African countries are making significant efforts to develop a vision for industrialisation. At present, about half of African countries have an industrialisation strategy, many of which aim to improve entrepreneurship. But few address the role of firms with high-growth potential effectively, in particular young small and medium-sized enterprises. Strategies need to better target such firms, which are important for industrialisation. In designing strategies, governments should consider certain industrial policies and draw lessons from past experience.
Carrying out industrialisation strategies remains a challenge for many countries. Successful strategies require strong political leadership and the full commitment of all levels of government. Sub-national governments’ participation can help tailor policies that better suit firms’ local needs, provided the governments have the necessary capabilities and can ensure transparency. Coordination between government bodies and private sector involvement in policymaking can help implement industrialisation strategies more effectively.
Finally, policy monitoring and impact evaluation are crucial to make industrialisation strategies more efficient. Such assessments can serve to reward well-performing institutions and to revise policies, but reliable data is needed.
How can African countries put their visions of industrialisation into action? The main prerequisite for adopting industrialisation strategies is strong political leadership.
Implementing strategies also requires many attributes that some countries have yet to develop: strong domestic capabilities and institutions, efficient policies and coordination among agencies, and regular monitoring and revisions of policies. However, governments can learn by doing. Industrialisation is imperative for Africa to catch up with high-income regions and calls for strategic action. Innovative industrialisation strategies have three main characteristics: they should avoid past mistakes, harness sectors with high-growth potential, and empower all economic agents, in particular opportunity driven African entrepreneurs.
An industrialisation strategy aims to transform society. It is a public good requiring public support. It connects policy making with long-term visions of the future shared by citizens. To fulfil those visions, a strategy defines development priorities, which serve to coordinate mid-term policy objectives and assess their achievement. Those priorities are context-specific and differ between the diverse African countries. An industrialisation strategy guides thinking and long-term investments in a context of uncertainty. Strategies provide an overarching framework for coordinating policies by defining:
Long-term objectives for development.
Mid-term priorities guiding policies and investments. These priorities can be adjusted as risks evolve. Achieving mid-term priorities may require structural reforms, including multi-level governance reforms.
Short-term goals that allow for measuring performance, notably of individual government institutions.
Africa will have to prioritize education and massively upscale its investments in the quality of its workforce in order to partake in the new industrial revolution. Education outcomes and systems in Africa currently perform poorly compared to global averages. Improved school systems are necessary to equip entrepreneurs and workers with the skills needed to boost the competitiveness of firms and modernise the economy. Research shows that the mind-sets and skills closely tied to entrepreneurship are transmittable when education and training systems incorporate creative and entrepreneurial skills into teaching.
African countries need more institutions and programmes that can actively bridge the gap between industry needs and education, notably by focusing on management and problem-solving skills. Business schools and colleges for technical and vocational skills development (TVSD) could develop stronger links to the commercial sector and focus on apprenticeships, management support and lifelong learning for entrepreneurs of small firms. TVSD refers to the acquisition of knowledge, practical competencies, know-how and attitudes necessary to perform a certain trade or occupation in the labour market. TVSD encompasses formal learning, in public and private educational institutions or on the job and non-formal learning within or outside the work place, aiming to ensure that all members of the community have access to lifelong learning. TVSD includes both initial vocational training undertaken by young people prior to entering the labour market and continuing vocational training for adults.
Strengthening the dialogue with the private sector can increase the relevance of training. Partnerships with enterprises, business, industry, craft associations, unions, and other formal and informal stakeholders can make training more relevant to the labour market. The private sector can contribute to the design and delivery of training programmes, particularly through offering internships, providing on the-job training, financing training institutions and giving advice on curriculum reforms
Increasing the role of the private sector can help develop more demand-driven training systems. In particular, private companies tend to provide more training in the tertiary sector of the economy, e.g. business, commerce and information and communication technologies. Trade associations can help certify informal apprenticeships by defining the content of necessary skills and competencies.
Entrepreneurs are agents of industrialization, new industrialisation strategies should extend beyond large companies to better harness Africa’s vast entrepreneurial base. Large companies, whether state-owned or private, are of course essential to industrialisation efforts. Nonetheless, promoting only a few large companies can encourage rent-seeking and decrease competition. As most entrepreneurs work in the informal economy, African countries have a high entrepreneurial potential that remains untapped.