Public Lecture (Professor John Sutton)

Can Sub-Saharan Africa Industrialise? Lessons from History

Professor John Sutton (LSE) delivered the opening public lecture at the Africa Growth Forum on the subject of industrialisation in Sub-Saharan Africa. The session was chaired by H.E Ato Newai Gebreab (Chief Economic Advisor to the Prime Minister and Executive Director, EDRI). The discussant for the session was Mr. Fitsum Arega (Director General, Ethiopian Investment Commission).

Prof. Sutton described the experience of five rapidly industrialising countries of Sub-Saharan Africa, namely, Ethiopia, Ghana, Tanzania, Zambia, and Mozambique. He noted that the most important question is, whether these rates of growth can be sustained over the next decade. Notably the industrial base of each of these countries is comprised of similar industries: food and drink, metals, plastics and building material. He cautioned that a decade of fast growth is typically followed by sluggish growth, and that higher growth rates can only be sustained through a qualitative change in the industrial base of the sector. However, there is reason to be optimistic, as there is a diverse range of firm types driving these industries, not just a handful of multinational companies.

Going forward, two frontiers for industrial development remain of vital importance. Firstly, growing existing industries, and secondly, broadening the industrial base to support the transition towards greater middle manufacturing. The focus of Prof. Sutton’s talk was on the latter.

Drawing on historical examples, Prof. Sutton explained that countries (Ireland, Israel, Republic of Korea, Portugal, Singapore, Spain) that had industrialised rapidly over the past 50 years have been associated with a major broadening of the pattern of industrial activity that has led them to develop as integral parts of global supply chains. Whilst technology transfers are easier to engineer, Prof. Sutton argued that strong industrial policy must also include emphasis on improving working practices. In addition to expanding industrial capacity, improving production quality, through better working practices, is vital to supporting entry into middle manufacturing and global supply chains.

He mentioned that three key areas wherein Africa could draw lessons from India and China, namely, (i) expanding greenfield operations, (ii) upgrading skills and (iii) integrating domestic supply chains with the vertical international supply chains to facilitate knowledge transfers.

Finally, he remarked that the growing existing industrial activities were as important as broadening the industrial base and a good industrial policy should put equal emphasis on both to achieve sustained long-term growth.

In agreeing with Prof. Sutton’s views, the discussant Mr. Arega remarked that the Ethiopian Investment Commission plans to engage a wide range of investors to support greater investment promotion activities, and as a means of learning from global best practices.

Summary written by Noopur Abhishek, Country Economist – IGC India Central