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‘AFRICAN COUNTRIES SHOULD INVEST IN HUMAN CAPITAL’

By Nomfanelo MaZiya | 2023-11-27

Experts have urged African countries to invest in human capital in order to foster integration into global value chains and enhance industrialisation.

This was during the African Economic conference 2023 which was held in Addis-Ababa, Ethiopia, from November 16-18, and organised jointly by the African Development Bank, the United Nations Economic Commission for Africa and the United Nations Development Programme.

The conference’s central theme was ‘Imperatives for sustainable industrial development in Africa’.
The African Development Bank (AfDB) taking a look back at the conference highlighted the findings of the studies presented on Friday, during the sixth research session at the conference.

AfDB reported that although African countries had improved their participation in global manufacturing value chains in recent decades, they remained low.

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It further highlighted that over and above remaining low, African countries participation was dominated by export of raw materials and involvement in relatively unskilled tasks.

Therefore it was reported that experts recommended that countries from the continent seize opportunities to engage more in international trade by promoting added-value manufacturing and investing more in human capital.

“This will allow them to exploit the potential of industrialisation, which has the power to stimulate inclusive growth in Africa,” reads the report.

It was further reported that although employment in the manufacturing sector more than doubled in Africa between 1990 and 2018, from 8.6 to 21.3 million jobs, African countries’ participation in global value chains was stagnant.

It reflected uneven 1.7 per cent in 2019, compared with 1.5 per cent in 2000, “according to 2022 data from the African Union Commission and the OECD Development Centre,” reads the report.
It further highlights that this was the finding established by Bernard Nguekeng, a lecturer in economics and management at Yaoundé II University, in Cameroon.

“Higher upstream and downstream participation in global value chains in countries in Southern Africa and North Africa contrasts with low participation in Central Africa,” he noted in his study, which covers 51 countries on the continent over the period 1996-2018.

Emphasising the positive impact on the economy of these sub-regions, Nguekeng said industrialisation was a key factor in job creation, improving productivity and strengthening exports in Africa, according to AfDB.

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The bank stated that he said industrialisation waa one of the African Development Bank’s five strategic priorities, and a primary objective of the African Union’s Agenda 2063.

AfDB said the panellists shared the view that industrialisation meant that African countries needed to focus on improving the skills of their workforce, and developing their infrastructure and wealth-generating activities to integrate more effectively into global value chains.

“They need to implement appropriate policies, designed to exploit the comparative advantages of each country, while encouraging competition and innovation in high added-value industries, according to the experts’ recommendations,” outlined AfDB.

The bank recalled that in this respect, the study on the structural transformation in around 20 sectors, conducted by Wissal Sahel, development economist at Mohammed V University in Rabat, showed the link between political reforms, sectoral growth and increased productivity in the workforce.

It stated that Sahel said Morocco’s comparative advantage in agriculture was supported by deliberate policies, such as the Morocco Green Plan. “Conversely, the manufacturing sector’s contribution to growth remains low. Foreign trade weighs heavily on industry,” emphasised Sahel, according to AfDB.
It stated that she further highlighted that African governments needed to support businesses on the continent to improve their competitiveness significantly, forge links with local economies and overcome obstacles to investment.

It was further reported that among other things, countries must invest in productivity and skills to attract investments in strategic value chains.

The report further indicated that Bruno Emmanuel Ongo, professor of economics at Yaoundé II University, focused his research on the effects of global value chains on inclusive growth in sub-Saharan Africa.

It is reported that in his study, which covered 46 countries over the period 1995-2020, he found that few African countries were participating in global value chains.

It indicated that he also found that the robust growth in the continent’s GDP, which averaged 5.1per cent over the last decade, had a limited inclusive effect on employment.

“Let’s promote our African products rather than importing textiles from other parts of the world! This would contribute strongly to developing local industry and African integration,” said Ongo.

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It is also reported that he also emphasised the need to create skills development policies as a matter of urgency, via teaching and continuing education programmes, particularly in technology.
“Human capital and governance are not improving African countries’ integration into global value chains,” he observed.

Echoing her co-panellists’ views on the need to invest in human capital, Nneka Esther Osadolor, lecturer at the University of Benin, Nigeria, is reported to have encouraged a shift towards vertical industrial specialisation in order to export products with high added value.

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