SPECIAL REPORT: Industrialization and West Africa’s future, By Audu Liberty Oseni

“Global testament has shown that private sector cannot bring the needed transformation, rather government must lead the process”.

In the 1960 to 1980s, dominant discourses in West Africa centered on industrialisation and manufacturing economy. From 1980s and 1990s, during the structural adjustment programmes, West African states left industrialisation discourses and forayed into privatisation and commercialisation of state owned enterprises, and this led to the collapse of the region’s industries and manufacturing economy. In Nigeria, 150 of its 175 textile industries closed down, leaving only 25 functional, though below optimal capacity. In the northern Nigeria state of Kaduna alone, of 10 textile industries each having a minimum of 4000 workers, none works at the moment.

Remarkably, the Nigerian government had spent an estimated US$7 billion (N1.1 trillion) on the biggest integrated steel company in West Africa, Ajaokuta Steel Company. In 2004, the company was concessioned to Global Infrastructure Holdings Limited (GIHL), an Indian firm. But this hasn’t revitalised the steel company. In the last 30 years, monthly salaries are paid to hundreds of workers who produce not even a bar of steel. A government committee set to proffer solution to this state of affairs recommended scrapping Ajaokuta Steel because it is a drain on the nation’s resources.

Worse still, the Delta Steel Company was closed by a court verdict terminating the management of the company by Indian investors who were alleged to be indebted to a consortium of three banks to the tune of N31 billion (about US$207m). In 1998, it was revealed that 16 years into the company’s operation, besides N1.2 billion spent on it during construction, it has not received any other funding from the government. The company had 110 management staff, 2058 non-technical and 316 technical staff. Besides the job it created, it had 4 primary schools, a quality technical college graded as the number four best in Nigeria, hospitals and technical training institute, 5,200 housing located in four industrial estates.

The Ghana Steel Industry fares no better too. It is facing imminent collapse. In 2010, Ghana lost GH¢60,512,100 (about $29m) to what it termed illegal exportation of ferrous scraps. This was linked to lack of capacity of the local steel companies to produce. This action is said to be a threat to the 3,000-strong workforce found in the 5 steel companies in the country-Tema Steel Company, Ferro Fabrik, Western Steel, Special Steel and Sentuo Limited. More worrisome, when Tema Steel Company could not survive the open market completion it shut down its furnace unit. Over the last 10 years, similar scenarios have led to about 60 timber companies folding up with the attendant loss of about 30,000 jobs.

As at 1991, Burkina Faso had discarded the pursuit of industrialisation and embraced full privatisation like its sister countries across the region. This led to the disengagement of the state from productive and competitive sectors and replaced duty bearer for the assignment with the private sector. This resulted in the transfer of thirty-one (31) companies to the private sector via sales of shares, increases of capital, transfers of asset and privatisation of management. However, these companies held the business fabric of Burkina economy and a great number of people lost their jobs arising from the privatisation policy.

West African states have joined the rest of the African continent in approaches to accelerate development. The New Partnership for Africa’s Development (NEPAD) was developed as a broad incorporated sustainable development initiative for the economic and social restoration of Africa with key objectives to eradicate poverty, position African states on a course of sustainable growth and development; stop the marginalisation of Africa in the globalisation practice; boost Africa’s full and beneficial integration into the universal economy; and step up women empowerment. In the same vein, there was the Abuja Treaty in June 1991, at the summit where African Heads of State and Governments put in place the African Economic Community (AEC) to promote economic, social and cultural development as well as African economic integration in order to expand its self-sufficiency.

Tall as this order of self-sufficiency might seem, it was the subject of a recent discussion in Abuja the capital city of Nigeria in July 2013. The ambition of that discussion for West Africa was to chart ways for an industrialised continent in the year 2063. It set clear targets of a free trade area by 2017; Customs union by 2019, and a common market by 2023. Participants deemed it important to have 10 to 15 potentials of world trade by 2040. They argued that African must have a clear view of what development is and must identify variables that have the potentials to shape the future and determine what its future programme becomes.

Looking at intervening variables, attaining development in West Africa is not likely to be guaranteed 50 years from now. Across the region, political parties and its leadership do not fight because of disagreement over developmental policies, but who controls the larger resources of the state. And on the responsibility of state to pursue development, more energy is channelled towards search for foreign investors and privatisation of state economies. Unfortunately, private sector creation in West Africa is a creation of political leaders to siphon state resources. Global testament has shown that private sector cannot bring the needed transformation, but rather government must lead the process which is a key missing link in West Africa.

Looking at the situation in Africa at large, the 2013 Africa Economic Development Report shows that in 2007–2011, the average share of intraregional exports in overall exports was 11%, compared with 50% in Asia and 70% in Europe. The report argued that Africa needs to increase the diversity and sophistication of its manufactured goods by expanding its productive capacity. And this has to be done via improving infrastructure, enhancing the capacity of its domestic workforces, promoting entrepreneurship, and expanding manufacturing companies for the satisfaction of the continent larger market and find place in a global market.

The African challenge to development is very apparent. The continent accounts for only 1% of global manufacturing, and manufacturing represents about 10% of the continent’s GDP, compared to 35% for East Asia and the Pacific and 16% for Latin America and the Caribbean. African companies are usually very small, and this makes it intricate for them to function at the required capacity to compete. The common size of a manufacturing company staff in sub-Saharan Africa is 47, compared with 171 in Malaysia, 195 in Viet Nam, 393 in Thailand, and 977 in China. This therefore shows that Africa at the moment is living on imports and is not likely to surmount its development challenge soon.

Factors that shape the future for vibrant and sustainable economies are not given adequate attention in West Africa. As the region begins to envision its future, it must begin to think in terms of industrialisation dominating its discourse, in that way the region is likely to guarantee development. In West Africa’s dealings with the West and China, it hasn’t clearly stated what agenda it sets to attain. Apparently, over the past 15 years, development model in West and Africa at large gave room for economic growth that does not translate into poverty reduction, reduce gross inequality and create sustainable jobs which reflect on the quality of lives. This model ought to be replaced with a new development paradigm that approaches development holistically rather than the present jobless economic growth. West Africa setting its development benchmarks is good for its development, but it has to understand that to achieve the benchmarks political will and strong commitment are required. Development will not happen overnight; it needs carefully thought out developmental programmes, and development process must take on board civil society and encourage people’s participation in the process, and the civil society must hold state to be accountable to the people.

West Africa is not likely to attain development in a short while. Countries that have made giant strides in development have prioritised education and channelled their efforts into science, technology and research which are a key missing link in the region. This makes West Africa lack the capacity to produce the required skills and manpower to drive development to which it aspires.


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