity in Africa. Local production is more than a plan of economics, it is the keystone to true sovereignty.

Breaking the Cycle of Dependency of Raw Materials.

The economy of Africa has been based on export of raw products. Nigeria exports crude oil and yet imports refined fuel. Cote d Ivoire cultivates all the cocoa in the world and imports processed chocolate in Europe. Ghana gradually sends gold to other nations but buys foreign jewelry. Such an arrangement exposes the economies of Africa to the mercies of international commodity prices. When prices are reduced, whole national budgets deteriorate. At the time of increase in prices it is the foreign processors that enjoy the benefits.

Local manufacturing stops this cycle by seizing value which has conventionally migrated out of the continent. A ton of cocoa beans sells at about 2 500. That same ton, processed into chocolate, has up to 20,000 dollar value in it. That difference of $17,500 of processing can remain in the country when it occurs locally. It gives farmers a better price, hires factory labor and develops industrial capacity. This, times by all the commodities that Africa produces and the possibilities to build wealth are unimaginable. The other countries such as Ethiopia and Rwanda are already starting to process their coffee in their own countries and win the top prices that pay attention to quality and not simple extraction.

The establishment of Jobs that will change communities.

Employment can be the biggest contribution of manufacturing to the African economies. Extractive industries such as oil and mining generate comparatively low amounts of jobs with regard to what is spent on them. A billion dollar oil project may offer employment to a few thousand individuals. There is a billion-dollar manufacturing industry that can directly and indirectly employ tens of thousands of people whose supply chains are used.

The Dangote refinery is the prospect in Nigeria. Addressing the full employment, it is projected to provide more than 100,000 direct and indirect jobs. More to the point, it shows that Africans are capable of scale construction, that there are technical resources, and that production can be used to establish the whole regional economy. Textile factories in Ethiopia, auto assembly factories in South Africa and pharmaceutical factories in Kenya all over the continent are demonstrating that industrial jobs can move families out of subsistence into stability. These are better paid than agriculture or informal trade. They demand abilities which employees have the chance to develop throughout work life. They form the middle class, without which all economies cannot prosper.

The effect of creating more jobs goes past factory gates. Suppliers are required by the manufacturers. A furniture company needs suppliers of timber processors, upholstery producers, ironwork suppliers, and logistic companies. All these help in sustaining more jobs. Such a multiplier effect implies that each employment that is generated by manufacturing has a few others on the larger economy. The creation of industries is not only the creation of an ecosystem but local manufacturing.

Lessening Investment of Importance and Bettering Resistance.

The impact of the COVID-19 pandemic revealed how weak the African economies reliant on imports are. With the world supply chains taken over, the continent found itself in situation of lack of basic needs. Ventilators were scarce. Pharmaceuticals ran low. Even the soap was valuable in certain places. It is not only irritating but a liability that can be deadly.

This is the weak point of the local manufacturing. Countries that make their own basic products in their countries have dominion over their supply chains. They do not have to be victims of delays in the shipping, trade wars, or foreign export restrictions. African manufacturers switched and began to make masks and sanitizers in addition to protective gear during the pandemic. The quickest response was to those who had the pre-existing manufacturing capacity. Scramble was made by those who had destroyed their industrial base.

The lesson was clear. Manufacturing is not merely related to economical development but to resolve. It is possible to withstand global crises if a country can feed itself, clothe itself, and even obtain its own medicines. This is the reason why pharmaceutical production has been of high priority in African Union since they plan to manufacture 60 percent of vaccines on the continent by 2040. Protectionism is not the object; it is self-reliance.

Another aspect of such resilience is foreign exchange savings. Dependency in imports imparts strain on foreign currency. All the money used in buying imported products is the money that cannot be spent in other ways. Nigeria drains in the billions every year on importation of refined fuel, food and manufactured products. The dollars are recaptured by the local manufacturing. Naira invested in the local commodities circulates in the economy not frittered away. This helps to strengthen currencies and stabilize the economies and minimize the external shock vulnerabilities.

Utilizing Technology and Youth Dividend.

The future of manufacturing that Africa will experience will not be like the past. In the past, the approaches to industrialization have tended to be based on protectionist policies that generated uncompetitive industries in the world. The new manufacturing wave is new. It is founded upon technology, regional integration and the vast youth base in the continent.

Technology transforms the uncompetitiveness of African manufacturing in the past. Use of solar power minimizes use of unavailable electricity grids. The supply chain coordination made by mobile technology is one that was unable to be done ten years ago. Digital platforms link the markets in the continent to the small manufacturers. AI is applied in Nigeria to streamline production lines by startups. In Kenya, manufacturers verify supply chains with the help of blockchain. The new technologies enable new facilities to jump over the traditional ones, becoming efficient with no pollution and resources intensity as in conventional industrialization.

The youth in Africa are the people who will change the situation but the engine of change. The continent boasts of more than 60 percent of its population below 25 years of age which cannot be sustained. The scale of manufacturing employment is required to change the millions of people entering the workforce annually. However, young Africans are not only laborers but they are innovators. On the continent young entrepreneurs are establishing manufacturing firms in industries such as fashion up to renewable energy part components. They are familiar with local markets and local challenges and they notice things that foreign investors do not.

The manufacturing sector requires the level of the market, which the African Continental Free Trade Area (AfCFTA) can offer.

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