African Development Bank Chief Economist Urges African Capital to Support Industrialization Across the Continent

Professor, thank you so much for joining us today. What a momentous day. I mean, we're looking at imperatives for sustainable industrial development in Africa. What does that mean for the AFDB? Thank you very much for having me. The imperative for sustainable industrial development in Africa means the world for not only the African Development Bank Group, but also for the African continent, for every African. And the reason for that is what I said during the opening session, we see that industrial development is at the bane of development of every country of the world. And over time, we have seen that African industrialisation has not caught pace with the rest of the regions, its peers in the rest of the regions of the world. And then what we've seen is that manufacturing value added in Africa remains very low, and only about 20% of Africa's traded products are from manufactured products. And what that means is that we're not adding value to our resources, and we're then earning less, playing in the lower value, at the lower levels of the value chain. And with the COVID-19 pandemic, the geopolitical tensions we have seen, the Russia's war in Ukraine and the rest of it, we've seen disruptions of the global supply chains. We've also seen calls for reassuring and friend-sharing in trade. We have seen a lot of changes in the global financial and development architecture. And that only points to one thing. Every region, every country, needs to look into their own strategic industrial policies to produce what they need, and to consume what they need, and also to build and strengthen regional value chains, just as a risk mitigant, in case there's another pandemic. And as we know, there will be another pandemic. It's not like COVID-19 will be the last. So that is why we have, with the United Nations Economic Commission for Africa and United Nations Development Program, the African Development Bank has co-convened this conference, so that we can refocus on this critical aspect of development. And if I quote the president of Ethiopia this morning, I like the words he used. Industrialization is a necessity. It's not something that we just have to do. It's a necessity for Africa. It's not something we just have to do. Absolutely. And you mentioned earlier on today that Africans should produce African and consume African. And you're talking right now about manufacturing regional supply chains and the like. So how can we further strengthen our regional supply chains and enhance our manufacturing capability as African nations? Now, there are several ways that needs to be done. But let me just talk about a few of them. One, we need to make sure that African capital supports African industrialization. And that doing that means that we boost our domestic revenue mobilization and we block leakages in our financial flows to ensure that we can channel resources to the much needed capital that is required for industrializing the continent. But we'll also need to do a lot more of economic integration, where countries are trading together and working together in more meaningful ways. And one of the areas of doing that is for countries to maintain an open visa opportunities for African countries to allow for factors of production to move freely between countries. And that will help to support innovation and increase factor productivity in these countries. But again, investing in infrastructure is a key aspect that must happen. Building hard infrastructure, building the roads, the rails, the regional interregional connectivities, the airports and seaports will help to improve the logistics and reduce the cost of production. And it will also enhance trade and trade flows between countries and trade facilitation. But we also need policies that encourages the local production and local consumption, but also helps for import substitution on the continent. And then on the other side, we need to strengthen quite a lot our soft infrastructure, which is the knowledge capacity, the institutional capacity for governance, our rules and regulations that will ensure that we'll have good environment that is safe for capital to come in and safe for capital to leave. So maintaining easy entry and exit and safety of capital on the continent, that would be very critical in allowing the much needed resources that is required for industrializing the continent. And again, we need to invest in our youths and women, the greatest asset that this continent has. If you look at the narratives currently, the whole world now knows that the world is becoming African, because in the next few years, over 25% of the global population will be in African, and most of them are youths. And these youths provide for me, in my view, the labor productivity markets for the future. So we need to start investing a lot in African youths and women, because again, this is my experience. This is where the innovation drive lies on the continent. And digitization to help in improving transparency and competitiveness of our markets will also be very crucial in getting that done. Absolutely. And on the point of view, that's been a very important factor that has come through the conference already, in terms of the young researchers that will be presenting their research papers, and the particular focus on youth entrepreneurship and women entrepreneurship as well. But Professor Uramo, thank you so much for joining us today.

The 2023 African Economic Conference has officially kicked off and is being held in Addis Ababa, Ethiopia. The theme for this year's for this year's conference is “The Imperatives for Sustainable Industrial Development in Africa" and CNBC Africa's Tania Habimana caught with Kevin Urama, Chief Economist, African Development Bank. 

Urama: African capital should support Africa’s industrialisation 

The 2023 African Economic Conference has officially kicked off and is being held in Addis Ababa, Ethiopia. 

Urama: African capital should support Africa’s industrialisation

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Urama: African capital should support Africa’s industrialisation

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