Agriculture, mining and manufacturing, between them, accounted for an average of 47.1 per cent of GDP value added in Africa in 1990-1994. For developing Africa, the combined share of agriculture, mining and manufacturing stand at 49.2 per cent. Over the same period, the share of agriculture in the GDP in developing Africa has stagnated at around 22.6 per cent compared with 5 per cent in South Africa. Mining and manufacturing accounted, respectively, for 13.8 per cent and 12.8 per cent of GDP in developing Africa.

A. Agriculture

1. Food production trends

As already pointed out, agricultural production in Africa increased by 2.1 per cent in 1994 compared with 3.7 per cent in 1993. The North African subregion achieved an impressive growth rate of 12.8 per cent, followed by the Southern and the West African subregions where output is reported to have grown by 3.6 per cent and 2.7 per cent, respectively. In contrast, the Eastern and the Central Africa subregions registered negative growth rates of 1 and 1.5 per cent, respectively (table II.1).

Table II.1 Source: FAO, Agrostat - Production Indices for Regions, 7 Nov. 1994.

Food production increased by 2.5 per cent in 1994, compared with 4.5 per cent in 1993. Over the same period, the total output of cereals increased by 9.3 per cent from 96.4 million tons to 105.3 million tons. Output of wheat increased from 13.4 million tons in 1993 to 15.5 million tons in 1994 while output of coarse grains rose from 67.9 million tons to 74.4 million tons over the same period.

On the other hand, output of roots and tubers, which traditionally provide a key share of the food supply in much of tropical Africa, increased by 0.5 per cent from 119.4 million tons in 1993 to 120 million tons in 1994. Cassava production stagnated in Ghana and Madagascar in both 1993 and 1994, while it declined markedly in Zaire (by 15.9 per cent), Uganda (by 2.7 per cent), the United Republic of Tanzania (by 4.4 per cent) and Mozambique (by 5.7 per cent).

In the North African subregion, the latest estimates for wheat put 1994 production at 11.7 million tons, 25 per cent higher than the previous year. The more than satisfactory increase in 1994 is mainly attributable to the marked increase in Morocco's output by some 4 million tons to a record 5.53 million tons. The lower output in Algeria, Egypt and Tunisia, estimated at 1.1 million tons, 4.4 million tons and 502,000 tons, respectively, were more than offset by the Morocco's much higher output. Coarse grain output in the subregion reached 11.1 million tons, 29 per cent higher than in 1993, with the poor harvest in Algeria and Tunisia being more than offset by increased outputs in Egypt and Morocco.

In West Africa, cereal production by the countries of the CILSS is estimated at a record 9.9 million tons, 14 per cent higher than in 1993. Production in Mali and the Niger in 1994/1995 was above average, at an estimated 2.65 million tons and 2.64 million tons, respectively. In the case of Mali, the marked improvement in output is attributed to higher yields per hectare while in the case of the Niger it is ascribed mainly to a 28 per cent increase in millet production. In the coastal countries of the Gulf of Guinea, there were generally good harvests of the main maize crop. In Nigeria, except for Kwara State - which was hit by severe floods, leaving 20,000 people displaced and 20,000 ha of crops, 5,000 ha of farmland and 2,000 ha of sugar cane destroyed - the overall food supply outlook is satisfactory. In Ghana, due to erratic rain and drought, the food supply situation remains tighter. According to the FAO crop assessment mission, production of cereals in the nine coastal countries will amount to about 20 million tons, 7 per cent less than 1993. In both Liberia and Sierra Leone, where a large number of farmers have been displaced by civil strife, the food supply situation remains precarious.

In Central Africa, cereal output increased by 3.6 per cent from 2.8 million tons in 1993 to 2.9 million tons in 1994. Average or above-average harvests were realized in Cameroon, the Central African Republic, and Gabon. In northern Zaire, growing conditions remained satisfactory. Nevertheless, in some parts of the province of Kivu floods damaged property and rural infrastructure resulting in reduced food output. In Rwanda, food production was hard hit in 1994 by the adverse consequences of civil strife. The already serious food supply situation is likely to be aggravated following a substantial shortfall in food crops harvests in early 1995. In Burundi, food production in 1994 is estimated at some 19 per cent below average. With ethnic violence continuing in several areas of its northern provinces, food supplies are likely to diminish even further, due to the reduced harvests and the disruption of relief efforts.

In East Africa, cereal output increased by 18.6 per cent, from 18.3 million tons in 1993 to 21.7 million tons in 1994. In Ethiopia, for example, production of cereals and pulses is estimated at 7.7 million tons for 1994/1995, about 3 per cent higher than in 1993/1994. A recent FAO/World Food Programme Crop and Food Supply Assessment Mission to the Sudan forecasts the 1994/1995 harvest of sorghum and millet at a record 4.91 million tons, 85 per cent more than in 1993/1994. Aggregate production of cereals in 1994/1995 is estimated at 5.5 million tons, 79 per cent more than in 1993/1994. In Somalia, food grain production in 1994/1995 is estimated at 420,000 tons, 155,000 tons higher than in 1993/1994. Despite those modest gains, the food supply situation remains critical, especially for subsistence production of food grains or the purchasing power for buying food.

In Southern Africa, aggregate cereal output increased by 2.1 per cent, from 23.5 million tons in 1993 to 24.0 million tons in 1994. In Mozambique, the food supply situation remains tight and is being further aggravated by a substantial decline in cassava production in the face of increasing numbers of returnees. In Malawi, one third of the population of 9 million face the risk of hunger, given the tight food supply situation that remains in several areas affected by the 1993/1994 drought. In Angola, inadequate food supplies persist in many areas, and deaths from causes related to starvation and severe malnutrition are increasingly reported. The total food deficit in 1994/1995 is estimated at 1.4 million tons, consisting mainly of roots and tubers. In Botswana, Madagascar, Namibia, Swaziland, Zambia and Zimbabwe, growing conditions were less favourable.

2. Production trends in industrial crops

Performance by regional producers of industrial crops in the course of 1994 was mixed. Compared to 1993, there were percentage increases of 6.2, 15.9 and 3.7 for coffee, sugar and cocoa, and percentage declines of 12.2, 7.0 and 4.9 for tobacco, tea and cotton, respectively (table II.2).
Table II.2

Source: FAO, Agrostat Database, Computer Printouts, Nov. 7, 1994.

Coffee production in developing Africa increased by 6.2 per cent from 983,000 tons in 1993 to 1.0 million tons in 1994. Ethiopia has emerged as the largest producing country in the region. The coffee industry is being restructured, with the introduction of a free market system and the renovation of the transport and processing infrastructure. In Uganda, coffee trees are being replaced with high-yielding local robusta varieties that have been developed at Kawanda Research Station. In Côte d'Ivoire, production fell catastrophically from 286,000 tons in 1990 to 144,000 tons in 1994 - a decline of almost 50 per cent in less than five years.

Cocoa production in developing Africa increased by 3.7 per cent from 1.33 million tons in 1993 to 1.38 million tons in 1994. In Côte d'Ivoire, which is the world's largest producer, the bumper crop of almost 850,000 tons that had been expected in 1993/1994, became unrealisable in the light of the disappointing rains in July and August 1994. In consequence, the estimate for the 1994/1995 harvest is as low as 715,000 tons, notwithstanding the positive incentives of the Government announcement of a 31 per cent increase in the cocoa producer price at CFA F 315 per kg. In Ghana, the second largest producer in the region, production increased by 12.5 per cent. However, the contribution of cocoa to the country's merchandise export earnings has been falling steadily since 1989, when it represented 52.4 per cent of the total, to only 26.6 per cent in 1993. In Nigeria, a severe outbreak of black pod disease threatens to cause a big cut in Nigerian cocoa production in the course of 1994/1995. Heavy rainfall in Ondo State, where around 70 per cent of the country's cocoa is produced, favoured the spread of the disease towards the end of 1994 and may actually reduce production to 100,000 tons in 1995/1996.

Cotton production in developing Africa declined by 4.9 per cent from 3.8 million tons in 1993 to 3.6 million tons in 1994. In Egypt, the largest regional producer, the lint output in 1994/1995 is estimated at 325,000 tons compared with 409,000 tons in 1993/1994. The reduction is ascribed to the decline in the area under cultivation to 726,100 feddans (1 feddan = 0.42 ha) in 1994/1995 from 884,310 feddans in the 1993/1994 season. According to the International Cotton Advisory Committee (ICAC) exports of Egyptian extra-fine cotton soared dramatically in 1993/1994, to reach 40 per cent of world cotton trade. Total production in Benin, Burkina Faso, Cameroon, the Central African Republic, Chad, Côte d'Ivoire, Guinea, Madagascar, Mali, the Niger, Senegal and Togo rose from 224,000 tons in 1980/1981 to 441,000 tons in 1986/1987 and reached 517,000 tons by 1993/1994. The marked rise in international prices, coupled with the 50 per cent devaluation of the CFA franc, will likely raise receipts in domestic currency and foster a substantial increase in the area under cotton cultivation in CFA countries in 1994. Production may well reach a record 600,000 tons, from an area of 1.37 million ha, but yields per hectare may be below average because of the higher costs of imported inputs following the devaluation.

Sugar production in developing Africa increased by 15.4 per cent from 5.2 million tons in 1993 to nearly 6.0 million tons in 1994. In Egypt, the largest sugar producing country on the continent, production stagnated at 1.1 million tons in both 1993 and 1994. In Mauritius, output increased by 11.5 per cent in 1994. The sector, which employs 35,000 sugar cane planters and more than 40,000 industry employees, is to be revitalized. In Swaziland, production fell by 7 per cent in 1993/1994, but is expected to return to the level of the three preceding years as the drought recedes. In Zimbabwe, production increased by more than tenfold in 1994. The subsector has steadily recovered from the severe drought of 1991/1992 when production stood at a mere 9,000 tons.

Tea production in developing Africa declined by 7.0 per cent from 329,000 tons in 1993 to 306,000 tons in 1994. In Kenya, the largest African producer, output declined by 11.8 per cent in 1994. The smallholder farmers had an additional incentive through the increase in monthly advance payments per kg from KSh.3.00 to KSh.4.50 for green leaf delivered to the factory. Other factors which contributed to the increase include improved maintenance of rural access roads, liberalization of the tea industry, the introduction of auction of exports in dollars, and the creation of retention accounts. Tea production in Uganda has increased steadily, from 9,500 tons in 1992 to 12,300 tons in 1993, an increase of 29.5 per cent, and by 23 per cent in 1994. The increase is mainly due to the rehabilitation of 70 per cent of the plantations.

Tobacco production in developing Africa declined by 12.2 per cent from 458,000 tons in 1993 to 402,000 tons in 1994. In Zimbabwe, the largest producer, output declined by 11.2 per cent in 1994. The 1994 tobacco selling season opened on a strong note, with buyers offering an average price per kg of 883.35 Zimbabwe dollars (US$109.86) for flue-cured tobacco, compared to the average price in 1993 of Z$ 802.62 (US$123.77). Following massive stockpiling of excess leaf in 1993, tobacco farmers reduced the area under cultivation for the season by 25 per cent, and this contributed to a reduction in output by about 170 million kg, bringing supply into greater balance with demand. That move was reinforced by lower production costs and concentration on the cultivation of good quality crops, the soft, nature-ripe tobacco which is in high demand on the international market. After a break of 18 years, the Burley tobacco auction floors opened in April 1994 with prices per kg averaging Z$ 1,135.92 ($142,30). In Malawi, production declined by 26.1 per cent. By September 1994, 98,000 tons of tobacco had been sold on the auction floors. Prices paid for the 1994 crop averaged $1.38 per kg, 30 per cent higher than in 1993. Tobacco accounts for some 65 per cent of Malawi's export earnings but recent evidence has shown that there has been an increasing tendency to switch from tobacco and hybrid maize production to chili-growing. There are now over 5,000 farmers growing chilies, compared with 100 in 1992. The price per kg of chilies rose from 8 Malawi kwacha in 1993 to K 12 in 1994 and may rise to as much as MK20 per kg in 1995.

As in previous years, government policy initiatives in 1994-1995 on rural development related to areas such as poverty alleviation; rationalization and liberalization of agricultural parastatals; subsidized credit; price guarantees and price support; sustainable agricultural activities in combination with protection of the environment; and river basin development.

Unlike the prevailing situation in previous years, however, there seems to be a much more heightened awareness of, and greater concerns for, the plight of the rural groups that are adversely affected by the process of economic reforms. In Zambia, the Government took several initiatives to support those most vulnerable through the Programme to Prevent Malnutrition (PPM), the Food-for-Work Programme and the Programme for Urban Self-Help (PUSH), all aimed at providing short-term relief. In Botswana, the 1994 budget had earmarked 335 million pulas or 21 per cent of budgetary expenditure to the Ministry of Local Government, Lands and Housing for the Accelerated Land Servicing Programme, labour-oriented relief projects which provide employment opportunities for the rural population and for other related goals. In Ghana, the food grain technology introduced in 1993 has begun to produce results. In all 45 post-harvest grain villages have been established, spread across the 10 regions of the country.

In Cameroon, Burkina Faso and Chad, an integral component of the policy reform strategy is the creation of a social safety net to protect the most disadvantaged segment of the population. It takes the form of price controls for major cereals such as sorghum and rice. In Côte d'Ivoire, a fund of 3.1 billion CFA francs was created in April 1994 for the purpose of helping small farmers to up- grade their agricultural implements and secure credit for the purchase of fertilizers. In Tunisia, the Government subsidizes barley production for livestock feeds and has kept imported price of barley low. Small farmers also enjoy subsidized seeds and fertilisers. The price of water for irrigation has been cut and farmers' debts have been rescheduled.

In Morocco, in order to prevent a collapse in the price of wheat, the Government guarantees a floor price. Farmers are in any event still feeling the financial effects of two years of drought and the Government has taken measures to help out by rescheduling crop finance debts, and by reducing the price of fuel used for agricultural purposes. In Kenya, a guaranteed floor is maintained for producer price of major crops such as maize, wheat, rice and sugar cane, based on international prices. In addition, effective provisions for agricultural credit have been instituted through the establishment of an Agricultural Development Bank, which will have the mandate to accept deposits from the public but will be confined to lending to farmers and selected agro-industrial enterprises.

In many countries, the funds allocated to the development of irrigation have been increased. In Swaziland, for example, a major initiative to which the Government is now committed is the Komati River Basin Development Project. It includes the construction of a dam on the Komati at Maguga but the main element of the scheme is the development of approximately 7,500 ha of irrigated land. The project will focus on sugar and citrus plantation, and the construction of the dam is to start in 1997. In April 1994 the Government of Morocco announced that it was putting out to tender to private contractors some 25,000 ha of State-owned land for irrigation. So far, 23,000 ha have been irrigated. The Niger has launched a major rural development project in the Tarka Valley and in the catchment basins of the tributaries. The total area covered by the project is 2,800 km 2 in the Madaoua and Bouza districts. The objective is to improve food security by using modern irrigation methods and to raise producers' income and investment potential through improved organization of marketing and input procurement.

A strategy common to all the governments, consists of ameliorating the management and operational structure of public-sector institutions, including those dealing with agricultural services. In Gabon, steps have been taken to strengthen such institutions and to clarify their financial linkages to the Government. Similar attempts are being made in Benin, Cameroon, Ethiopia, Sierra Leone and Zimbabwe. In Ethiopia, for example, steps have been taken to strengthen and increase the efficiency of some public-sector institutions in the area of agricultural development, while others have been dismantled. In Zimbabwe, arrangements were underway to dismantle the Agricultural Marketing Authority and to replace it with a new institution called the Marketing Finance Corporation. In addition, government subsidies on maize meal and other basic foodstuffs have been discontinued.

In Madagascar, efforts have been made to minimize State intervention in the marketing of vanilla, one of the country's principal export crops. In Cameroon, a restructuring programme in the coffee and cocoa industries was initiated in 1991, when, among other things, the system of licensing buyers was abandoned. In the second quarter of 1994, arabica prices for farmers were allowed to move freely for the first time. A vital element of the programme is to improve the diffusion of information on producer prices.

Despite the series of policy pronouncements and policy interventions by African governments to step- up the production of food and agricultural output, the region is yet to stem the steady decline in food production per capita. In the face of population growth rate of over 3 per cent per annum, per capita food production showed a negative growth rate of 5.3 per cent in 1991-1992 compared to -0.1 per cent in 1981-1990 and a -1.3 per cent during 1971-1980. The productivity of the African peasant farmer has remained very low, mainly due to the shortage of inputs; and so has the average productivity of agricultural land in the region. In effect, much more remains still to be done in the area of institutional and policy reforms as well as the development of infrastructure, research capacity, field extension services, access to credit, better distribution of inputs, etc. There is an urgent need for African governments to ensure that food self-sufficiency objectives are complemented with food security strategies, and to take a long-run view of the needed improvements in food security on the region. Given the high population growth rates in Africa, the increasingly limited land base, the dependence on agricultural employment by a large proportion of the rural food-insecure population, renewed acceleration of agricultural growth with sustainable technology remains a precondition for household food security in the region.

B. Mining

Crude oil and electricity production in Africa stagnated in 1994 while gas production increased modestly. The available data on mining production show that although there have been fluctuation in the levels of output of individual products, the overall trend was downwards in 1993. There are as yet no complete data on specific products for 1994; nevertheless, preliminary estimates suggest that cobalt and copper are continuing their downward trend. The performance of other minerals and metal ores is rather poor, with output of bauxite and gold decreasing slightly.

1. Fuels

Crude oil production was slightly lower than in 1993 (see table II.3 below). Production increases in countries such as Angola, Gabon and the Libyan Arab Jamahiriya were offset by lower output in other countries, particularly Nigeria. The production by members of the Organization of Petroleum Exporting Countries (OPEC) declined to 240.8 million tons, 1.8 per cent less than in 1993. Non-OPEC production reached 97.4 million tons in 1994, an increase of 2.5 per cent, with the strongest growth of 6.3 per cent in Angola and in the Congo, where production rose by 12.1 per cent, to 9.7 million tons.

In Nigeria, because of the oil workers' strike, production fell in the second and third quarters of 1994 to about 1.9 million barrels a day (b/d) compared to 2 million b/d in the last quarter of 1993. Production losses were most substantial during August 1994, and major oil companies, such as Shell Nigeria, were forced to declare force majeure. Still, Nigeria's production for 1994 at 97.3 million tons remained the largest in Africa.

In the Libyan Arab Jamahiriya, production fell slightly in 1993 due to the United Nations embargo, which called for a ban on the sale to the Jamahiriya of all oil-related equipment, other than those required to pump oil. The effect of the sanctions and the lack of investment in the oil sector could become even more serious in the future. In 1994, production edged up 0.2 per cent to 68.6 million tons, and the Government hopes to bring production up to 2.1 million b/d (equivalent to 104.5 million tons) by 1996.

In Algeria, the estimate of 59.2 million tons of oil produced in 1994 is some 610,000 tons lower than the 59.8 million tons produced in 1993. Despite the output prospects of new oil fields, international oil companies have remained cautious due to the country's current political situation. However, it must be emphasized that Algerian reserves of hydrocarbons are now thought to be considerable, at par with those of Saudi Arabia.

Table II. 3

Sources: United Nations, Monthly Bulletin of Statistics, various issues; OPEC, Annual Report, various issues; The Economist Intelligence Unit, Country reports; and ECA secretariat

a/ Including condensates.

* Estimates.

In Egypt, production rose only marginally in 1994, by 0.4 per cent, to 46.5 million tons. In Tunisia, production fell to 4.6 million tons in 1993 compared to 5.4 million tons in 1992. Output from the Cercina field, which came on stream in June 1994, and from the Rubana field, together with the doubling of production elsewhere, helped to limit the decline to 5 per cent for 1994 as a whole. In Angola, the results achieved in 1994 were less than planned, as significant capacities remained shut because of the civil war. The rise in production was nevertheless impressive, and Angola has become one of the major African oil producers. In 1994, crude oil production stood at 28.16 million tons compared with 26.50 in 1993 and 23.65 in 1990.

Gas production in developing Africa is concentrated mainly in two countries: Algeria and Nigeria. Algeria produces almost 67 per cent of African natural gas, with a record output of 46.1 million tons in 1993 - only 0.4 per cent more than in 1992. Given that national production of natural gas is now greater than that of crude oil and that reserves are such that it could be increased considerably in the immediate future, there are renewed efforts to boost its production. In Egypt, production has more than quadrupled since 1983 from 2.4 million tons to 10.1 million tons in 1993 - an average annual rate of growth of 14 per cent. Efforts to boost production are also evident in Tunisia, which has a great potential for natural gas than for oil. Total reserves are put at 84-180 billion cubic metres, compared to the Algerian or Nigerian reserves estimated at the end of 1993 at more than 100 trillion m3.

Nigeria contributes 80 per cent of total natural gas production in sub-Saharan Africa. In 1993, Nigerian production rose by 9.1 per cent, to reach 4.6 million tons oil equivalent (TOE). Other gas producers in sub-Saharan Africa are Angola, the Congo, Gabon and Rwanda. In Gabon, production, including gas flared or reinjected, averages 2.7 billion m3 a year.

2. Non-fuel minerals

The available data on mining production show that although there have been fluctuations in the levels of output of individual products, the overall trend was downwards in 1993. There are as yet no complete data on specific products for 1994; preliminary estimates suggest nevertheless, that cobalt and copper are continuing their downward trend. The performance of other minerals and metal ores is rather poor, with output of bauxite and gold decreasing slightly.

The decline in African copper output has become a permanent feature since the early 1990s, when production started to slump at Gécamines of Zaire and at the Zambia Consolidated Copper Mines (ZCCM), which together account for 90 per cent of the region's output. In 1993, production by Gécamines was a mere 50,000 tons, compared to more than 500,000 tons in the late 1980s. Production dropped in Zambia by 11 per cent in the same year. African cobalt production is practically limited to Zaire and Zimbabwe; and output has been in decline due to the political crisis in Zaire. In 1993, aluminium production in Africa remained almost unchanged at 618,000 tons, after consecutive growth during the previous three years.~ Since 1992 prices of phosphate rock have weakened, leading to lower production levels in Africa for the third successive year.

Total production of gold in Africa, which had increased by 2 per cent in 1992, continued its upward trend, reaching 676 tons in 1993. Most of the growth came from Ghana, where production reached 41.4 tons, an increase of 24.3 per cent. In other producing countries, output remained stagnant or increased only marginally. Estimates of African diamond production total 34 million carats in 1993, 12.7 per cent less than the 39 million produced in 1992.

Since the 1980s, most African countries have sought to attract private investors, both local and foreign, into the mining industry, thereby giving life to new policies on mining activities which would tap their vast resources and enable them to gain access to the considerable technological, managerial and marketing skills of the private sector. To facilitate that process, governments are pressing forward with the sale of State-owned enterprises at an accelerated rate. The most important examples have probably been the privatization of the Ashanti Goldfield Corporation of Ghana, in April 1994, and the process, almost completed, in the case of ZCCM in Zambia. The result, in the case of the Ashanti gold mine, is that the mine is once more rated as one of the world's top 15, and a host of 180 private companies are prospecting for gold in Ghana.
In Nigeria, the investment law was revised in 1993 to make it more attractive to new investors and priority has been given to the development of solid minerals to reduce the dependence on oil. For that reason, the new mining law puts emphasis on the need to diversify away from the oil sector, in order to create a more balanced development. In that connection, the Government has set up a Minerals Development Bank to facilitate soft loans to mining investors, while removing bureaucratic delays which existed under the previous policy.

In Burkina Faso, a new mining code was adopted by the National Assembly in May 1993. Its aims are to encourage mining exploration, to give overseas investors equal rights to those of national investors and to guarantee the right to repatriate investment capital and revenues, subject to normal taxation requirements.

In Ethiopia, a new mining law was adopted in 1993 to encourage mining exploration. The law provides exemption from customs duties and taxes on equipment and materials necessary for mining operations; and makes it easy for profits and dividends, principal and interest on loans, and fees and other payments relating to investments to be remitted abroad.

Be that as it may, a long-term objective for the Africa mining industry in Africa should be the development of downstream transformation industries to produce finished and semi-finished goods for regional and subregional consumption. That would be in the framework of regional market integration for minerals and mineral-based products to ensure optimal use of resources. It is only then that the present external bias of the mining sector, which hinders the development of basic industries in the region, will then be overcome. To attain that objective, the development, exploitation and utilization of mineral resources must be guided by principles which seek to conserve resources, protect the environment and enable the products to be utilized domestically in Africa. That is not to advocate regionalism or protectionism, but to lessen undue dependence on imports, a situation which deters local industrial development.

C. Manufacturing industry

Mid-way through the second Industrial Development Decade for Africa (IDDA-II), there is little or no indication of the structural transformation of the manufacturing sector in most countries of sub- Saharan Africa. The sector continues to be characterized by structural weaknesses such as low productivity, under-utilization of capacity and inadequate industrial investments; acute dependence on external sources of raw materials, technology and other essential inputs; and obsolete machinery and ill-maintained equipment. With the liberalization of trade, the sector also faces problems of intense competition from cheap imports from relatively technologically better-off developing countries, especially those of South-East Asia, which are making rapid inroads into the African market for basic consumer goods.

As shown in table II.4, growth in manufacturing value-added (MVA) of developing Africa recovered in 1994 with an estimated increase of some 5 per cent following a decline in 1993 and a modest increase in 1992 and 1993. In comparison, the MVA for the entire Africa region was slightly lower, on account of the 3.28 percentage growth in South Africa in 1994, which itself is a significant improvement over 1993. Preliminary estimates indicate a recovery MVA in 1994 in all the subregions except the Central African subregion where it is projected to decline by 8.7 per cent.

Table II.4

Source: ECA secretariat.

1 Preliminary estimates.

There were substantial variations in the performance of the manufacturing sector at subregional and country levels in 1994. In Eastern and Southern African subregion, for example, the growth of MVA which had declined by 0.55 per cent in 1993, increased by 3.20 per cent in 1994. Growth in the real output of the manufacturing sector in South Africa, where it accounts for 23.5 per cent of national GDP, faltered in the first half of 1994, because of the uncertainties of the pre-election period, labour unrest, work-stoppages, and the decrease in capacity utilization, but a strong rebound was recorded in manufacturing activity during the fourth quarter of 1994. The decline was most pronounced in textiles, clothing, leather goods, paper and printing products, although machinery and transport also declined. According to the Reserve Bank of South Africa, more than 50 per cent of the major subsectors of manufacturing are close to full production capacity or are moving quickly in that direction. The low levels of investment spending since the early 1980s have also led to an increase in the average age of the capital stock. There was however a rebound in the second half of the year sufficient enough to produce an overall positive growth for the year. South Africa accounts for about 77 per cent of the total MVA for the Eastern and Southern African subregion. Of the remaining 23 per cent, Zimbabwe is the most important contributor. Ethiopia, Kenya, Zambia and Zimbabwe together accounted for an average of close to 60 per cent of the manufacturing output of the subregion in 1993- 1994, with Zimbabwe alone having a share of 30 per cent. ECA estimates a modest recovery in the growth of manufacturing value-added at 3.9 per cent for Zimbabwe in 1994.

In West Africa, trends in industrial sector performance is set by Nigeria and, to a large extent Ghana, Senegal and Côte d'Ivoire. In Nigeria, the manufacturing sector declined by 5.0 per cent in 1994 compared with 2.3 per cent growth achieved in 1993. The recession in manufacturing activities in the course of 1994 was traceable to a combination of factors, including disinvestment by a number of foreign companies, high production costs, increasing smuggling activities, and uncertainty about economic prospects associated with the political impasse in the country. The high cost of production reflected largely the high cost of borrowing and the general hike in tariffs for utilities. The manufacturing sector is projected to grow by 4.28 per cent in 1995, based on expected improvements in the level of capacity utilization in the sector and the impact of concessional loans and other incentives.

According to ECA estimates, Côte d'Ivoire recorded an MVA growth of 0.8 per cent in 1994, the same as the overall increase in GDP, following the decline of 0.4 per cent in the 1992-1993 period. In Senegal, there were improvements in both GDP growth by 1.2 per cent in 1994 compared to a decline of 2.0 per cent in 1993, while MVA, down by 2.5 per cent in 1993, recovered at a growth rate of 2.6 per cent in 1994. Following the devaluation of the CFA franc, firms producing for the domestic market but largely reliant on imported inputs have been hard hit by the high prices of imported inputs. As a result, turnover has reportedly fallen by 40 per cent on average in these enterprises. Companies producing for the domestic market but with a low import content have fared rather better; the food, food-processing and textile sectors have been the main beneficiaries. The main export sectors (groundnuts, fish and potatoes) have undoubtedly benefitted from the devaluation in terms of local currency turnover, while the cement and chemicals sectors have also responded favourably.

Manufacturing growth performance in Ghana, though relatively modest in recent years, has shown steady improvement since 1992, with MVA estimated to have increased by 7.1 per cent in 1994. These trends, to a large extent, indicate the bright spots in the performance of the subregion's manufacturing sector which are sometimes overshadowed by the collapse of economic activities in politically volatile countries like Liberia, Sierra Leone and the Gambia.

In North Africa, manufacturing value-added increased by 1.9 per cent in 1993, and is forecast to surge by 6.4 per cent in 1994. The pace of industrial growth in the subregion in 1993-1994 was spearheaded to a larger extent by Tunisia. The economy of Tunisia has averaged 5 per cent growth annually for over a decade, and its GDP per capita is the highest in the Maghreb Arab Union. The reform measures adopted in 1993-1994 were expected to make effective contribution to project financing by strengthening domestic savings mobilization and through business funds and credit. Foreign investment in the country is projected at US$7600 million during the plan period, 1992-1996. In Morocco, the growth of MVA, which stood at 4.0 per cent in 1992, sank to a negative of 4.2 per cent in 1993 before rising to 0.8 per cent in 1994. The manufacturing sector, which accounted for about 18.5 per cent of GDP in 1993, is suffering from stiff competition from South-East Asian textiles and clothing. Morocco currently has a significant advantage in wage costs compared to the EU - a ratio as much as one to five - but the Government is conscious of the risk of counting too much on this differential as a basis for expanding markets for Moroccan manufactures.

The industrial sector performance in the Central African subregion was to a large extent affected by the depressed economic conditions in Zaire which accounts for a substantial share of the manufacturing output of the subregion. Overall, the subregion has registered declines in MVA growth in recent years culminating in drastic drops of 9.41 per cent in 1992, 8.76 per cent in 1993 and an estimated 8.79 per cent in 1994. The country's investment needs are estimated at US$9,000 million over the next three years, equivalent to its total external debt. In Cameroon, the impact of the devaluation is becoming increasingly evident with agro-industry showing a 66 per cent increase in turnover in the first quarter of 1994 and a massive 132 per cent rise in export sales. The food industry, in particular, which uses a large percentage of imported inputs, recorded a fall in turnover during the first quarter of 1994 of 5.2 per cent, despite an average increase in the sales price of 51 per cent.

The major areas of industrial policy in the course of 1994- 1995 centred on the provision of special tax incentives to manufactured goods for export and/or export processing zones, special assistance to small-scale industries, privatization and the stimulation of foreign direct private investment. In Nigeria, for example, in the budget for 1995, the following tax incentives were provided: (a) removal of any charge or tax on interest paid on bank loans for manufactured goods produced for export; (b) exemption from tax of profits in the form of dividends derived from manufacturing companies in petro- chemical and liquified natural gas subsectors; (c) the exclusion from tax of all expenses on research and development; (d) removal of restriction on capital allowance to manufacturing companies. In Zimbabwe, the budget for 1994 provides the following incentives for Export Processing Zones: (a) income tax at a rate of 15 per cent after a tax holiday of five years; (b) exemption from withholding taxes on dividends, royalties, interest and fees; (c) refund of sales tax on goods and services; (d) exemption from income tax of fringe benefits of persons employed in the export processing zones (EPZ); and (e) duty-free importation of raw materials and capital goods. In addition, in recognition of the stiff competition that local industries face in the international markets, the Government reduced customs duties on textiles from 10 to 5 per cent and for clothing from a range of 20-35 to 15 per cent across the board. Further liberalization on the trade and exchange fronts, that has effectively raised the export retention level to 100 per cent and introduced a market-determined exchange rate, should also help industry to increase production.

In Uganda, a Harmonized Commodity Coding system was introduced for import duties, excise duties and sales tax. This comprehensive code is now being modified to reclassify goods into luxury, intermediate and essential categories. The principal features of this reclassification are as follows: (a) duties on raw material imports for industry are in the main being harmonized to a rate of 10 per cent; (b) those for certain construction materials such as paints, varnishes, tubes and pipes, sales taxes are being reduced to 10 per cent; (c) sales tax on furniture, which is currently 30 per cent, is now reduced to 10 per cent.

In Kenya, the duty rate on yarns and threads is lowered to 30 per cent while that of zinc is lowered to 10 per cent. In addition, selective dumping duties are imposed on subsidised imports where these are adversely affecting local manufacturers. Two such dumped products that have been identified are PVA emulsion and tea sacks being imported from South Africa at subsidized prices. To make the dumping duties effective, no remission for dumping duties are available under the Export Promotion Programme Office (EPPO) or Manufacturing Under Bond (MUB) programmes.

In Swaziland, under the Small-Scale Enterprise Loan Guarantee Scheme, the Central Bank-guaranteed loans are to be made available under a fund established by the Government. The beneficiaries are small businesses that otherwise would face problems of collateral for normal commercial loans. To date, E7 million has been committed in guarantees, allowing a total loan commitment of E9.4 million which have benefited 365 borrowers, of whom 131 were women, 124 men and 110 companies.

In Botswana, during 1993, a total of 446 projects costing P60 million with a potential to create an additional 5,355 jobs, were approved under the financial assistance policy. Of the jobs to be created, 27 per cent would be by small-scale local entrepreneurs, while 15 and 58 per cent, respectively, would be in medium- and large-scale enterprises employing both citizens and non- citizens. Of the total committed funds, 15 per cent would be for the small-scale enterprises, while 10 and 75 per cent, respectively, would be for the medium- and large-scale enterprises.

In Ghana, up to 1993, a total number of 101 enterprises have benefitted under the line of credit component of the project which is administered by the Bank of Ghana. A total amount of US$24.7 million has been committed by way of loans to small and medium enterprises in the manufacturing sector.

The Government of Tunisia, in its attempt to stimulate FDI, has promulgated a new simplified investment law, made the Tunisian dinar convertible for purposes of foreign investment, and created a foreign exchange market. It has established "free points" (an intermediate stage to a free- trade port), offering tax advantages to exporting companies. The "Agence de promotion de l'industrie" (API) has launched promotional campaigns to publicize the stable investment climate of Tunisia: a modern and improved infrastructure; political stability; a reasonably well-trained and adaptable work force; proximity to Europe; and, a free trade agreement in the making with the European Union (EU).
In Morocco, privatization and FDI are driving a boom on the Casablanca Stock Market. Foreign investment funds now account for more than 45 per cent of the activity on the stock exchange. A forecast in turn-over on the stock exchange in 1994 is estimated at MD 86,000 million as compared to MD 48,000 million in 1993. The country's massive privatization programme is the second major element in activity there. In the process of privatization, through the "Société nationale d'investissement" (SNI), the State has sold off its stakes, worth US$200 million, in the CTM-LN transport company and the Sofac Credit on the Casablanca stock exchange. The SNI itself, which holds shares in some 40 manufacturing and financial companies, is currently undergoing privatization. In total, about 112 companies are to be privatized by the end of 1995, bringing an estimated MD 35,000 million to the coffers of the Government.

In spite of the observable trends towards a re-orientation in industrial development strategies and policies in many African countries, an effective and early realization of the target growth rate of 8 per cent per annum that was set in IDDA II for the manufacturing sector is hardly in sight, given the entrenched structural rigidities, weak inter-industry and inter-sectoral linkages, technological backwardness and poor institutional and physical infrastructure in the region. The investment needs for rehabilitation, infrastructural development and capital deepening in Africa have never been greater.

Editor: Dr. Ali B. Ali-Dinar, Ph.D
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