To Help Africa capture opportunities of industrialization
Modern economic growth is driven by continuously increased per capita income which mainly due to the improvement of labor productivity. This chain effect has been repeatedly proven to be an achievable way to success in Europe, the US and Asia of the past decades, the relocation of light industries from China and other emerging economies to Africa continent has stated not while ago. By capturing this Window of Opportunity, Africa will set itself on the path to sustainable, dynamic, and inclusive economic growth. By maximising the supply-chains benefits, Africa will lock-in significant increase of income and long term economic growth.
China's secret in Industrialization and economic transformation
China is now at the stage, like Japan in the 1960s and the four Asian Tigers in the 1980s, where it has begun relocating its light manufacturing business to other countries. Africa is one of the best destinations. The root of such movement was due to rapidly rising labor cost throughout China. China is already Africa's largest trade partner - $188 billion per year; the 3rd largest donor - $6 billion and China's direct loan to Africa is growing by 70% annually. 95% of Chinese investors in Africa are private companies in manufacturing industry by a long way.
How should African countries position themselves?
Once the decision of economic transformation from agriculture and mining to modern industry is taken; the first action that government need to adopt is an active, focused investment promotion strategy. It needs a clear focus on attracting existing export-oriented, modern manufacturing firms that own technological knowhow. At the same time, government needs to leverage its resources to establish industrial parks and special economic zones with completed infrastructure and create a transparent business environment to reduce any unnecessary cost.
Where does Africa's opportunity lie?
Africa is an attractive destination for the relocation of light manufacturing from China. It has an abundant amount of labor force with relatively young demographic structure, while the potential market is more than the combination of Europe and America. Zero tariff is another advantage thanks for the US Africa Growth Opportunity Act and the EU's “Everything but Arms” policy.The Made in Africa Initiative intends to help Africa exploit this window of opportunity to become the world's next manufacturing motherland to achieve dynamic, sustainable, and inclusive growth.