Chapter 20: Reviving Industrialization in Africa

On attaining political independence, mostly in the 1960s, most African leaders actively sought to promote industrialization as a means of closing an important part of the development gaps left by the colonial administrators who were averse to initiating sustainable development process in the colonies but position them to entrench dependence on their home countries. Industrialization was viewed as the surest means to hasten the transformation of African countries from agricultural to modern economies, create employment opportunities, raise incomes as well as living standards, and reduce vulnerability to terms of trade shocks resulting from dependence on primary commodity exports. Many countries adopted state-led economic development strategies based on import substitution industrialization. The basic industrial policy framework was essentially one in which the state played a commanding role, which also entailed various degrees of central planning. While this development strategy seemed to have been successful during the first one and a half decades of independence, a process of deindustrialization set in evident in the late 1970s with successive oil shocks and an emerging debt problem, and accentuated by the Structural Adjustment Program (SAP) adopted in the mid-1980s. Despite a few success stories, the process of deindustrialization has intensified in Africa with the contributions of manufacturing declining further and the continent making the atypical transformation from agriculture to services dominated by rudimentary low productivity distributive trade. Indeed, some countries underwent structural changes that saw productivity fall, with some productive sectors shrinking and excess labor moving from higher to lower productivity sectors and to informality (McMillan & Rodrik, 2011).