LSE Firoz Lalji Institute for Africa’s White Paper on sustainable industrialisation in Africa

22nd Jun 2023 | Source: ARISE IIP

A new paper on African industrialisation "The Art of Upgrading Industrial Policymaking Itself", released by the African Trade Programme at the LSE Firoz Lalji Institute for Africa and supported by ARISE Industrial Platforms Ltd (ARISE IIP), argues that successful African industrialisation in the twenty-first century will be different to the East Asian experiences of the twentieth century.

Under the guidance of David Luke, Professor in Practice, LSE Firoz Lalji Institute of Africa by Jamie Macleod, Policy Fellow at the LSE Firoz Lalji Institute for Africa and Olawale Ogunkola, Professor of Economics, University of Ibadan, the paper claims that there is no single "the model" or "golden policy template" towards industrialisation, instead what matters is the approach and process by a committed developmental state including "experimenting and learning" to craft appropriate interventions.

This first requires an understanding of the "big five" industrialisation issues of today: policy consensus, green industrialisation, supply chain security and resiliency, shifting industrialisation paradigms, and widening policy space. But most importantly industrial policymaking in Africa itself must upgraded to become more adaptive, collaborative, and consultative, while bringing together government, anchor investors, and donors, into a grand bargain for social and environmentally sustainable industrialisation.

The "big five" of a contemporary route to sustainable industrialisation in Africa:

1. Policy consensus involved building a collective strategic vision for industrialisation, striking careful bargains with elites, and aligning economic incentives to ensure that the industrial policy is committed to at the highest levels of government, and through the business community to other constituencies and individuals within societies.
2. Green industrialisation should involve developing Africa's underutilized renewable energy sources, reducing process emissions in production, and increasing resource efficiency. Africa's historic contribution to CO2 emissions is negligible but is likely to rise as the continent develops. The challenge is to ensure the emergence of a competitive industrial sector while transitioning to cleaner energy and production methods.
3. Supply chain security will be dominated by geopolitical tensions and corresponding security-influenced industrial policies in major economies are leading to a recalculation of supply chain risks and investment decisions. African economies must consider how their industrial policies can traverse and circumvent such risks.
4. Shifting industrialisation paradigms such as the rise of digital production methods, the growth of platform production models, and continuing changes to the geographic distribution of production must be accounted for if policies are not to be out of date before their ink is even dry.
5. The widening policy space means there are more options for African countries to take advantage of without spooking international organisations or markets. This gives governments the opportunity to tailor policies to their countries individual needs and not accept off the shelf solutions.