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Zambia to tax
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Wednesday, Aug 15th

'Africa's manufacturing sector needs renaissance'

'Africa's manufacturing sector needs renaissance'

The World Bank says new technology, including advanced robotics, industrial automation, and 3D printing, is changing the landscape of global manufacturing. Although there are challenges, it notes that opportunities remain for developing countries - as long as governments take appropriate policy actions on competitiveness, capabilities, and connectedness.

New technologies and processes will change how traditional goods are made. To make the most of each economy's potential; policymakers and private-sector decision-makers will need to seize new opportunities by re-thinking their manufacturing-led development strategies says Gaurav Nayyar, an economist in the World Bank Group's Trade & Competitiveness Global Practice.

Nayyar co-authored a report Trouble in the Making? The Future of Manufacturing-Led Development.

The report reveals how advances in technology and changing trade patterns are affecting opportunities for export-led manufacturing. It highlights the resulting changes in the manufacturing sector's ability to create jobs and lift people out of poverty in developing countries.

Anabel Gonzalez, World Bank Group's senior director for trade & competitiveness notes in the report that, "Technology and globalisation are changing how manufacturing contributes to development. We will need to embrace this change rather than fear it. In the past, the manufacturing sector created jobs for unskilled workers and increased productivity. In the future, developing countries will need to update their policies along with their infrastructure, firm capabilities and job creation strategies to meet the demands of a more technologically advanced world."

According to the World Economic Forum (WEF), the limited structural transformation in Africa has not translated into more jobs, because the manufacturing sector itself requires extensive reform.

"What Africa needs is a manufacturing renaissance, with more local value-addition that would create more and better-paid jobs. It could make African countries become more resilient to economic shocks and less dependent on natural resource exports," states the global organisation.

An excerpt from the World Bank Report reads, "Some countries saw progress stall after a transitory pickup of economic growth, such as in Latin America. Other countries, including those in Sub-Saharan Africa and South Asia, never managed to break into manufacturing production to a significant extent.

"The manufacturing sector's role in supporting economic growth and development has been underpinned by a range of pro-development characteristics with the potential for spill overs and dynamic productivity gains: scale, tradability, innovation, learning by doing, and job creation. It has played a unique role in development by raising the productivity of large, unskilled workforces."

Data from the Overseas Development Institute shows that African manufacturing production, exports and Foreign Direct Investment (FDI) have grown over the last decade.

Between 2005 and 2014, manufacturing production within Africa more than doubled from US$73 billion to US$157 billion, growing 3.5% annually in real terms. Some countries, such as Uganda, Tanzania, and Zambia, have achieved more than 5% annual growth in the recent past.

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