In his message on Africa Industrialization Day, United Nations Secretary-General has called on African countries to adopt policies that encourage growth of the private sector and foster entrepreneurship in order to advance economic competitiveness and prosperity in the continent.

This year, the Day focuses on how to raise awareness about the importance of mobilizing finance to generate inclusive and sustainable industrialization. Both the African Union’s Agenda 2063 of “a prosperous Africa based on inclusive growth the sustainable development” and the 2030 Agenda and its Sustainable Development Goals (SDGs) – particularly Goal 9 – strongly support the creation of millions of new, high productivity jobs each year on the continent.

In a message on the day, Secretary-General Ban Ki-moon said: “To accomplish this, African nations need to embrace transformative policies that will encourage the growth of the private sector, facilitate entrepreneurial initiatives, increase investment and generate durable partnerships.”

“Investors need to see the benefits of financing the region’s programmes, projects, businesses, and human resources,” he added.

Mr. Ban underscored that in order to advance African economic competitiveness and create shared prosperity while protecting the environment, a strong and stable business environment based on good governance principles and the rule of law is necessary to support domestic and foreign investments.

He also called for greater regional integration and full integration into the global economy through fair and open trade.

“On this year’s Africa Industrialization Day, let us focus on financing for the engines of development as a way of realizing the full potential of all the continent’s people, especially women and youth, so they may look forward to a future of peace, dignity, and prosperity on a healthy planet,” said the Secretary-General.

In 1989, the UN General Assembly, through its resolution 44/237, proclaimed 20 November Africa Industrialization Day to mobilize the commitment of the international community to the industrialization of Africa.

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Observance of Africa Industrialization Day, 21 November 2016

“Financing Industrialization in Africa: Challenges and Winning Strategies”

The theme of this year’s Africa Industrialization Day celebration is “Financing Industrialization in Africa: Challenges and Winning Strategies”. The objective is to raise awareness on the challenges and opportunities in financing for industrialization, taking into consideration recent success stories and elaborating on how to further galvanize support for promoting Africa’s industrialization.

In observance of the 2016 Africa Industrialization Day, the United Nations Industrial Development Organization (UNIDO), the Office of the Special Adviser on Africa (OSAA) and the African Union are partnering with the Permanent Mission of the Arab Republic of Egypt in co-organizing a reception on Monday, 21 November 2016, 6-8 pm, at the Permanent Mission of the Arab Republic of Egypt to the United Nations. This event will provide an opportunity for key stakeholders and development partners to address the topic.

Why does industrialization matter?

More than ever in the past, the necessity for Africa to industrialize is being stressed at various international forums, ranging from TICAD VI to the G20 Summit, which put industrialization in Africa and Least Developed Countries (LDCs) in its programme for the first time. The 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs), in particular Goal 9, the Addis Ababa Action Agenda and the Third Industrial Development Decade for Africa (IDDA III) resolution, also mark a transition to a new development paradigm with the recognition that Africa has to restructure and diversify its economies to be on a sustained growth path. Africa can more than double its overall GDP per capita by increasing its industrial GDP in the next ten years, however Africa needs to leverage the full strength of a wide range of strategies to finance its industrialization.

The challenges of financing industrialization in Africa are multiple. These include: inadequate flow of Foreign Direct Investment (FDI) into the manufacturing sector, as FDI is mostly directed towards natural resource exploitation; Poor domestic mobilization and allocation of resources; Inability to finance infrastructure that is critical for industrial development; Poor continental industrial development funds and regional investment funds; Lack of quality of investment flows into productive sectors and lack of an attractive competitive growth environment; Non-conducive business environments; and weak public policies that leverage African remittances for industrialization. Moreover, Official Development Assistance (ODA) falls short of the 0.7% promises.

However, the following five key enablers are examples of some opportunities to finance industrialization: Catalyze funding into infrastructure and industry projects that attract further FDI by increasing and channelling funding into GDP catalytic programmes; Improve access to market finance for African enterprises, advising governments, stock exchanges and regulators on development of liquid capital markets; Foster partnerships; Increase firm capabilities and generate important productivity spillovers (through technology and know-how transfers, FDI can lead to higher productivity jobs and high-value added industry niches); Access to markets, in particular small domestic markets; Drive enterprise development and scale-up investments and financing to SMEs and establish linkages of SMEs to domestic projects/companies; Foster successful industrial policies that facilitate spillovers and backward linkages, and incentivize key PPP projects.

These enablers will require vision and commitment from political leaders but also from Financing Institutions, private sector and the broader development community, to provide support through technical assistance, capacity building, continuous dialogue, partnership and advisory services.

Overall, commitments to support Africa’s economic structural transformation have never been stronger with regard to the adopted SDG 9. These commitments put world leaders and partners at a center stage for operationalizing Africa’s industrialization. The time has come to transform these good intentions into tangible actions.