• Home
  • About us
  • Who are we
  • Studies and Research
  • Our expertise
  • Our references
  • Contact
Africa Partners

Your investment office for Africa

Port of Lagos in Nigeria: Productivity will be key for Africa
Economics, English, Studies and Research

Improving productivity will be key for Africa

By Christian Hiller von Gaertringen @@Chr_Hiller · On 15 April 2021

The output of African workers and employees is still too low. This is a barrier to the manufacturing industries on the continent. However, productivity will be key for Africa. Five suggestions on how Africa can overcome this obstacle.

Economic growth in Africa is not so bad. And even if the IMF must currently release an important portion of Kenya’s debt, African economies resist quite well to the Covid-19-pandemic. The Achilles heel of the African growth story is, however, the low productivity. Output of African workers and employees is, in comparison with the rest of the world, still too low.

The consequence of this fact is that manufacturing in Africa is going down instead of going up. According to the British magazine The Economist, in 1975-2014 manufacturing’s share of GDP in sub-Saharan Africa fell from 19% to 11%.

Transforming natural resources

Many economists demand that Africa should not only extract and export raw materials. Rather, Africa should also process this. African countries will benefit more from the cocoa bean plantations, if the beans would be transformed in Africa into chocolate and breakfast drinks. It is more interesting from an economic point of view to sell cables to the world than just copper.

But it is too expensive to manufacture in Africa. This is due to the poor education system in many African countries. Kenya, on the opposite, attracted quite a lot of manufacturing as the level of basic education in the countries is relatively high. And there remain too many bottlenecks in African economies due to a bad infrastructure and an inefficient infrastructure.

The underdeveloped manufacturing sector also means that the government does not earn enough taxes from the companies in the country. That means that governments are too dependent on foreign credit to build the much-needed infrastructure in the country. And this, in turn, makes governments very vulnerable to external shocks and vulnerable to crises.

How to improve productivity

Therefore, improving productivity will be crucial for the economic development in Africa. We have five suggestions for improving in Africa productivity:

  1. Education: Financing elementary schools, vocational schools, technical colleges and universities will have a major impact on Africa.
  2. Industrial parks: The low industrial density is a crucial weakness of the African economy. Developing industrial parks all over the continent will allow to build clusters, centres of competence in food processing, in mechanical engineering, in car making and so.
  3. Political support: To bring the industrial sector back up, companies need political support. Governments should become steadier in their economic policies. They should work to remove red tape. The decision to create the African Continental Free Trade Area (AfCFTA) is a step in the right direction. Now it has to be turned into reality. This will bring tough decisions.
  4. Infrastructure: It goes without saying that Africa needs to improve its infrastructure. The point is how to finance these projects. In many cases, it is difficult to charge customers or taxpayer for using this infrastructure. But there are ways to finance new infrastructure projects. We at Africa Partners are specialized in it.
  5. Export industries: Africa needs international finance for developing its economy. Developing export activities will help to pay back international finance as they will bring hard currency into the country. And there is another side effect: Facing international competition makes a company better.

Productivity is key

However, now is a good opportunity to promote industry in Africa. The Covid-19-pandemic and the recent closure of the Suez Canal because of a transverse ship showed the world how fragile international supply chains are. Manufacturing in Africa is closer to European and most US production sites than manufacturing in Asia. And the transport route is much shorter.

By the way: Europe will have to produce more in Africa. With an aging population, the continent no longer has the skilled workers its businesses need. What could be more obvious than to produce more in Africa in the future?

AfCFTAAfricaGrowthManufacturing
Share Tweet

Christian Hiller von Gaertringen

Thanks to his financial expertise, dense international network and deep understanding of the African economy Christian is a renowned expert and keynote speaker for business and finance in Africa.

You Might Also Like

  • Building a bridge in Lagos: How private equity can better its chances in Africa Africa Capital News

    How private equity can better its chances in Africa

  • Office building in Kigali: Africa can compete with other regions when it comes to ESG Africa Capital News

    Africa, the land of ESG investments

  • A big step toward African financial independence: Cape Town, South Africa English

    A big step toward African financial independence

Most viewed categories

  • Studies and Research
  • Agriculture
  • Economics
  • English
  • Deutsch

Choose your category

Find us on Facebook

Read more on the African growth story

Read more on the African growth story in my book “Afrika ist das neue Asien” published in German by September 2014 with the publishing house Hoffmann & Campe in Hamburg.
  • Impressum
  • Rechtliche Hinweise
  • Datenschutzerklärung
  • Contact

Most viewed categories

  • Studies and Research
  • Agriculture
  • Economics
  • English
  • Deutsch

Latest News

  • Building a bridge in Lagos: How private equity can better its chances in Africa

    How private equity can better its chances in Africa

    1 April 2022
  • Office building in Kigali: Africa can compete with other regions when it comes to ESG

    Africa, the land of ESG investments

    24 February 2022
  • A big step toward African financial independence: Cape Town, South Africa

    A big step toward African financial independence

    29 October 2021

Jetzt abonnieren

Search the site

© 2020 Antigone Communications All rights reserved.