Has Africa's Manufacturing Revolution Started? While Most Developing Regions Were Laying the Foundations of a Manufacturing-Driven Economy, Africa Continued to Rely on the Export of Low-Value Raw Materials. but It Now Seems That the Trend Is Changing and Local Value Addition Is Increasing-From Cutting and Polishing Diamonds to Exporting Finished Manufactured Products. Sarah Rundell Reports

By Rundell, Sarah | African Business, March 2010 | Go to article overview

Has Africa's Manufacturing Revolution Started? While Most Developing Regions Were Laying the Foundations of a Manufacturing-Driven Economy, Africa Continued to Rely on the Export of Low-Value Raw Materials. but It Now Seems That the Trend Is Changing and Local Value Addition Is Increasing-From Cutting and Polishing Diamonds to Exporting Finished Manufactured Products. Sarah Rundell Reports


Rundell, Sarah, African Business


Eurostar, an Indian-owned diamond trading and cutting company, is one of the latest businesses to open a factory in Botswana; it cuts and polishes diamonds in the capital Gabarone. Botswana accounts for an estimated 27% of global diamond production, but until recently the delicate art of polishing and cutting happened overseas. Although Africa is home to five of the top seven global diamond producers, the bulk of exports remain rough or uncut stones.

But this is changing as a new trend begins to take root. Over the span of a few years, 16 factories, like Eurostar, have set up in Botswana while six have sprung up in Namibia. It is the beginning of a new industry, adding value to gems back home. Botswana now competes with manufacturing centres such as India, which employs one million people in the polishing business, and can now add around 40% to the value of its sparkling export. "They are taking the rough diamond and turning it into a finished product. This way Botswana is able to compete with other polishing centres and it has created a whole new industry," says Mervin Lifshitz at the Botswana Diamond Manufacturers Association.

[ILLUSTRATION OMITTED]

Botswana's burgeoning diamond-polishing industry is indicative of a wider effort across the continent to add value back home and boost Africa's own manufacturing sector. Economists have said for years that without a strong manufacturing industry--South Africa has the most vibrant--countries will struggle to reduce the cost of manufactured imports, create jobs and accelerate industrialisation.

How healthy is Africa's manufacturing sector?

Companies say power supply is the biggest challenge. The World Bank's December 2009 Kenya Economic Update estimates domestic manufacturing loses almost 10% in potential sales due to power outages and transport bottlenecks. It is making Kenyan goods uncompetitive, warns Betty Maina at the Kenya Association of Manufacturers (KAM). "With energy cost constituting over 40% of total manufacturing costs, Kenya's products are increasingly finding it difficult to compete with those from other countries, especially Asia," she says.

It is a similar story in Nigeria, where companies rely on their own generators. This helps ensure power supply but the cost is unbearable for many, causing factories to close or temporarily shut and lay off staff, says Alhaji Bashir Borodo, the president of Nigeria's Manufacturers Association.

"Manufacturing is dying in Nigeria because of the power supply," bemoans Lagosian entrepreneur Seyi Boroffice. "The government still believes it can fix the problem but it has to be driven by the private sector."

It is a call being answered. Nigerian energy firm Oando has invested N16bn ($104.6m) through its subsidiary Gaslink in 100km of distribution pipeline to service over 90 customers in Lagos's industrial centres. It is part of an overall massive investment to provide Nigeria's industrial and commercial centres with a reliable and cheap fuel option, the company says.

In South Africa, where state-owned power utility Eskom produces 90% of its electricity supply from coal-fired power stations and struggles to meet demand, companies say they are exploring other power sources. A near-collapse of the grid in January 2009 shut the country's gold and platinum mines for five days and sent metals prices soaring.

The recession has not helped manufacturers. Inflation and consumer belt-tightening has led to increased competition from cheaper imports. Mohit Manglani, president of the Carpet Manufacturers Association of Nigeria urges the importance of buying local: "It is the only way to encourage manufacturers to continue to produce high quality and affordable carpets in this country. Patronising locally made carpets wilt save the country foreign exchange as well as create job opportunities. We believe in the Nigerian manufacturing sector and we encourage more consumption of locally made carpets," he says. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Has Africa's Manufacturing Revolution Started? While Most Developing Regions Were Laying the Foundations of a Manufacturing-Driven Economy, Africa Continued to Rely on the Export of Low-Value Raw Materials. but It Now Seems That the Trend Is Changing and Local Value Addition Is Increasing-From Cutting and Polishing Diamonds to Exporting Finished Manufactured Products. Sarah Rundell Reports
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.