‘Africa’s Path to Industrialisation: How Can China Contribute to the Continent’s Economic Development?’ (中国方案与非洲自主工业化的新可能) was originally published in Wenhua Zongheng (文化纵横), issue no. 1 (February 2019).

Since attaining their independence, African countries have tirelessly pursued industrialisation, seeking to overcome their dependent status in the global economic order. In 1989, the Organisation of African Unity (the precursor to the African Union) and, subsequently, the United Nations General Assembly declared 20 November to be Africa Industrialisation Day to encourage international awareness and cooperation on African industrialisation. Regrettably, these aspirations have not yet been realised.

In the twenty-first century, there have been important developments in the continent’s economic development. The relationships between Africa and emerging economies, including China, have developed rapidly, altering the continent’s strategic position within globalisation. A period of high growth rates between 2000 and 2014 led to the emergence of an ‘Africa Rising’ narrative in Western media, as Africa’s image transformed from a ‘continent of despair’ to a ‘continent full of hope’.^[1] However, behind the portrayals of the ‘rise of Africa’, the underlying figures remain disheartening. In 1970, Africa’s share of global manufacturing was about 3 percent, by 2014 that share had fallen to less than 2 percent. Meanwhile, in 2017, across sub-Saharan Africa the average share of manufacturing in Gross Domestic Product (GDP) hovered around 10 percent, roughly on par with the levels of the 1970s. Apart from a few countries such as South Africa, Egypt, Nigeria, and Morocco, the growth rate of manufacturing in most African countries has consistently lagged behind the overall economic growth rate. In short, Africa has experienced growth without industrialisation, with its high economic growth rates stemming from rising demand and prices for natural resources, making it unsustainable.

Through an analysis of Africa’s experiences on the path to industrialisation, this paper attempts to answer three questions. Why have decades of Western aid failed to promote African industrialisation? What explorations have African countries made in their paths to industrialisation? And finally, as a fellow participant and student on the path to industrialisation, what can China contribute to Africa’s industrialisation?

The Failure of Western Developmental Prescriptions

In the 1960s, newly independent African states began to embark on the path of industrial development. However, six decades later they have not yet been able to realise industrialisation. Popular explanations for the continent’s low level of development have often blamed internal factors such as climate, geography, ethnic diversity, and culture. However, these explanations fail to account for the fact that such issues have existed in one form or another in all of today’s developed countries.^[2] In addition, they often minimise or ignore the historic and ongoing impact of Western intervention on the continent. Colonialism transformed Africa into a source of raw materials for imperial powers and a dumping ground for goods, producing underdevelopment in various aspects. For instance, early colonial rulers created education systems that were focused on training clerks to assist in the management of the colonies, rather than training engineers and scientists. In recent decades, the failed prescriptions and models imposed by the West on Africa have also negatively impacted the continent’s development.

There have been many disputes in the West over the appropriate roles of the state and the market in economic development. During the first half of the twentieth century, prominent Western economists, such as John Maynard Keynes, proposed theories that called for governments to strengthen their intervention and regulation over the economy. These policies were broadly implemented in Western Europe and the United States until the late 1970s and early 1980s, when state intervention became discredited in favour of economic liberalism. Western countries came to view state-led economic models as no longer being sustainable and began to implement neoliberal policies, including privatisation of state-owned enterprises and public institutions, trade liberalisation, relaxation of domestic industrial regulations, and tightening of government spending.^[3] The West also forcibly imposed neoliberal policies on much of the world and often tested its neoliberal ideas on countries of the Global South, including in Africa, impeding their pursuit of industrialisation. The imposition of Western economic ideology and theories has hampered African countries in formulating developmental strategies suited to their national conditions.^[4]

In the 1960s and 1970s, newly independent African countries implemented a variety of state-led development strategies. However, the continent’s economic performance lagged behind other developing regions and state-led models of development were blamed as the culprit of not only slow economic growth, but governmental inefficiencies and corruption. Coupled with the ongoing foreign exchange crises that afflicted most African countries during the 1980s, they had no choice but to turn to the Bretton Woods institutions and accept structural adjustment programmes imposed by the International Monetary Fund and the World Bank. For the next several decades, the Western-led global wave of economic liberalisation, deregulation, and privatisation swept across Africa. Under the guidance of neoliberal prescriptions, African countries were essentially de-industrialised, undoing much of the progress that had been made in the previous decades. Laissez-faire policies did not bring development and prosperity to Africa. In the 1960s and 1970s, per capita income in sub-Saharan Africa grew at a rate of 1.6 percent per year; between 1980 and 2004, per capita income decreased by 0.3 percent per year.^[5]

In the first decade of the twenty-first century, most African countries experienced rapid economic growth due to the commodities boom. However, due to the absence of industrialisation strategies under neoliberalism, few African countries could achieve structural economic transformations and technological upgrading. During this time, the World Bank and Western donor countries shifted the focus of their aid to Africa towards ‘improving the business environment’, that is, promoting reforms that were favourable to the private sector which, they claimed, would lead to industrial development.^[6] According to research conducted by the Brookings Institution on eight sub-Saharan economies, this aid agenda was ‘poorly implemented and insufficient’.^[7] Indeed, reforms to improve the business environment are inadequate to address the challenges faced by African economies in global industrial competition. Furthermore, even in low-income African countries with extremely poor business environments, rapid growth can be achieved in specific industries and areas.^[8] Policies oriented towards improving the business environment reflect the creed of the Western aid community: industrialisation can only be built on neoliberal foundations. Chinese economist Wen Yi (文一) summed up the problem with the Western development prescription as, ‘taking the roof as the foundation, taking the result as the cause […] taking the results of Western industrialisation as the prerequisite for economic development’.^[9]

Western aid has promoted economic dependence in Africa, while the political, economic, and ideological hegemony of the West has reduced Africa’s policy space and autonomy. From neoliberal structural adjustment programmes to reform strategies aimed at improving the business and investment environment, Western prescriptions have not assisted African development. Under this model, a significant amount of African developmental policies have been formulated outside of the continent, without the input and leadership of indigenous African developmental thought. On matters of economic development and industrialisation, the dominant positions in the intellectual landscape are held by politicians and scholars based in Washington and Paris. Independent African thinking and analysis has been marginalised, and African countries have been discouraged from formulating industrialisation strategies based on their national conditions.

Finally, two additional factors have prevented Western aid from promoting industrialisation in Africa. First, Western donor countries are concerned that if Africa achieves industrialisation, the continent will compete with them; thus they curb Africa’s advancement up the industrial ladder. Second, Western industrialised countries have moved their labour-intensive industries and high-polluting, low-end manufacturing to East Asia, and have entered a post-industrial stage of development. Under this global division of industry, the West does not need to transfer industries to Africa and, hence, is not motivated to promote African industrialisation.

Africa’s Pursuit of an Independent Path to Industrialisation

In recent years, there has been a renewed emphasis placed on industrialisation within Africa. The African Union (AU), various regional organisations, and most African countries have published various industrialisation strategies. The AU’s Agenda 2063 puts forward a clear proposal for economic transformation on the continent through industrial development, especially manufacturing, to increase the value added of Africa’s resources, improve levels of employment, and raise people’s income.

Across the continent, a consensus is gradually forming around the belief that industrialisation is essential to Africa’s economic transformation, sustainable development, and modernisation. The key next step is to determine how to effectively promote industrialisation. Today, African explorations of a sovereign path to industrialisation are focused on four main areas.

1. The role of the state and the market in industrialisation. Unlike the 1980s and 1990s, when market fundamentalism was in its heyday in Africa, in the current period few government’s completely deny the state’s role in industrialisation. However, there remain disagreements as to the nature and scope of this role; namely, whether the state should focus on providing public goods such as education, research and development, and infrastructure where market supply is insufficient, or whether the state should directly intervene in the economy and influence resource allocation, such as by supporting certain industries or companies, thereby reshaping the process of economic development. In 2016, the United Nations Economic Commission for Africa (UNECA) published Transformative Industrial Policy for Africa, which emphasised the importance of industrial policy in advancing national economic development and structural transformation, arguing that ‘the manufacturing sector has been the engine of economic development’ and that ‘the manufacturing sector in an economically backward country cannot develop without an intelligent and coherent industrial policy’. The principal author of Transformative Industrial Policy for Africa, Korean economist Ha-Joon Chang, is a prominent advocate of industrial policy, having long contended that state intervention in industrialisation has been essential to the development of all of today’s rich countries. Contrary to the market fundamentalist narrative, Chang argues that these countries adopted significant degrees of protectionism in the early stages of their economic development and have continued to do so for much of the post-Second World War period. Consequently, Chang argues that developing countries should reject Western neoliberal prescriptions and should implement industrial policies in their paths to industrialisation, and has become an influential voice in the industrialisation debates taking place on the African continent. Although most African countries have shifted away from the post-war models of import substitution industrialisation and now tend to adopt export-oriented policies geared towards foreign markets, Chang points to Ethiopia and Rwanda as African countries that have had successful industrial policy experiences in the current era and calls on policy makers to study a wide range of countries, industries, and measures to develop a broad ‘policy imagination’.

2. The interaction between regional integration and industrialisation. In 2009, the chosen theme for Africa Industrialisation Day was ‘industrialisation for integration’ and, in 2017, the theme emphasised that ‘African industrial development’ was ‘a precondition for an effective and sustainable continental free trade area’. In fact, since winning their independence, African countries have established regional integration and industrialisation as the ‘two wings’ to transform Africa’s marginal position in the global political and economic system. Industrialisation advances Africa’s economic development and helps to increase Africa’s share in global production and trade, while regional integration fosters intra-African trade and benefits industrial development. In March 2018, 44 African countries signed the African Continental Free Trade Area (AfCFTA) agreement in Kigali, Rwanda, marking a milestone in establishing a unified African market.

Currently, 86 percent of Africa’s total trade is still conducted with other regions of the world, not within the continent.^[10] However, in stark contrast to the composition of Africa’s exports to other regions of the world, which largely consists of unprocessed primary commodities, two-thirds of intra-African trade is in manufactured goods.^[11] It is hoped that the AfCFTA agreement will increase intra-African trade opportunities, create a larger continental market, act as a springboard for African industrialisation, and further enhance the continent’s independence and autonomy. Although a number of African countries enjoy preferential duty-free treatment for entry of their goods into the US and European markets through the US African Growth and Opportunity Act (AGOA) and the European Union’s Everything but Arms (EBA) scheme, the continent is subject to other impediments and inevitably suffers unfair treatment. For example, in 2016, the member countries of the East African Community (EAC) agreed to phase out the import of second-hand clothing towards a complete ban in 2019, to support the local textile industry. That same year, EAC members Tanzania, Rwanda, and Uganda raised their tariff rates on imported second-hand clothing. These moves sparked a trade dispute with the United States, with the Trump administration threatening to cancel AGOA-related trade benefits for the three countries.

3. The coordinated development of urbanisation and industrialisation. In its 2017 Economic Report on Africa, Urbanisation and Industrialisation for Africa’s Transformation, UNECA wrote that the rapid urbanisation in Africa must be harnessed as a driving force for industrial development on the continent.^[12] In other parts of the world, urbanisation has been closely linked with industrialisation, with urbanisation having been realised through improving agricultural productivity and increasing industrial output. However, the report notes that Africa’s urbanisation has been disconnected from its industrial development and broader structural economic transformation. Africa has not achieved coordinated development of industrialisation and urbanisation, resulting in the creation of ‘consumption cities’, featuring high levels of imports, low levels of formal job creation, and mainly low-productivity services, rather than ‘productive cities’.^[13] Bridging the gap between urbanisation and industrialisation and reconnecting these two developments in a mutually beneficial manner is a major challenge for Africa.

4. The dominant role of manufacturing in economic development. The history of development of the wealthy countries of today reveals that manufacturing has always been the engine of economic development. Few countries have managed to develop their economies without a robust manufacturing base. Nonetheless, some in the West argue that the importance of the service sector is increasingly surpassing that of manufacturing, and that Africa can ‘leapfrog’ industrialisation. For example, in 2017, Joseph E. Stiglitz, former chief economist at the World Bank and Nobel laureate in economics, contended that Africa cannot replicate East Asia’s manufacturing-led model and that the modern service industry will be the engine of Africa’s economic development.^[14] Similarly, in 2018, the Brookings Institution and the United Nations University World Institute for Development Economics Research (UNU-WIDER) jointly published Industry without Smokestacks: Industrialisation in Africa Reconsidered, which proposed that tradable services (for example, information and communications-based services, tourism, and transport and logistics), agro-industry, and horticulture can drive Africa’s economic growth and structural transformation.^[15]

However, on the role of manufacturing in the continent’s industrialisation strategy and Western developmental prescriptions, Africa has a sober understanding. In the AU’s Agenda 2063 and the industrial policies formulated by UNECA, manufacturing is clearly understood to be the foundation and key to the region’s job creation, economic transformation, and development. In 2016, Kingsley Moghalu, former deputy governor of the Central Bank of Nigeria, urged African countries to ‘reject the misleading notion that they can join the West by becoming post-industrial societies without having first been industrial ones’.^[16]

Still, Western technology experts, such as Alec Ross, have continued to claim that African countries can use technology to ‘leapfrog economically’, pointing to Rwanda as an example.^[17] In his 2016 book, The Industries of the Future, Ross wrote that ‘the idea is for Rwanda to move straight from an agricultural economy to a knowledge-based economy, bypassing the industrial phase altogether’.^[18] However, such claims overlook the fact that manufacturing remains the primary driver of the knowledge economy; even Rwanda, which has already rapidly developed this sector, continues to vigorously boost its manufacturing.

Africa has formulated a range of strategies for industrialisation, including improving infrastructure, attracting foreign investment, promoting regional integration, coordinating the development of agriculture and industry, establishing special economic zones and industrial parks, and integrating into global industrial chains. As Africa actively promotes its industrialisation, the continent’s most important strategic partner, China, is undergoing its own domestic economic transformation and industrial upgrading. In China, there are overcapacities in steel and cement, labour costs are rising, and labour-intensive industries face difficulties. Meanwhile, Africa, with a young labour force and large market, is in need of industrialisation. In this period, there are significant opportunities for Africa and China to complement each other’s goals. What role China will play in Africa’s path to industrialisation and whether the Chinese approach can provide Africa with insights distinct from Western prescriptions, are important questions for the China-Africa relationship going forward.

How China Can Contribute to Africa’s Industrial Development

Under the framework of the Forum on China-Africa Cooperation (FOCAC), established in 2000, China has committed to working with Africa to break through the developmental bottlenecks, such as the infrastructure gap, training skilled workers, and funding shortfalls. FOCAC initiatives have consistently focused on cooperation related to industrial capacity, including the ‘ten major China-Africa cooperation plans’ proposed at the Johannesburg Summit of 2015 and the ‘eight major initiatives in collaboration with Africa’ proposed at the Beijing Summit of 2018. China’s contributions to African industrialisation can be organised into three main areas: infrastructure construction; offering new developmental options by sharing its own experiences; and changing the paradigm of international cooperation and improving Africa’s global position through China-Africa cooperation.

1. China supports African industrialisation through infrastructure construction. Africa has a severe infrastructure gap: in the energy sector, this leads to frequent power outages and expensive electricity; the fragile transportation network hinders regional economic integration; and with a population of roughly 1.4 billion people, the continent has only 64 seaports. Here, China has been an important partner, building a large number of railways, roads, airports, seaports, and other transport infrastructure, as well as energy and water infrastructure in Africa. China is also committed to supporting the construction and expansion of African high-speed rail, highway, and aviation networks. In the 1950s and 1960s, Chinese foreign assistance followed a turnkey model that, in some instances, encountered operational difficulties after handover. Following these experiences, China now pays a high level of attention to the subsequent maintenance and operation of foreign infrastructure projects and increasingly strives to combine infrastructure construction in Africa with industrial capacity cooperation. For example, Ethiopia’s Chinese-built industrial parks have synergised with the Chinese-built Addis Ababa-Djibouti Railway, helping the country establish an economic corridor and promote industrial development.

2. China’s developmental experiences demonstrate alternative paths to industrialisation for African countries. As the Western powers imposed their neoliberal model on the Global South, leading to deindustrialisation in many developing countries, China followed a different path. As Liu He (刘鹤), Chinese economist and former vice premier, put it, ‘China adhered to its own characteristics and did not blindly copy the Western model […] In contrast to the either-or and black-and-white approaches of Western economists towards matters such as property rights and competition, China found a middle ground based on its concrete conditions and walked a winding and unique path regarding the issue of marketisation’.^[19] China’s experiences in industrialisation offer lessons on numerous aspects of development that African countries can learn form, such as: the dialectical unity of reform, development, stability, and innovation; the management of relations between the government, market, and society; the importance of leadership that is capable and has a strong political will; the need to define clear strategies; and various infrastructure, industrial, and other developmental projects. In addition, China has accumulated years of experience in engaging with developed countries in a constructive manner to upgrade its own productive capacity. While cooperating with Africa in developing its industrial capacity and facilitating technology transfer, China can draw upon and share its own similar experiences in the development of productive capacity, urbanisation, and industrialisation.

By sharing its experience, China can offer insights to African countries, and this contribution and role are no less important than building roads and bridges. Although China has not pushed its own development model on others, African countries have expressed their own desire to learn from China’s experience. Three important tenets of China’s developmental experience include transcending dogmatic frameworks, paradigms, and models, starting from one’s own concrete conditions, and fine-tuning one’s actions based on experiences and lessons. For example, in 2017, the CEO Roundtable of Tanzania, which brings together chief executives from 200 of the country’s largest firms, published a book on industrialisation, in which China’s experience is studied in depth. Citing the establishment of the Shenzhen Special Economic Zone in 1980 by Deng Xiaoping (邓小平), the authors write that ‘starting small and experimenting would enable us to fail fast, learn quickly, and change things around rapidly and as necessary. After fine-tuning the model over a period of time, we can then scale with higher quality across the nation instead of instantly scaling across the nation, perhaps at a lower quality, given limited implementation and financial capabilities, being unable to fine-tune and manage efficiently when facing challenges, and thereby ending up with a mess of a national industrialisation programme’.^[20] It is important to note that there is no ‘Chinese consensus’ or ‘Chinese model’ with respect to economic development; the relationship between China and Africa is one of mutual learning, rather than one-way instruction.

In this vein, what is useful for African and other developing countries is not merely a summary of China’s successful experiences but, as importantly, an understanding of China’s failures. Arkebe Oqubay, Senior Minister and Special Adviser to the Prime Minister of Ethiopia as well as the chief designer of Ethiopia’s industrial parks, spoke to this point, in an interview that I conducted with him in early 2018: ‘We know that not all of China’s industrial parks have been successful, some have failed. But during my research in China, I could not find any documents or reports that summarised these lessons from failures’. Determining how to comprehensively summarise and communicate China’s industrialisation experiences is an important aspect of China-Africa cooperation today.

3. China-Africa relations can develop a new paradigm for international cooperation and improve the continent’s strategic position, policy space, and autonomy. At the 2016 Group of Twenty (G20) summit, China, for the first time, put forward a proposal to support industrialisation in Africa and the UN-designated group of Least Developed Countries. Western discussions related to Africa often revolve around using aid to resolve poverty, however aid alone cannot resolve poverty or promote industrialisation. In contrast, China-Africa cooperation is focused on development, combining aid, trade, investment, and other means to assist the continent’s independent development.

One of the most significant aspects of China-Africa cooperation is its indirect influence on how Western countries engage with the African continent. Due to their anxiety over the growing China-Africa partnership, Western countries have, to an extent, been pressured to not merely treat African countries as aid recipients but as business and investment partners. The nature of the relationship has gradually changed, and Africa has been able to improve its global position, becoming a hotbed for investment. In recent years, for example, Germany’s Volkswagen has invested and built factories in South Africa, Nigeria, and Kenya, while the US-based logistics firm, Zipline, has launched a drone assembly factory in Rwanda. These developments could be promising for Africa’s industrialisation.

Ultimately, the real engine for African industrialisation lies in the hands of African countries themselves. Capital, technology, and experience from China, or other countries, can only support these efforts. For instance, similar projects or forms of cooperation can have very different outcomes in different countries. In the case of the construction of industrial parks, Ethiopia’s Chinese-built Eastern Industrial Zone not only successfully created tens of thousands of jobs locally but also led to the introduction of the country’s first industrial park regulations; however, in Angola, an oil-rich country, the Viana Industrial Park Zone failed to achieve even the basic ‘three connections and one levelling’ (三通一平, sāntōng yīpíng) – that is, ensuring that a construction site is connected to water, electricity, and roads, and that the ground is levelled before a project is begun – because the local party that received the land failed to set up or operate successful commercial activities in the industrial park. To successfully support African industrialisation, China must align its approach with the specific national development strategies of African countries, which are the key to success or failure on the path to industrialisation.

Bibliography

Author’s Notes