How Africa could create more manufacturing jobs.

Even though the IT sector in many parts of Africa is growing, many economists still think that manufacturing holds the key to solving the rampant youth unemployment in th continent. The argument is that while IT no doubt creates tremendous economic value and wealth, the industry does a poor job in creating new jobs. This is just not in Africa, but globally. For instance, in the United States, hundreds of thousands of jobs have been shed as American companies outsourced manufacturing jobs to cheap sources of labor, mainly in Asia. The IT start-ups, while producing great wealth for shareholders, have not replenished the jobs lost as a result of outsourcing. Many economists agree that the loss of the manufacturing jobs is one reason why the middle class in the United States is ‘hollowing out’.

The important thing is that wages are rising in China and elsewhere in Asia, and this puts Africa at a good position to position itself as a hub for manufacturing firms looking to produce cheap goods. The
prospects could even be greater as universities are churning out more graduates in science, technology, and engineering, and increasing the technical capacity in these sectors.

However, even with all these significant benefits, the manufacturing sector is still underperforming. As a share of the GDP, the manufacturing sector is falling in many countries across the continent. Perhaps with the exception of South Africa and Northern African countries, the manufacturing base of many countries is pitifully low. In South Africa, the car manufacturing plants of BMW and Toyota have helped spur youth employment and growth in the country. In Morocco, the aerospace industry is creating many hi tech jobs, as the country positions itself as a manufacturer of hi tech aerospace machinery.

We find some hindrances to enabling the manufacturing sector become a key enabler of growth in the continent. The most obvious is that power is too expensive, and even where it is available, it is still erratic. In Nigeria for instance, generators are a must have for any small business that relies on electricity, not to mention the large manufactures. This is ironic given that Nigeria is one of the largest producers of oil in the continent. In countries where power is available steadily, the costs are two to three times the cost of power outside the continent. Given that power is one of the biggest costs in any manufacturing process, this puts the continent at a huge disadvantage.

Additionally, the continent will have to do more to make it faster for businesses to register and start their operations. To this end, Rwanda seems to be leading, as business permits take a matter of days, rather than weeks or months in countries elsewhere on the continent. 

However, there are some encouraging signs. For instance, the Japanese government has set up manufacturing hubs in Ethiopia, where Ethiopian workers are working side by side with their Japanese counterparts, and helping to spur the manufacturing capacity in that country. As a result, significant savings are being realized as a result of the implementation of the famed Japanese factory management processes such as Gemba Kaizen. Hopefully, such small moves will help spur up the number of manufacturing jobs, and realize that not just wealth, but also meaningful jobs, are being created.