Developing Export-Based Manufacturing in Sub-Saharan Africa

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Neil Balchin, Stephen Gelb, Jane Kennan, Hope Martin, Dirk Willem te Velde and Carolin Williams, March 2016

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This report describes how production, employment, trade and foreign direct investment (FDI) in the manufacturing sectors in nine selected sub-Saharan African (SSA) countries has increased in the recent decade and identifies opportunities for the development of promising manufacturing sectors in the future.

The paper employs a number of techniques to examine country specific promising sectors. Africa already has a share that is greater than 2% of world trade in fertilizers, chemicals, leather products, apparel, oil, iron and steel. Qualitative accounts and calculations using standard techniques indicate that there are some very interesting opportunities in the following African manufacturing sectors: garments, agri-business, mineral processing, manufactures of consumer goods, pharmaceuticals, automobiles and food, beverages and tobacco.

Finally, the report examines rankings for selected countries in the area of geographical advantages, market size, economic fundamentals, general investment climate, and specific policies. Some countries are well positioned in relation to comparators. For example, Nigeria’s size and growth in Tanzania and Ethiopia stand out, as do Ethiopia’s low labour costs, Rwanda’s investment climate and Ghanaian skills.

The paper concludes that while some are positioned better than others, all of the countries we examined will need to improve in several areas if they are going to attract high levels of investment into export-based manufacturing sectors. African countries should act to take advantage of recent trends such as African regional growth and rising wages in Asia.

Media coverage

Neil Ford, African Business Magazine, 25 Nov 2016

Anzetse Were, Business Daily Africa, 01 May 2016

Dirk Willem te Velde, Financial Times, 03 May 2016

CNBC Africa interview with Dirk Willem te Velde, 20 April 2015

Blog by Dirk Willem te Velde

Why African manufacturing is doing better than you think

Infographics

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Infographics by ODI.
Sources:
Image 1a: WDI, 1b: UNCTADStat.
Image 2: USITC Interactive Tariff and Trade DataWeb (https://dataweb.usitc.gov/scripts/user_set.asp);
Eurostat COMEXT database (http://epp.eurostat.ec.europa.eu/newxtweb/mainxtnet.do);
Trade Statistics of Japan (http://www.customs.go.jp/toukei/info/tsdl_e.htm).
OECD.Stat (https://stats.oecd.org/index.aspx?queryid=6779).
Note: ‘Manufactures’ = SITC 5–8, minus 667 and 68.

Photo credit: Dominic Chavez

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