Roland Portella: "Africa represents only 1.2% of global manufacturing value added"

Roland Portella, President of the Economic Club CADE, Specialist in Business Development

Figure of the African diaspora in Paris, Roland Portella is the president of the "fourth generation" of the CADE (Coordination of the Tomorrow's Africa), a do-tank that has been active in development issues for more than 20 years and, more specifically, the role of the diaspora in the continent's economic renewal. Interview.

"Simple production and marketing of raw materials reach their limits in terms of endogenous productivity and positive externalities"

What do you think are the foundations of industrial policies in Africa?

The consolidation of economic growth in Africa must be achieved by investing in industrial sectors, pledges of wealth creation and significant deposits of jobs. Indeed, simple production and marketing of raw materials reach their limits in terms of endogenous productivity and positive externalities. The service sectors will be able to generate very few jobs in light of population growth, accelerated urbanization and the influx of young people into the labor market. Consumption and equipment needs will accelerate in the next 15 years. Africa accounts for only 1.2% of world manufacturing value added, which is very low in relation to the challenges of its structural and inclusive development. Worse, 50% of African imports are manufactured goods. Hence the need to orient African economies towards domestic needs that could lead to the development of productive apparatus. The crucial imperative for African states as a whole is to structure efficient industrial policies and mobilize capital to build competitive industries and industries.

How to make governance and industrial leadership more effective?

Real industrialization in the medium and long term requires the emergence of activities with a strong source of employment and production ecosystems, technical and technological know-how, process engineering production. It is not only a question of satisfying the demand of consumers and companies for quality products, but of building or rebuilding (for the countries which have undergone these last decades a fall of the industrial activities as Senegal in the field of textile)

Field contractors in Africa are in demand by national and international institutional analysts for more relevant analyzes and, above all, for prospective studies that can enable them to better target growth markets in advance. This would allow them to make industrial investments for the future. Hence the imperative need to have in each State of real institutional leadership that know how to define strategic directions with production of statistics and economic trends that they will have to master. Entrepreneurial leadership must prevail in order to carry out constructive lobbying actions and be forceful of proposals to the rulers. This allows it to be an actor from the beginning of the definition of strategies, policies, and national and regional incentives measures favoring industrial development, such as: attractive taxation, trade in products and services, transport-mobilities, education and vocational training, the reduction of customs barriers or "intelligent protectionism" … .etc. Networks of business leaders in Africa should be encouraged, especially those working in industry sectors.

Will the CFTA, the Continental Free Trade Area, really promote the industrialization of Africa?

Yes, in principle I think it is a necessity to act and create a intra-continental free trade zone in order to increase intra-African trade, and we also hope for a faster development of industrialization. But the effects will not be mechanical at all, it is therefore necessary that each signatory State or subregional zones pledge to finance accompanying measures (which amount to tens of billions of dollars) for their companies and sectors that will need to upgrade to remain competitive with their importing competitors. The problem is already with free trade agreements or partnerships with Europe or with the USA, Asia, etc. We are witnessing the destruction of local sectors, for example in agricultural products such as poultry, milk and oils, or in textile products. The question is whether the rules of the CFTA may allow some states to negotiate safeguard clauses as in the WTO rules and systems of increased vigilance on the rules of origin of products. The "intelligent protectionism" and "economic patriotism" of each state is not in total contradiction with the liberalization of trade. This is one of the reasons Nigeria is refusing to sign the CFTA for the time being.

What types and industrial activities does Africa need?

It all depends on the context of each country, its level of development and human capital, its heritage and its technological know-how, its comparative advantages.

Overall, according to our analyzes, the priorities in order of importance are manufactured goods aimed at domestic consumption: agri-food industries in order to reduce imports of food products by more than $ 60 billion a year; manufacture of health and hygiene products; household equipment products; infrastructure and habitat building materials; then the new industries related to the ecological and environmental transition (renewable energies, waste treatment and recovery, depollution)

Specifically, there are high-tech industries inserted in the global value chains: Ben Guirer's aircraft in Morocco, manufacturing just-in-time cockpits for Airbus and electronic factories in Tunisia, with production levels to world standards and levels of productivities very significant, Tangier Med a car assembly line for Renault, etc. But the challenge today is that this type of modern industries in Morocco, Tunisia, South Africa, Nigeria or Mauritius, can serve as an industrial laboratory and transfer of knowledge in their own countries. other segments of more basic industrial activities or other African countries that are lagging behind industrialization.

But it is important to note that what makes an industrial sector stronger and modernized is the related or underlying services that contribute to industrial growth, such as the logistics and digital transformation services (in the countries developed we talk about industry 4.0), energy efficiency, etc. This is the reason why the industrial sectors are structuring because they produce the most induced effects and are multipliers of positive externalities. But they can also produce negative externalities, especially ecological ones.

Precisely, how to combine strong industrialization and preservation of the environment?

Today, few industries, no matter how powerful, do not take into account reputational risks and the financial risks associated with non-compliance with environmental standards. Corporate social and environmental responsibility (CSR) is no longer just a question of marketing or risk management, but is part of their strategies and business models. While there are still enormous efforts on the part of African states to enforce environmental standards, particularly with regard to pollution of water and soil and subsoils, some of them do not hesitate to sanction large companies by "big" fines, or even withdrawing them from exploitation or concession licenses. Some donors also demand these respects of CSR (example of the Principles of Ecuador) which can go to the refusal to grant financing to companies that solicit them. Local communities, usually accompanied by NGOs, are also organizing to defend their land rights and the preservation of biodiversity. They go as far as to complain even internationally, and use social networks to denounce bad practices or abuses. In some territories we have seen violent conflicts to defend their rights to respect their environment. Everything is still a question of management of the reports of economic and political forces, even judicial … Hence the need to have a good mechanism of settlement of the complaints so that these risks do not turn into litigation and long conflicts, in use of the forces order and loss of life. The vigilance of industries towards their supply chains is indispensable as well as more transparency in their carbon balances …

Finally, what are the challenges facing the industrial sectors in Africa? [19659006] Since 2015, our economic club, CADE, has developed recommendations and decision-making tools, notably through our program "Building Modern and Competitive Industries in Africa: Industrial Strategies and Entrepreneurial Leadership". We focus at the macro level on the realization of new prospective maps for states and territories to better orient their industrial policies.

At the organizational level, we believe that conventional industrial zones have reached their limits in terms of creation of manufacturing added values. The relevance would be in the creation of industrial platforms for pooling technical and managerial skills. Let's look at what the alliance between Egypt and the Russian companies, whose goal is to create industrial parks around the Suez Canal, will be for an overall amount of 5 billion dollars. These two aspects will make it possible to prepare the sectors of the future.

Finally, of course, there is the crucial question of the available quantity of energy, and especially of electricity so that the industries produce efficiently and sufficiently. Beyond the major energy infrastructure projects for the general networks, the trend must be the dissociation of capital to be brought in the energy production for industrialists. In order to prevent industries from producing themselves the necessary conditions for their industrial production (water, electricity, road), the future is to enter into long-term contracts with institutional investors (who manage long-term savings, insurance pension funds, etc.) and infrastructure funds. These will build energy infrastructures, the counterpart of which is ensured by industrialists as end-users through their purchases and consumption of the energy produced. Thus, in the absence of large production plants, Africa as a whole may have a solvent minimum of efficient assembly plants.


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