Lessons, Priorities for Africa’s Future Industrialisation

Time and again, industrialisation has been a major policy objective of African governments but with little to show for it. This is because the focus should not only be on building physical infrastructure or aiming to bolster exports, argues Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

It has been almost three decades since the United Nations General Assembly proclaimed November 20th as Africa’s Industrialization Day. This was done as part of the first Industrial Development Decade for Africa.

African countries have been aspiring to industrialise their economies since their early days of liberation. By the mid-1960s, many African governments conceived bolder plans and programs on industrialisation. This was further given a regional scope with the adoption of the Lagos Plan of Action in April 1980 for the collective industrialisation of Africa.

Since the 1970s, more specifically as a follow-up to the Lagos Plan of Action, many African countries embarked upon ambitious industrial development programs that were largely driven by massive public investment. Nevertheless, except for a couple of North African countries and South Africa, most of them failed to achieve their stated goals. As a result, Africa’s share of global manufacturing output is still around two percent.

Over the last decade, Africa has seen a renewed interest in industrialisation both from within and the outside world. As we get ready to celebrate Africa’s industrialisation day of 2018, it is crucial for governments to reflect on key lessons from past failures and look at existing and emerging challenges and opportunities.

Primarily, African countries should recognise that industrialisation does not involve an either-or choice between import substitution and export promotion. Rather than focusing on such false dichotomy, countries should pivot to an industrial strategy that improves the well-being of people through job creation and higher value addition to local resources.

Secondly, the most critical infrastructure prerequisite for industrialisation is the institutional infrastructure that includes creating the required human skill sets and institutional systems that drive the industrialisation process.

Development of an effective industry-university linkage is one such institutional system besides having a sound and context-relevant policy environment. Most of the investment that went into the development of huge physical infrastructure across the region thus far largely failed to deliver due to limitations in such key areas.

When it comes to physical infrastructure, public sector investment has a key role to play, particularly in developing energy, transportation and communication infrastructure. However, such investment needs to be coupled or preceded by investment in institutional infrastructure.

Most African countries spend significant resources and time on attracting Foreign Direct Investment (FDI). Even if FDI has a key role to play in facilitating industrialisation, its effectiveness is largely dependent on having the right mix of institutional and physical infrastructure.

Most importantly, African countries need to recognise that they can never industrialise by becoming a dumping ground for obsolete and inefficient industrial production processes in the name of FDI. This is particularly a critical issue now when we consider the progress in different parts of the world, including China, toward a more resource-efficient industrial system.

Moreover, African countries need to prepare themselves to contain the adverse impact and maximise the benefits from the opportunities of digitisation of the global economy.

Last but not least, African countries should make a maximum effort to exploit the emerging opportunities created by recent development in disruptive technologies. These include the opportunities from development in the application of artificial intelligence including block-chain technologies, distributed energy systems driven by renewable energy resources, and distributed manufacturing systems that include modularisation of industrial processing technologies.

These are crucial not only for their exponential economic impacts but also because of their significant distributional outcomes that can promote inclusivity or discourage it.

It has been said that Africa has largely missed all three stages of the industrial revolution of the past two centuries. As we approach the closure of the third industrial development decade for Africa, it is hoped that African leaders and its young and creative generation will make their respective countries part of the industrialisation of the 21st century by taking such lessons into consideration.

By Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.
Published on Nov 10,2018 [ Vol 19 ,No 967]

Repi Waste-to-Energy Plant: Sunk, Misguided

The Repi Waste-to-energy facility is located at an open-dump site in Addis Abeba. The plant was officially inaugurated a couple of weeks ago and has received significant media coverage at the national and continental level.

The facility required about 2.6 billion Br to construct and was initially planned to generate up to 50 MW of electric power a year, covering a third of household electricity consumption in Addis Abeba, according to information released during its inauguration.

Aside from the coverage it received in the national media, the plant was highlighted by a number of regional and international media outlets as an environmentally friendly investment that needed to be replicated by other African countries.

“The development of Reppie represents Phase I of a wider rollout program to develop multiple waste-to-energy plants across SSA’s major cities,” a statement on the website of Cambridge Industries, the project contractor, reads.

Despite the accolades though, it was a misguided investment beginning with the initial decision-making process.

It is crucial to understand the historical background of the technology. Waste incineration was developed in the 1960s and ‘70s as a solution to the increasing volume of waste generated, which created disposal challenges at sanitary landfills by shortening their lifespans.

While finding a more cost-effective disposal of the growing volume of waste was the primary driver, generation of energy and hot water production were the other factors that expedited the proliferation of waste incineration facilities in European urban centres in the 1980s and the ‘90s.

From the perspective of operational efficiency, there are a number of fundamental prerequisites for the technology to be economically viable. Primarily, a significant proportion, about 40pc, of the domestic waste, has to consist of energy-rich combustible waste.

The city also has to have relatively efficient waste segregation and collection infrastructure that ensures collection and sorting of the waste at a minimal cost. Just as crucial is the necessity of the plant having a co-generation possibility that will enable it to make use of the steam and hot water that comes out after driving the turbine.

Such waste incineration systems were quite effective until the mid-90s in Europe but were later considered to be white elephants as the waste management practice shifted from disposal to “Reduce, Reuse and Recycle.”

Addis Abeba does not meet most of the fundamental prerequisites outlined above. As a matter of fact, with the exception of a couple of cities in South Africa, none of the urban centres in Sub-Saharan Africa would fulfill the operational requirements.

Even for those cities which may have a higher percentage of combustible waste, they can make higher values from such waste through recycling and reuse rather than incineration for energy generation.

Of course, African countries would need to have small-scale incinerators to handle hazardous waste generated in medical and industrial processes, for example. However, considering the composition of domestic waste of most African urban centres, which is 60pc to 75pc dirt and biodegradable waste, incineration for energy generation is a fundamentally wrong and misplaced choice of technology. Furthermore, the mining of combustible waste from the existing dumping site at Repi would significantly increase the embedded energy that would be consumed to generate every megawatt of energy.

The most disappointing fact is that, for the same amount of investment that was spent on this project, the Addis Abeba city administration could have had an efficient Integrated Solid Waste Management System that would have created thousands of jobs.

The whole idea of the project is a typical case of taking Africa as a dumping site for obsolete technologies. Promoting it as the future direction for African urban centres, in the presence of other resource efficient waste management techniques and technologies, is offensive to the region.

African countries should avoid making similar mistakes and make more informed and rational decisions on their future infrastructural investment including their waste management infrastructure.

By Desta Mebratu
Desta Mebratu (Prof.) is the CEO of African Transformative Leapfrogging Advisory Service (ATLAS). He can be reached at desta@africaleapfrog.org.

Published on Sep 29,2018 [ Vol 19 ,No 961]

Transformative Infrastructure: Route to Better Growth Output

b>The 2018 African Economic Outlook suggests that African countries will continue to develop. Such a growth outlook would be supplemented if the nations matched it with transformative infrastructure development, which takes renewable energy and digitisation into consideration, writes Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

The African Development Bank recently released the African Economic Outlook report for 2018.

The report noted that overall economic real output growth of African countries is estimated to have increased by 3.6pc in 2017. By this year and the next, it is projected to accelerate to 4.1pc. It also concluded that the recovery of growth had been faster than expected, especially among economies that are not resource intensive.

The report further highlighted some of the significant policy measures that need to be taken by African countries to achieve structural transformations that would create more jobs and reduce poverty.

Beside providing an overall annual review of macroeconomic developments and structural change, the report mainly focused on financing infrastructure development in the continent.

In this context, the report highlighted the existing major infrastructure gaps that impeded the highly required economic diversification that may lead to structural transformations. The report talks about the insufficient stock of productive infrastructure in Africa.

It also underlines the critical importance of developing high-quality infrastructure to achieve the Sustainable Development Goals, which are globally targeted for attainment by 2030, and other related regional goals.

Overall, the report provides valuable analysis and recommendations on the importance of addressing existing infrastructure gaps. It also provides useful suggestions on possible strategies that need to be considered by African countries and its development partners on how to finance infrastructure development in Africa.

However, it falls short in highlighting the key considerations that African countries should make in terms of building high-quality infrastructure.

Primarily, the fourth industrial revolution, aka “Industry 4.0”, is driven by increased digitisation and robotisation. It is one of the significant disruptive developments that will redefine the global economy of the 21st century. This development will obviously result in some key challenges that need to be addressed, both individually and collectively, by countries.

There are also major opportunities that may positively influence the quality of the infrastructure we develop in the 21st century. This ranges from the development of smart grids for power infrastructure to the development of distributed manufacturing systems supported by more efficient supply chain management.

Another major development that will determine the character of the 21st-century economy is the inevitable transition in the global energy system that is driven by progress in the renewable energy sector.

The distributed nature of renewable energy resources coupled with the potential empowerment of individuals and communities due to the development in the ICT sector could provide a strong basis for an economy that fosters job creation and value addition at the local level.

This would require developing a new generation of energy infrastructure that has an optimal scale and resource efficiency combination.

Just as important a factor that African countries should consider is that the decision they make on the kinds of infrastructure they build today has huge potential to lock them in for the coming decades.

This is particularly true if they continue investing in the conventional infrastructure of the 20th century, which may not be responsive to developments in the 21st century. In this regard, applying life-cycle planning and management of infrastructure development is key to ensuring the development of quality infrastructure that reduces or eliminates such lock-in possibilities.

Quality infrastructure of the 21st century is ultimately characterised by its potential to create an inclusive, low-carbon and resource-efficient economy that results in multiple economic, social and environmental benefits to society.

This is, in essence, the aim of the SDGs and the aspirations of the African Union’s Agenda 2063, which call for transformational change. Africa, as a region that is yet to develop a large proportion of its infrastructure, has a huge leapfrogging opportunity if it sets a goal of developing a transformative infrastructure for the 21st century by considering the future first.

By Desta Mebratu (Prof.)
Desta Mebratu (Prof.) (desta@africaleapfrog.org), CEO of African Transformative Leapfrogging Advisory Service.

Originally published: https://addisfortune.net/columns/transformative-infrastructure-route-to-better-growth-output/