United Nations Industrial Development Organization (unido)

In the first section the paper describes the weak position held by Africa in the global trade of goods and identifies key determinants of the region’s industrial performance. It goes on to outline shifts in the overall structure of international trade and production, together with the challenges they pose for Africa. It analyses the reasons for low productivity rates, points to missed export opportunities and highlights the key determinants of competitiveness. In the two final sections the paper suggests ways and means of improving competitiveness within the private sector so as to meet the challenge of competing in a global production system that is highly segmented. It goes on to describe the UNIDO approach to promoting productive capacity that supports both the African Union’s strategic plan for industrialisation and the sustainable industrial development component in NEPAD. 1.1. The share of Africa in global trade in manufactured goods 1.1.1 The region’s weaknesses In 2004 the volume of world merchandise trade expanded by 9 %. This was primarily due to the dynamic performance of trade in manufactures that grew by 10 % in the same year. Of the total volume of global merchandise exports valued at $ 8,907 billion, manufactures accounted for some $ 6,570 billion as against fuels and mining products ($ 1,281 billion) and agricultural products ($ 783 billion). In terms of value, Africa’s share amounted to some $ 212 billion. In structural terms Africa’s merchandise exports in 2004 were skewed towards fuels and mining products (59.1 %), followed by manufactures (25.1 %), agricultural products (12.1 %) and unspecified products (3.7 %). African decisions-makers in the productive sector need to be aware of the direct correlation between their position in the different segments of the global production system and the positive impact on economic and industrial governance at the local, national, regional and continental levels. They should gradually adjust their approaches to industrial development, if there is to be any chance of reducing Africa’s marginalization in the global production system. Greater knowledge of the individual countries’ specific industrial capacities and capabilities across the whole value chain is becoming a key tool in modernizing the region’s industries. In 2004 Africa exported goods to the value of $ 232 billion equivalent to 2.6 % of global trade; it imported goods to the value of $ 212 billion equivalent to 2.3 % of global trade. Of its exports, manufactures accounted for $ 58.1 billion, agricultural products $ 28 billion and fuels and mining products $ 137 billion. Taking fuels, mining products and agricultural products together, it can be seen that unprocessed goods accounted for more than 71.% of Africa’s total merchandise exports in 2004. Only 10 % of the goods exported were traded within Africa (intra-trade); the larger shares went to Europe (42.8 %), Asia (16.8 %[5.8 % to China alone]) and South and Central America (2.9 %). Africa may well face difficulties in terms of long-term sustainable development, if it fails to promote its capacity and capability to process goods. Productive capacity is an essential complement to trade capacity in Africa. According to UNIDO, the share of Africa in global manufacturing value-added in 2005 stood at 0.7 % as against 5,1 % in Latin America and 18.4 % in South-East Asia (see Graph 1). Global concern is growing over the manner in which effective operational support can be lent to stakeholders in development as they endeavour to attain the targets set in the United Nations Millennium Development Goals * This part of the paper has been prepared by Yves Ekoué Amaïzo and Anders Isaksson (1.3 only), UNIDO, Vienna (Austria). 1 World Trade Organization, International Trade Statistics 2005. 2 Ibid, p. 80. 3 UNIDO, International Yearbook of Industrial Statistics, 2006, p. 34 (percentage is in constant 1995 price).