The Future of African Industrialization: Will it be Homegrown or Foreign-Led?

As Africa embarks on its industrialization journey, a critical question arises: Will this process be driven by African ownership or is it expected to be led and hence dominated by foreign actors? The continent's history of colonization and subsequent foreign control over natural resources underscores the importance of local ownership and control. Here's why Africa should prioritize homegrown industrialization and how it can achieve this goal.

Why Homegrown Industrialization Matters

1. Colonial Legacy: Africa's past experiences with colonization have led to protracted, extractive foreign control over resources, hindering economic progress. Otherwise, increased local ownership would ensures that benefits stay within the continent, fostering sustainable development.

2. Current Global Dynamics: The ongoing geopolitical tensions between superpowers and the significantly influential role of emerging economic powers create an opportunity for Africa to assert its economic independence. As the continent becomes a significant consumer market, it must leverage this position to negotiate favorable terms with foreign partners - if at all not doubling up effort and becoming a producer market.

Plausible Strategies for Homegrown Industrialization

1. Technology Transfer: There are several state and nonstate actors in the global north who enjoy the title “development partner” with Africa. These foreign partnerships need to be encouraged to focus on technology transfer rather than ownership. This approach allows African businesses to acquire necessary skills and knowledge while maintaining control.

2. Special Purpose Vehicles (SPVs): Use SPVs as platforms for foreign partnerships, ensuring local businesses secure financing and work with foreign companies as minority owners. This model facilitates technology and logistical knowledge transfer. This too should be deployed on a time bound basis to ensure an integrated approach as well as aim at the goal of Africa’s own growth, transformation and taking charge.

3. Local Funding: Rely on local public and private funds, as well as diaspora investments, for startup financing. Foreign capital should serve the purpose of catalysing local capital mobilisation, resulting in a good mix or diversity of funds, and drive the cost of capital to affordable levels. Although growth may be slower, this approach ensures organic development with internal ownership - guaranteeing sustainability.

4. African Union Coordination: The African Union can play a pivotal role in coordinating these efforts, ensuring a unified strategy across the continent. In addition, AU should be responsible for coordinating unified external action, harnessing one African voice on the global stage, and facilitating collective negotiations for the continent - saving costs and strengthening African voice and agency in today’s global village.

Opportunities and Challenges

Opportunities: Africa's manufacturing sector is projected to double by 2025, creating over 14 million jobs. The Continental Free Trade Area (AfCFTA) offers a platform for intra-African trade and specialization - facilitating African nations to rely on each other? for what each is best at.

Challenges: Africa faces challenges such as weak institutions, infrastructure gaps, and competition from global market actors. Addressing these through green industrialization strategies and embracing and investing in digital technologies can enhance competitiveness.

Africa's industrialization should be driven by local ownership and control, leveraging north-south-south-south cooperation including on technology transfer and strategic partnerships. This approach not only ensures economic sovereignty but also fosters sustainable growth and development (locally developed, locally owned). With coordinated efforts and support from PanAfrican international institutions, Africa can chart its own industrialization path, securing a brighter future for its people.

Cited Sources

Industrialization in Africa: Issues and Policies https://www.policycenter.ma/sites/default/files/2023-10/RP_05-23_Hinh%20T.%20Dinh%20VF.pdf

GREENING AFRICA'S INDUSTRIALIZATION https://www.uneca.org/sites/default/files/fullpublicationfiles/era-2016_eng_rev6may.pdf

Africa's industrialization under the Continental Free Trade Area https://www.brookings.edu/articles/africas-industrialization-under-the-continental-free-trade-area-local-strategies-for-global-competitiveness/

Industrialization - African Journals Online https://www.ajol.info/index.php/jolte/article/download/51996/40631

10 Africa: Industrialization Strategy In the Context of Globalization in https://www.elibrary.imf.org/view/book/9781557757692/ch010.xml

Leapfrogging: The key to Africa's Development? https://documents1.worldbank.org/curated/pt/121581505973379739/pdf/Leapfrogging-the-key-to-Africas-development-from-constraints-to-investment-opportunities.pdf

10 things Africa must do to accelerate industrialization and ... https://au.int/en/pressreleases/20221114/10-things-africa-must-do-accelerate-industrialization-and-economic

History of African Trade https://elibrary.acbfpact.org/acbf/collect/acbf/index/assoc/HASH0100/039e055d/606b9c4a/9550.dir/History-of-African-Trade.pdf

Africa's Industrialization Prospects: A Fresh Look https://docs.iza.org/dp16043.pdf