The Extraordinary Summit of the African Union (AU) on Industrialization and Economic Diversification in Africa took place between the 20th and 25th of November 2022 in Niamey, Niger. The Summit’s aim was to commemorate Africa Industrialization Day – an annual occasion proclaimed by the United Nations General Assembly in 1989 to raise awareness about the importance of African industrialization and the challenges faced by the continent.
According to Africa’s Industrial Revolution report, the continent’s industrialization drive stands to benefit from an innovative policy mix that combines the focus on traditional manufacturing with a forward-looking focus on new and emerging sophisticated opportunities. African leaders have long echoed the need to reverse the dependence on the global north by accelerating the process of industrialization on the continent by strengthening the institutional frameworks underpinning intra-African trade.
With this imperative in mind, the Summit was attended by leaders across the AU Member States who engaged under the auspices of devising cooperative pathways in order to mobilize industrialization efforts as a fundamental pillar of economic growth, development, and the expansion of employment opportunities. All of these serve the achievement of the African Development Agenda 2063.
In particular, the Summit discussed important issues such as activating the African Continental Free Trade Agreement (AfCFTA) and its relationship with industrialization, employment, technological renewal, and organizational capacity in order to improve industrial performance and make it competitive, as well as making the most of regional value chains.
The Summit also took note of the progress made so far on the AfCFTA and adopted a Draft Decision of the Extraordinary Session on the AfCFTA and three Operational Tools including the AfCFTA E-Tariff Book, AfCFTA Rules of Origin Manual, and the AfCFTA Guided Trade Initiative.
The AU Summit further incorporated the Extraordinary Ordinary Session of the African Union on the AfCFTA on November 25th, where several key points of commitment were made. Central to these was a reaffirmation of their ‘determination to ensure that Africa’s industrialization and economic diversification are financed in a predictable manner and with the urgency of identifying and addressing the impediments to productivity and growth through infrastructural development, energy, access to finance, digitalization, innovation, and skills development to achieve economic diversification.’
The Summit also helped to highlight some of the shortcomings that have hampered economic recovery and the continent’s ability to realize the full potential of a market of 1.3 billion people with a combined GDP of $3.4 trillion. In particular, some leaders noted in their addresses the lack of a clear and coherent continental policy on industry and industrialization as an impediment to the operationalization of the AfCFTA.
Other key outcomes of the Summit included consideration of the Report of the joint meeting of the Ministers of Industry and Economy that took place on November 7th in Niamey. The meeting also considered and adopted the Declaration and Decision of the AU Extraordinary Summit on Industrialization and Economic Diversification.
The recent AU Summit provided another opportunity for national, regional, and continental stakeholders from both the public and private sector to discuss areas of cooperation to facilitate sustainable development in Africa. A recurring theme championed by leaders throughout the Summit echoes the broader discourse around the need for trade and industrial policy alignment – especially between the overlapping policy approaches at the levels of the Member State, Regional Economic Community (REC), and the AU – in order to unlock intra-African trade and inclusive growth.
On behalf of USAID’s African Trade and Investment program, Tutwa was able to deliver a private sector-focused hybrid seminar as a side event at the AU Summit in Niamey, titled ‘Beyond Trade in Goods and Services: Preparing for Phase II of the AfCFTA’. With the support of expert trade and development practitioners, Tutwa’s consultants were able to successfully deliver presentations that spoke to a range of issues that explored policy approaches that could help optimize policy responses to the Phase II and Phase III AfCFTA protocols which include digital trade, investment, intellectual property rights, and the role of women and youth in trade.
AU Extraordinary Summit on industrialization and economic diversification
- To accelerate commodity-based industrialization as an engine of growth, productive jobs, and economic diversification through regional value chains on the continent’s natural resources endowments, with priorities on health and pharmaceutical, automotive, minerals beneficiation, food and nutrition, and apparel of cotton industries to reduce the continent’s external dependency. In this regard, the African Union Commission will now draft a report with clear recommendations for strengthening regional value chains.
- To increase investments in infrastructure and energy with the support of financial institutions and partners to reduce production costs and boost the competitiveness of the African economies.
- To enhance domestic resource mobilization to ensure sustainable financing on Africa’s industrialization and allocate a minimum of 5 – 10% of the national budget dedicated to industrial development.
- To develop sustainable Special Economic Zones and Industrial Parks as well as work with and support existing ones in member states as a means to overcoming existing industrial infrastructure constraints and become hubs for regional value chain integration.
- To ensure inclusive and sustainable industrialization, the Heads of State and Government and other stakeholders will have regular dialogue with the private sector to scale up high-level engagement in industrialization. The African Union Commission in collaboration with other institutions will strengthen support to Member States in creating an enabling business environment for the private sector to thrive.
- The leaders endorsed the African Union Small Medium Strategy. Relatedly, the African Union Commission is tasked with establishing and operationalising the Africa Enterprise Network. The African Union Commission will also work with the African Regional Standards Organization (ARSO) and the Pan-African Quality Infrastructure (PAQI) to expedite the finalization of the Made in Africa Standards and Guidelines.
- The leaders have committed to reserve a minimum of 10% of public procurement to local enterprises, to strengthen the private sector development and industrialization.
- At the Summit, the leaders agreed to establish, at the national level, programs for industrial linkages between the educational system and the labor market, aimed at promoting the competitiveness of the private sector through the development of soft and hard skills necessary for industrialization in the areas of science, technology, engineering, and mathematics (STEM); technical and vocational education and training (TVET), and robotics and artificial Intelligence. Relatedly, the African Union Commission and the African Capacity Building Foundation (ACBF) will prepare a feasibility study on the establishment of an African Manufacturing Institute to support Member States and the private sector in the development of modern manufacturing skills and fostering innovation in the manufacturing sector that will accompany the ongoing structural economic transformation in Africa.
- E Mohamed Bazoum, President of the Republic of Niger, was appointed the African Union Champion on Inclusive and Sustainable Industrialization and Productive Transformation, to provide political leadership and awareness, and ensure a follow-up on the progress regarding the industrial development on the continent to achieve Africa’s transformation under Agenda 2063. The African Union Commission will set up an Inter-Institutional Coordination Mechanism to provide technical assistance to the AU Champion.
- With prevailing exceptional circumstances that justify the extension of the TRIPS Agreement to cover therapeutics and diagnostics for a comprehensive response for COVID-19, and to diversify production, the Heads of State called on all WTO Members to support the extension of the TRIPS waiver to cover the production and supply of COVID-19 diagnostics and therapeutics no later than 17 December 2022. Africa accounts for less than 5% of global production of all medical products, exposing the continent to vulnerabilities and fragility during pandemics.
Source: African union press release