Industrialisation not a magic bullet

African countries need to be wary of driving industrialisation as the solution to their challenging economic environments. According to Dr Martyn Davies, the managing director of emerging markets and Africa at Deloitte, considering the size of the continent, the high number of low- to no-growth economies, and the lack of infrastructure, industrialising may not be the answer to all of the continent’s problems. “How you define industrialisation is problematic in itself,” he said. “Is gaming, for example, an industry? Is the design and creation of online games and the export of these considered a manufactured product or is it a service?” He said in the majority of African states there were no defined growth models and focusing on industrialisation with the idea of developing a continental free trade area would be challenging to say the least. “Industry is tremendously difficult and it requires significant infrastructure, intellectual capital and competitive supply chains that can compete with those around the world.” It was not as simple as just making a policy switch, said Davies. “Ethiopia is one of the countries successfully driving the manufacturing process, but in South Africa it is being lost.” He said the need to diversify was pushing countries to manufacturing, and while it was necessary to find growth paths beyond commodities it was not necessarily as easy as it sounded. “Australia has plenty of iron ore but no manufacturing while Japan is one of the best manufacturers in the world with zero resources. It is an economically illiterate assumption that having resources means beneficiation will bring growth.”