Why Africa could be the manufacturing workshop of the world

1/30/2018 1:38:25 PM

Africa can be the manufacturing workshop of the world. While wages in industries in China and South-East Asia rising rapidly, moving manufacturing to Africa is the obvious choice, says Helen Hai, CEO and founder of the Made in Africa Initiative. She personally led successful initiatives to launch manufacturing companies in Ethiopia and Rwanda and is proving her point again in Senegal. “This continent has huge potential to play a part in the next industrial revolution.”

Helen Hai, based in Shanghai, spends much time travelling back and forth to Africa to oversee projects and talk to government leaders. They want to discuss her ideas about fostering industrialization on the continent. As an advocate of the importance of a manufacturing base for Africa, she is a goodwill ambassador for the United Nations Industrial Development Organization (UNIDO).

Quick, inspiring example

Hai was the driving force behind the establishment in 2012 of the Huajian shoe-making facility in Addis Ababa, which makes shoes for leading brands. “Based on the economics ideas of former World Bank chief economist Professor Lin about manufacturing being central to development, the former prime minister of Ethiopia, Meles Zenawi, wanted me to put the theory into practice. He wanted a quick, inspiring example. As the GM of the new factory, I managed to find and train local workers and start production of shoes for export to the US. By the end of year one we had 2,000 local workers and 4,000 after year two.”

The example created a lot of interest in Ethiopia and across Africa. Helen Hai became an advisor to the Ethiopian government and revived the plans for a local industrial zone. Within months she managed to interest several international companies to set up their production business there. “I showed them how the shoe factory became profitable. Success breeds success and attracts new investments and entrepreneurs!”, says Helen Hai, pointing out that Ethiopia has become one of the shining examples of industrial development on the continent.

Just like China did

In Hai’s view, African countries can replicate what China managed to do since the seventies of the 20th century. "At that time, China was extremely poor. The country began at the lower end taking advantage of competitive labour and became the manufacturing center for the world for everything. Without any aid, built on the principle of job creation and trade," she says.

“Africa now has a golden opportunity”, Hai says, “as China is moving to the position of high-income country by 2025. About 85 million jobs in China’s labour-intensive jobs have to be relocated, as Chinese workers will be too expensive. Those can be African jobs, provided they start working on their economic transformation.”

Hai is confident there is a lot of local entrepreneurial potential in Africa. “Once the talented Africans have witnessed success, they will start their own businesses, independent from any Chinese or European telling them what to do. In Ethiopia, I recruited 86 students and took them to China to train them how to make shoes in the industry. Back in Ethiopia, these students trained local workers. By now, half of these 86 have have aleady left the company and started their own shoe plants.”

Job creation and trade – not aid

Obviously, developing African countries to become prosperous nations with industries and jobs for hundreds of thousands of people will not happen overnight. “Job creation and trade – not aid – will lift African countries from poverty. To jumpstart the local economy and economic transformation, countries need to start by building factories for the bottom of the job pyramid.” In Hai’s vision, this will only work when three essentials are available: manufacturing know-how, enabling governments and the ability to sell to the global markets.

Other African countries, such as Rwanda and Senegal, have invited Hai to do for their country what she did for Ethiopia. “President Paul Kagame of Rwanda invited me two years ago to do this. It took me six months to create 1,000 jobs in garments manufacturing for export – and counting. The word is spreading. Next stop for me and the Made in Africa initiative: Senegal. Similar needs, similar challenges and possibilities. We are working on establishing an industrial zone in Senegal.”

Now ‘face the tiger’

When African countries succeed in becoming new manufacturing hubs, the garments, shoes and higher-value products in European and American stores will no longer be ‘Made in China’ but ‘Made in Africa.’ “We need to make Africa aware of its possibilities. We also need great examples of success. And we need to forget the old-school way of how to, as I would like to put it, ‘face the tiger’. Not by careful study and a lot of talking. The tiger will be gone after all that time. Or it will have eaten you. Africa should try the Chinese way of dealing with the tiger. Just jump it, grab the opportunity!”

Photo credits: Helen Hai

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