Business
Africa on track to becoming world’s manufacturing hub
The out-going president of the African Development Bank (AfDB) Donald Kaberuka says time has come for Africa to become the world’s manufacturing hub and this can be done through industrial cooperation with China as the Asian giant phases out labor-intensive industries.
“The global manufacturing cycle started from Europe then to America, before moving to South East Asia and China. It is now coming to Africa,” Kaberuka told reporters Monday on the sidelines of the African Union (AU) summit held in Johannesburg, South Africa.
Kaberuka, who is stepping down from the helm of the AfDB this August after serving two consecutive 5-year terms, quoted a Chinese metaphor “building the nest to attract birds” to urge the African countries to put in place proper infrastructure and enabling policies to facilitate the transfer of manufacturing industries from China.
“This is the time for Africa to build the nest, the birds are waiting to come and breed,” he said.
He said low labor costs and an integrated, larger market through the creation of the Tripartite Free Trade Area (TFTA) would help Africa attract foreign investment to the manufacturing sector.
However, the bank chief stressed the need for the continent to put in place an enabling environment for investors to come in, such as adequate power and transport infrastructure.
He said Africa needed to address factors undermining its investment attraction capacity such as the high cost of doing business mainly due to insufficient energy supplies and a weak regulatory environment. The continent also needed to address the capacity of its maritime ports to ensure fast clearance of goods, he said.
“Sometimes boats bringing materials have to wait for a week or 2 weeks before discharging cargo. So old infrastructure is a limiting factor but of these, energy is the biggest limiting factor,” he said.
China built up its export-oriented economy based on proliferation of low-cost, labor-intensive factories over the past three decades. But this edge of low-cost is being eroded by the gradual rise of workers’ income and benefits as the economy continues to develop. Over-capacity at home in sectors like steel, cement, textile, and solar panel manufacture pushed Chinese companies to seek better business opportunities abroad.
China has also identified industrial cooperation as the top priority for its engagement with Africa this financial year. Chinese investment to the continent reached US$21.2 billion in 2012, a figure aimed to be raised to US$100 billion by 2020.
