Just a few decades ago, the African island-nation of Mauritius depended overwhelmingly on growing sugar-cane -- and was as poor as much of Africa. Since then, Mauritius has transformed itself into a diversified manufacturing and tourism center, able to attract foreign investors and provide its people with incomes far above the continental average.

Across Africa, most countries face the problem that Mauritius once did: They produce and export mainly unprocessed crops or minerals, even though such raw materials are fetching lower and lower prices on world markets. In response, some are seeking to follow the example of Mauritius, to consciously and more energetically build up their manufacturing industries.

South Africa, a country developed through the revenues of its gold and diamond mines, is drafting new legislation to encourage companies to first process minerals before exporting them.

In neighboring Botswana, a realization that the economy cannot be sustained indefinitely on a single product, diamonds, has given renewed impetus to that country's industrialization program.

Africa is clearly on a new path, says Executive Secretary K.Y. Amoako of the Addis Ababa-based UN Economic Commission for Africa, marked by economic reforms, greater commitment to political pluralism, a decline in conflicts and policies more favorable to private investment.

"African countries should aim to be middle-income industrialized nations in the next three decades." While this is a bold vision, Amoako says, it can be achieved.

Early hopes and disappointments

When most African countries gained their independence in the 1960s, the new governments saw industrialization as a logical means of shaking off colonial trade patterns and attain sustainable development. They employed state-led strategies to develop local industries to produce goods that were previously imported. But the results fell short of expectations.

By the 1980s, many African governments embraced structural adjustment policies promoted by the World Bank and International Monetary Fund, which reduced the role of the state in economic activities and encouraged the sale of public enterprises. While many of these enterprises had been inefficiently run, they often accounted for most industrial production and employment.

Diversifying production

Building -- or rebuilding -- African industry is a major challenge. Across the developing world, countries that have successfully shifted from producing raw materials into manufacturing have done so in stages. They started by moving into the processing of primary commodities, a process known as vertical diversification.

Some African countries, for instance, are now exporting leather instead of just hides, textiles in place of cotton, or paper, plywood or furniture instead of logs. Cote d'Ivoire, now a major fish and wood processing country, has managed to do this. So has Senegal, which also shifted from simply selling raw fish into processing and packaging its produce.

"Our entrepreneurs," says Botswana's President Festus Mogae, "should look for technology from partners to enable them to process their products and sell value-added goods abroad."

At independence in 1966, his country was one of Africa's poorest, but it soon discovered diamonds and its economy has been one of the continent's fastest-growing. Aware that these diamonds will one day be exhausted, Botswana has used the revenues to invest heavily in human resources.

On the way to recovery

While African governments and their development partners continue to grapple with the factors responsible for sub-Saharan Africa's weak performance, there is a growing consensus that, at least in a number of countries, the policy environment for recovery now exists.

The World Bank forecasts that in the medium term, value added manufacturing will grow at about 4 per cent annually. A turning point out of the decline of African industry came in the mid-1990s, reports UNIDO, as 36 countries attained industrial growth rates higher than during the first half of the decade. Among the factors that contributed to this shift, the agency states, was a new focus by African governments on competitiveness.

In the past, policy-makers believed competitiveness largely related to wage levels, exchange rates and macro-economic policies. Today, UNIDO identifies infrastructure, governance, skills and technology as the four elements influencing competitiveness.

Moreover, adds UNIDO, all four elements are dependent to varying degrees on state policies and capacity. Competitiveness will be undermined if governments fail either to maintain law and order, to guarantee the security of individuals and investments, to protect intellectual property rights or to provide an efficient infrastructure, adequate training, education and health systems, notes the agency's Industrial Development Report.

An earlier African Competitiveness Report issued in 1998 by the World Economic Forum and the Harvard Institute for International Development found that small, dynamic economies with solid export bases perform the best.

(China Daily December 18, 2004)