By Esther Dziti
Harare –Africa’s annual manufacturing GDP is projected to grow 3.5 percent this year after a -6.3 decline in 2020, according to a Deloitte forecast.
Deloitte’s outlook is based on the Oxford Economic Model (OEM)
“2020 also experienced a significant dip in manufacturing employment levels, largely due to forced shutdowns in the early days of the pandemic and suppressed orders, with April recording manufacturing’s lowest employment levels since 2010,” Deloitte said. “Despite recent gains from much of the country’s manufacturing base back in operation, employment levels in December are still 543,000 lower than in February.”
According to the organisation for Economic Co-operation and Development’s report titled “The Future of Production in Africa”, a shift towards semi-processed goods is expected to drive growth in coming years.
Currently, African producers source 12.9 percent of their inputs from inside the continent for intermediate goods, while regional sourcing in Southeast Asia can be as high as 21.6 percent. The comparable figure for final goods stood at 17 percent of total exports.
The OECD said better co-ordination of strategies between countries would help identify regional competitive advantages, strengthen existing linkages and, consequently, increase regional sourcing of inputs and final goods.
“Co-ordinated regional strategies are important to curb capability gaps between large multinationals and small domestic firms. For example, increasing capital financing for small domestic firms can help them compete both nationally and at the continental level (UNCTAD, 2018).
“Additionally, strong linkages between multinationals and local economies are critically important for the creation of more quality jobs and for the promotion of better knowledge and technology transfer. Moreover, sharing and harmonising management practices and product standards across firms and regions can also bridge capability gaps.
“For example, in Ghana, the top one percent most productive firms produce on average 169 times more value added per firm than the other 99 percent (Teal, 2016). Enhancing firms’ ability to thrive in new markets can ensure their survival African firms can harness the opportunities of intra-African trade and existing clusters to develop their business.”
The report said the launch of the African Continental Free Trade Area could facilitate opening up of access to new markets.
“For example, larger firms can benefit from larger economies of scale notably through a wider production and distribution base, while small and medium-sized enterprises can tap into new markets for their products or ideas (Parenti, 2018).
“In terms of global export, targeted policy schemes can support young exporting firms (OECD, 2017). Export promotion agencies’ targeted schemes could increase young firms’ survival rates (AUC/OECD, 2018),” advised the report.