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Working Paper 40 - Industrial Restructuring in Africa During the1990s: Outcomes and Prospects

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    Since the advent of political independence, many governments in Africa have looked to themanufacturing sector as the main vehicle of structural transformation and reduction of dependenceon primary exports. However, it is now generally accepted that “misguided attempts to promoteindustrialisation without regard to comparative advantage or stage of development have led toinefficient use of resources in many countries” (World Bank, 1992:122). During the 1970s, almostone-third of African countries had negative average annual rates of manufacturing output growthand, in another quarter, these growth rates stagnated at below 2.5 percent. An important objective of the economic reform programmes that are currently being pursuedin almost all African countries is to eliminate the “inefficient use of resources” by industrial enterprises.It is clear that the industrial sector in most African countries is being profoundly affected by thisprocess of reform which has accelerated markedly during the 1990s. However, there has beenremarkably little independent analysis of just how successful industrial restructuring in Africa hasbeen. Two reviews of structural adjustment programmes undertaken by the World Bank in 1992and 1994 concluded that industrial restructuring had been successful in the majority of countriesunder scrutiny and that this was particularly so among those countries that had most consistentlypursued comprehensive macroeconomic reforms (see World Bank, 1992a and 1994). But othereconomists outside of the World Bank have been less sanguine and some have argued that “structuraladjustment programmes damage the prospects for industrialisation” (Stoneman, 1994:104) andmay, in fact, be leading to wholesale de-industrialisation.The purpose of this paper is to review the industrial performance of African economies duringthe 1990s and to then discuss the principal reasons why this performance, particularly with respectto the manufacturing sector, continues to be so poor in the majority of countries. The discussion willbe structured as follows. Section 1 outlines the broad objectives of industrial restructuring as thesehave been interpreted by the World Bank. Section 2 addresses the weaknesses of the main datasources that are generally relied upon in assessing the industrial sector. Section 3 reviews theperformance of the industrial sector, looking specifically at the following indicators: output growth,share of GDP, the sectoral composition of output, private and foreign investment, exports, andemployment and training. Section 4 then analyses the principal factors that have affected theperformance of the industrial sector, focusing in particular on investment, exports, and productivity.Finally, in Section 5, the prospects for the industrial sector and the role of government policy arebriefly considered.

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    Paper provided by African Development Bank in its series Working Paper Series with number 174.

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    Date of creation: 09 Feb 2002
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    Handle: RePEc:adb:adbwps:174

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