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Africa Industrialization Day: Unlocking Africa’s “value-added” industrial potential

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Africa Industrialisation Day, which falls on Friday, mobilizes the commitment of the international community to the continent’s industrialisation and gives us the opportunity to reflect on the Bank’s impact in this sector, one of its High 5 priorities. 

From oil to cocoa, cotton to vanilla, Africa is rich in naturual resources but its heavy dependence on commodity exports means it has yet to take full advantage of the added value that processing raw materials and manufacturing can bring.

The African Development Bank is working to change this by promoting successful industrial policies, attracting funding to infrastructure and industry and supporting the growth of capital markets to create quality employment that alleviates poverty.

The last decade has seen progress, with manufacturing growth in Africa outpacing the global growth rate. In 2019, Africa’s industrial GDP expanded by 17% to $731 billion (in 2010 dollars), with the value-added of manufacturing surging by 39%, according to the Bank’s 2020 Annual Development Effectiveness Review (ADER).

But Africa’s industrialisation is geographically limited, with around two-thirds of value-added manufacturing taking place in just five nations: Algeria, Egypt, Morocco, Nigeria, and South Africa.

This year, progress has been reversed by the COVID-19 pandemic, which has upended economic growth, disrupted trade and financial flows and triggered losses of millions of jobs.

The economic and social impact of the pandemic has injected more urgency into the drive to industrialise Africa, just as the African Continental Free Trade Area is set to reshape the continent into a singular market of 2.5 billion people by 2050.

As the African Development Bank joins the international community to mark Industrialization Day, some stories of women and men turning the tables on Africa’s industrialisation front merit all our attention.

PROCESSING, MANUFACTURING AND TECH

Just outside Cairo, the Egyptian Refining Company (ERC), a greenfield petroleum refinery, is one of the largest industrial units of its kind in Africa.

With nearly $222 million in funding from the Bank, the refinery converts the lowest-value fuel into 4.7 million tons of refined products and high-quality oil derivatives per year, meeting domestic consumption needs, cutting emissions from dirty fuels and reducing Egypt’s balance of payment deficit.

The huge project created more than 15,000 jobs at peak construction and 1,000 permanent local job opportunities.

“From day one they were able to see that this project, which has been 12 years in the making, was going to have a transformative effect on Egypt’s economy,” said Ahmed Heikal, chairman and founder of ERC’s parent company, Qalaa Holdings.

In 2019, 1 million people across Africa benefited from the Bank’s industrial investee projects. Turnover from Bank investments in micro, small and medium-sized enterprises (MSMEs) almost trebled, reaching $1 billion and far exceeding targets.

Some of the best opportunities for Africa’s industrialization lie in agriculture. Crucial to this sector is the Bank’s support of Special Agro-Industrial Processing Zones (SAPZs), which strengthen African countries’ ability to attract private sector investment by bringing policy, investment and infrastructure together, usually in a rural area with high agricultural output.

Take South Africa, where the Bank is supporting the development of 22 SAPZs. One of them, Bokomoso Ba Rona SAPZ, aims to rehabilitate an area and develop a post-mining economy on a 30,000-hectare site owned by mining company Sibanye-Stillwater.

“We are aiming to attract private sector investment, which will drive agro-processing and build a strong value chain,” said Noxolo Mtembu, Project Manager at the Gauteng Infrastructure Financing Agency, which is responsible for developing the SAPZ.

Africa’s emerging connectivity and a workforce increasingly familiar with the digital world and new technologies will make it possible for the continent to take advantage of the fourth industrial revolution to improve productivity, create jobs, and extend social welfare.

New industries have transformed the fabric of local economies, for example in Nabeul, in north-eastern Tunisia, once most famous as a craft and tourist centre.

Now Nabeul is becoming as well known for its high-tech industries. With financing from the Bank, the MEDIS pharmaceutical laboratory was established to produce generic medicines, creating thousands of skilled jobs and becoming one of the region’s biggest employers.

The laboratory has provided formal, secure jobs for many who otherwise would have been confined to informal work or unemployment.

“My job with MEDIS has given me freedom and dignity. I’m not asking for a handout and I’m not asking anything of anyone,” said employee Sabra Gmati.

“If MEDIS or a business like it wasn’t in Nabeul, I’d be unemployed and I would stay at home.”

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EU to support COVID-19 vaccination strategies and capacity in Africa

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The President of the European Commission, Ursula von der Leyen, has announced today €100 million in humanitarian assistance to support the rollout of vaccination campaigns in Africa, which are spearheaded by the Africa Centres for Disease Control and Prevention (Africa CDC). Subject to the agreement of the budgetary authority, this funding will support the vaccination campaigns in countries with critical humanitarian needs and fragile health systems. The funding will, among others, contribute to ensuring the cold chains, roll-out registration programmes, training of medical and support staff as well as logistics. This sum comes on top of €2.2 billion provided by Team Europe to COVAX.

President of the European Commission, Ursula von der Leyen said: “We’ve always been clear that the pandemic won’t end until everyone is protected globally. The EU stands ready to support the vaccination strategies in our African partners with experts and deliveries of medical supplies at the request of the African Union. We are also exploring potential support to boost local production capacities of vaccines under licensing arrangements in Africa. This would be the fastest way to ramp up production everywhere to the benefit of those that most need it.”

Janez Lenarčič, Commissioner for Crisis Management, said: “International vaccine solidarity is a must if we are to effectively address the COVID-19 pandemic. We are looking at ways to use our humanitarian aid and civil protection tools to help in the rollout of vaccination campaigns in Africa. Ensuring equitable access to vaccines for vulnerable people, including in hard-to-access areas, is a moral duty. We will build on our valuable experience in delivering humanitarian aid in a challenging environment, for example via the Humanitarian Air Bridge flights.”

Commissioner for International Partnerships, Jutta Urpilainen, added: “Team Europe has stood by the side of our African partners from the onset of the pandemic and will continue to do so. We have already mobilised more than €8 billion to tackle the COVID-19 pandemic in Africa. We are strengthening health systems and preparedness capacities, which is absolutely key to ensure effective vaccination campaigns. And we are now exploring support through the new NDICI and how to leverage investments in the local production capacities through the External Action Guarantee.”

The EU also has a range of instruments at its disposal, such as the EU Humanitarian Air bridge, the EU Civil Protection Mechanism, and the EU’s humanitarian budget. These tools have been used extensively in the context of COVID-19 to deliver crucial material and logistical assistance to partners in Africa.

The Commission is also currently exploring opportunities to support African countries in the medium term to establish local or regional production capacity of health products, in particular vaccines and protective equipment. This support will come under the new Neighbourhood, Development and International Cooperation Instrument (NDICI) and the European Fund for Sustainable Development plus (EFSD+).

Background

The EU has been scaling up its humanitarian engagement in Africa since the onset COVID-19 crisis. A key of part of these efforts is the EU Humanitarian Air Bridge, which is an integrated set of services enabling the delivery of humanitarian assistance to countries affected by the coronavirus pandemic. The air bridge carries medical equipment, and humanitarian cargo and staff, providing humanitarian assistance for the most vulnerable populations where the pandemic imposes constraints on transport and logistics. The air bridge flights are fully funded by the EU. So far, almost 70 flights have delivered over 1,150 tons of medical equipment as well as nearly 1,700 medical and humanitarian staff and other passengers. Flights to Africa have aided the African Union, Burkina Faso, Central African Republic, Chad, Côte d’Ivoire, Democratic Republic of Congo, Guinea Bissau, Nigeria, São Tomé and Príncipe, Somalia, South Sudan, Sudan.

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20th International Economic Forum on Africa

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The global economic recession triggered by COVID-19 is hitting African countries hard. In 2020, 41 African economies experienced a decline in their gross domestic product (GDP). Although situations vary across the continent, this crisis has made clear that post-COVID strategies need to tackle two major obstacles to Africa’s long-term sustainable growth: dependence on external markets, and the incapacity of the formal economic sectors to create enough quality jobs.

The African Continental Free Trade Area (AfCFTA), now open for business, provides a platform to accelerate productive transformation, create regional value chains and spur continental integration. Its effective implementation, however, depends on African economies’ capacity to create fiscal space and boost private investment in quality infrastructure and sustainable projects.

What are the key priorities for implementing the AfCFTA and accelerating Africa’s productive transformation? How can African governments strengthen their borrowing capacity and improve their debt management? How can bilateral and multilateral co-operation facilitate the process? The 2021 edition of the Forum will gather all key actors to share their views and solutions for action.

The Forum hosts Europe’s largest annual conversation on Africa’s ongoing, formidable transformation. It invites African and OECD policy makers, investors, academics, civil society and international organisations to share their views, and discuss how better policies can improve development outcomes for Africans and the world.

To host the Forum, the Government of Senegal, is teaming up with the Development Centre of the Organisation for Economic Co-operation and Development; and the African Union, along with partners Casa Africa, le Cercle des Economistes, the French Development Agency (AFD) and the Sahel and West Africa Club (SWAC).

The debates will build on the findings of the recently launched Africa’s Development Dynamics 2021, a report by the African Union Commission, produced in collaboration with the OECD Development Centre.

Honourable speakers include:

  • Macky Sall, President of the Republic of Senegal
  • Andry Rajoelina, President of the Republic of Madagascar
  • Toshimitsu Motegi, Minister for Foreign Affairs of Japan
  • Angel Gurría, Secretary-General, Organisation for Economic Co-operation and Development
  • Moussa Faki Mahamat, President, African Union Commission
  • Ibrahim A. Mayaki, Chief Executive Officer, African Union Development Agency (AUDA/NEPAD)
  • Arkebe Oqubay, Senior Minister and Special Adviser to the Prime Minister of Ethiopia
  • Wamkele Mene, Secretary-General, AfCFTA Secretariat
  • Jean Hervé Lorenzi, President, Cercle des Economistes
  • Rémy Rioux, Director-General, Agence Française de Développement

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DR Congo: Lives and futures of three million children at risk

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Internally displaced persons, including children, collect water from a broken water main in Uvira, South Kivu, DRC. Waterborne diseases such as cholera are a major threat to displaced populations. UNICEF/Patrick Brown

The United Nations Children’s Fund (UNICEF), on Friday, highlighted the dire situation of some three million displaced children in the Democratic Republic of the Congo (DRC) who face brutal militia violence and extreme hunger. 

 Whole villages have been set ablaze, health centres and schools ransacked, and entire families – including children – hacked to death, in a series of merciless attacks in eastern DRC by fighters using machetes and heavy weapons, UNICEF said in a news release. Communities have been forced to flee with only the barest of possessions. 

“Displaced children know nothing but fear, poverty, and violence. Generation after generation can think only of survival”, Edouard Beigbeder, UNICEF Representative for the DRC, said.

“Yet the world seems increasingly indifferent to their fate. We need the resources to continue helping these children have a better future.”

There are some 5.2 million displaced people in the DRC, about half of whom were displaced in the last twelve months, according to UN data. The overall figure includes about three million children. 

Families forced from their homes and villages are compelled to live in crowded settlements lacking safe water, health care and other basic services. Others are taken in by impoverished local communities. In the most violence-afflicted provinces of Ituri, North Kivu, South Kivu and Tanganyika, more than 8 million people are acutely food insecure.

Sharp rise in violations against children

UNICEF’s report Fear and Flight: An uprooted generation of children at risk in the DRC, released on Friday, underscores the gravity of the crisis. 

The report recounted testimony of children who have been recruited as militia fighters, subjected to sexual assault, and suffered other grave violations of their rights – abuses that registered a 16 per cent increase in the first six months of 2020 compared to the previous year.

However, delivering relief assistance to populations who have been displaced is complex, and often hampered by insecurity and a weak transport infrastructure. 

A rapid response programme directed by UNICEF with partner NGOs offers a temporary solution, providing tarpaulins, cooking utensils, jerrycans and other essentials to nearly 500,000 people in 2020, said the UN agency.

According to Typhaine Gendron, the Chief of Emergency for UNICEF in DRC, such emergency distributions help deal with the “immediate shock” of being displaced. They are also part of an integrated response that looks to address a family’s broader needs in health, nutrition, protection, water and sanitation (WASH), or education, she added.

Additional funds desperately needed

While the volatile security situation is a major concern for aid workers and UNICEF personnel engaged in the humanitarian response, additional funds are also desperately needed. UNICEF’s 2021 humanitarian appeal for the country, amounting to about $384.4 million is only 11 per cent funded.

Without timely and adequate funding, UNICEF and its partners will not be able to provide critical services addressing the acute humanitarian needs of almost three million Congolese children and their families and protect and promote their rights, the agency warned. 

UNICEF Representative Beigbeder stressed the urgency, “without sustained humanitarian intervention, thousands of children will die from malnutrition or disease, and displaced populations will not receive the basic lifesaving services they depend on.” 

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