Light manufacturing in Africa : targeted policies to enhance private investment and create jobs

184 Pages·2012·3.05 MB·English

by  World Bank Group

AFRICA DEVELOPMENT FORUM
Light Manufacturing
in Africa
Targeted Policies to Enhance
Private Investment and Create Jobs
Hinh T. Dinh, Vincent Palmade,
Vandana Chandra, and Frances Cossar
Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Light Manufacturing
in Africa
Light Manufacturing
in Africa
Targeted Policies to Enhance
Private Investment and
Create Jobs
Hinh T. Dinh
Vincent Palmade
Vandana Chandra
Frances Cossar
A copublication of the Agence Française de Développement and the World Bank
© 2012 International Bank for Reconstruction and Development / International Development
Association or The World Bank
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Washington DC 20433
Telephone: [phone]
Internet: www.worldbank.org
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Africa Development Forum Series
The Africa Development Forum series was created in 2009 to focus on issues
of signifi cant relevance to Sub-Saharan Africa’s social and economic develop-
ment. Its aim is both to record the state of the art on a specifi c topic and to
contribute to ongoing local, regional, and global policy debates. It is designed
specifi cally to provide practitioners, scholars, and students with the most up-
to-date research results while highlighting the promise, challenges, and oppor-
tunities that exist on the continent.
The series is sponsored by the Agence Française de Développement and the
World Bank. The manuscripts chosen for publication represent the highest
quality in each institution’s research and activity output and have been selected
for their relevance to the development agenda. Working together with a shared
sense of mission and interdisciplinary purpose, the two institutions are com-
mitted to a common search for new insights and new ways of analyzing the
development realities of the Sub-Saharan Africa region.
Advisory Committee Members
Agence Française de Développement
Pierre Jacquet, Directeur de 1a Stratégie et Chef Économiste
Robert Peccoud, Directeur de la Recherche
World Bank
Shantayanan Devarajan, Chief Economist, Africa Region
Sub-Saharan Africa
IBRD 39088
CAPE MAURITANIA
VERDE
NIGER
MALI
SUDAN ERITREA
SENEGAL CHAD
THE GAMBIA
BURKINA FASO
GUINEA-BISSAU GUINEA
BENIN
NIGERIA
ETHIOPIA
CÔTE
SIERRA LEONE D’IVOIRE GHANA CENTRAL SOUTH
AFRICAN REPUBLIC SUDAN
LIBERIA TOGO CAMEROON SOMALIA
EQUATORIAL GUINEA
UGANDA KENYA
SÃO TOMÉ AND PRÍNCIPE GABON CONGO
DEMOCRATIC
RWANDA
REPUBLIC
OF CONGO BURUNDI
TANZANIA
SEYCHELLES
COMOROS
ANGOLA
MALAWI Mayotte
(Fr.)
ZAMBIA
MADAGASCAR
ZIMBABWE MOZAMBIQUE MAURITIUS
NAMIBIA BOTSWANA Réunion
(Fr.)
SWAZILAND
LESOTHO
SOUTH
AFRICA
Source: World Bank.
Contents
Foreword xi
Acknowledgments xv
Abbreviations and Acronyms xvii
Overview
Light Manufacturing in Africa: Targeted Policies to
Enhance Private Investment and Create Jobs 1
Potential for Light Manufacturing: Creating Millions of
Productive Jobs 3
Case Study: Ethiopia 4
African Competitiveness in Light Manufacturing and Possible
Solutions from Asia 12
References 18
Part 1
Setting the Stage 19
1 Good Possibilities for Light Manufacturing in
Sub-Saharan Africa 21
Structural Transformation 21
Light Manufacturing, Including Agribusiness, as a Possible Driver
of Africa’s Structural Transformation 25
Does Sub-Saharan Africa Have a Comparative Advantage in
Light Manufacturing? 26
Africa’s Performance in Light Manufacturing 32
Strategy for a Competitive Light Manufacturing Sector in
Sub-Saharan Africa 39
Past Policy Prescriptions: An Intimidating “To Do” List 44
vii
vii i CONTENTS
A Selective and Practical Approach: Resolve the Most Critical Constraints
in the Most Promising Subsectors 46
Notes 48
References 50
Part 2
What Constrains Light Manufacturing in Sub-Saharan Africa? 53
Main Constraints in Ethiopia, Tanzania, and Zambia 54
Note 56
References 56
2 Input Industries 57
Effects of Input Costs on Competitiveness 57
Why Are Input Costs Higher? 59
Possible Solutions from Asia 62
Policy Recommendations 63
References 65
3 Industrial Land 67
Effects of Industrial Land on Competitiveness 67
Marketing of Goods: Land for Warehousing, Showrooms, and Trading
Inputs and Outputs 70
A Possible Solution from Asia 71
Policy Recommendations for Africa 73
Notes 75
References 75
4 Finance 77
Access to Finance and Firm Performance 77
The Availability and Cost of Finance 78
Why Is the Cost of Formal Finance So High
and the Availability So Constricted? 80
Possible Solutions from Asia 82
Notes 84
References 84