1. November 7th, 2013 A Business Plan for Africa Breakaway Sessions 1: Africa Inc. Product Mix Session 3: Increasing Profit Margins through Industrialization and Advanced Manufacturing

2. 2 Use a cluster-based approach to identify local assets and competitive advantage favoring entrepreneurship. Foster cluster strategy to encourage expansion of local industries. Enforce a 10-20 year National Power Strategy as a priority. Promote entrepreneurial skills at all stages of the education system. Promote the development of local manufacturing to supply regional market: key selection criteria for procurement from international equipment suppliers and contractors should include involvement, empowerment and partnerships with local industries based on skills and technologies transfer. Liberalized regulatory framework allowing an increased engagement of the private sector supported by strong national and regional institutions that are committed to implementing the transport corridors. P OLICY R ECOMMENDATIONS WITHIN THE A FRICA 2.0 M ANIFESTO

3. 3 K EY F ACTS AND F IGURES Fact 1: Africa’s industrialization has been weak and inconsistent. In 1980–2009, the share of manufacturing value added to GDP increased marginally in North Africa, from 12.6 per cent to 13.6 per cent, but fell from 16.6 per cent to 12.7 per cent in the rest of Africa. (source: Economic Report on Africa 2013, Economic Commission for Africa, African Union) Fact 2: The informal sector contributes about 55% of sub-Saharan Africa’s GDP and employs 80% of the labour force. This statistic indicates the weakness of African industrial sector. Fact 3: Africa’s highly concentrated export structure is the result of a historical dependence on natural resource sectors. In 3/4 of African countries, the share of primary commodities in total merchandise exports equals 50% or more. In a third of the countries, this share is 90% or higher.

4. 4 L EVERAGING S TRENGTHS AND O PPORTUNITIES, A DDRESSING W EAKNESSES AND T HREATS WEAKNESSES AND THREATS Countries in Asia and to a lesser extent Latin America, building on a competitive and dynamic industrial base, are moving faster than Africa to higher-technology and knowledge-intensive sectors. This, coupled with Africa’s underdeveloped industrial base, makes it increasingly hard for the continent to catch up. 1.A number of African countries are landlocked and face high transport costs, low economic density and geographic isolation from high- growth clusters. ( see Industrialization for an emerging Africa: AU/UNECA ministerial ). 2.Difficulties for smallholders and small firms to access technologies, information, skills, and finance. 3.Africa depends excessively on primary commodity exports, which makes it difficult to create decent jobs. IMPLICATION : Africa is losing the race The export product concentration index measures the degree of export concentration within a country. Industrialized countries are characterized by values closer to zero, reflecting very diversified export sectors. More than half the 53 African countries, however, have an index equal to or higher than 0.40, marking dependence on a narrow range of products, such as hydrocarbons in Angola.

5. 5 L EVERAGING S TRENGTHS AND O PPORTUNITIES, A DDRESSING W EAKNESSES AND T HREATS STRENGTHS AND OPPORTUNITIES Upgrading implies: Improvement in production systems ( process upgrading ) Moving into more sophisticated product line ( product upgrading ), Moving into higher knowledge- content functions ( functional upgrading ), Moving into new production activities ( inter-sectorial or chain upgrading ). IMPLICATIONS 1.Changes in global production systems present an opportunity for Africa: as many emerging economies climb the Global Value Chains they leave space for other developing countries to produce some of their low-technology goods, which can help built infant industry. 2.Africa must capitalize on its resource endowments and the commodity price boom, by upgrading its production. 3.The combination of wealthier customers, capable staff and devoted stakeholders should automatically contribute to greater profits in the long run.

6. 6 Foster cluster strategy to encourage expansion of local industries Nigeria is one of the largest oil producer in the world but seriously lack oil refinery capacity. Developing an oil industry cluster could help the country reduce heavily its import bill and create a lot of jobs. L EVERAGING S TRENGTHS AND O PPORTUNITIES, A DDRESSING W EAKNESSES AND T HREATS STRENGTHS AND OPPORTUNITIES

7. 7 B EST P RACTICES  In 2001, Rwanda, embarked on an ambitious National Competitiveness Program to upgrade the performance of its key business clusters, particularly the export- oriented ones, starting with coffee, tea, and tourism. As a result, the country managed to increase exports by 300% in the past decade from $80million in 2001 to $250 million in 2011. (source : Africa.2.0 Manifesto)  Mali mango exports to the EU increased fivefold in volume between 2003 and 2008. The country implemented a multi-modal (road, rail, and sea) transportation system to move mango exports to destination markets in Europe more efficiently : transit time for mangoes decreased from 25 days to 12 days over the same period. A cold-chain (refrigerated) system was developed, phytosanitary improvements were made, certification and traceability programs were implemented. (source : Africa.2.0 Manifesto)  Morocco evolved from one of the largest phosphate producer into a global champion in fertilizer production and distribution led by OCP group.  South Africa ’s mining supply industry show well-developed linkages with the commodity sectors. The industry acquired areas of knowledge that were specific to the deposit type and extraction techniques of local mines, and this enabled it over time to become a global leader in some products and services.

8. 8 K EY Q UESTIONS TO A DDRESS IN T ODAY ’ S S ESSION How to build the next General Electric in Africa? What should be the main industrial clusters in Africa? How to upgrade African products’ place in Global Value Chains? Which key industrial activities should Africa Inc. prioritize? What policies could help boost African industries? How to facilitate access to finance and technology?

9. 9 A CTION PRIORITIZATION M ATRIX AND S TAKEHOLDER E NGAGEMENT M ATRIX For each identified leapfrogging action, complete the Stakeholder Engagement Matrix below: Complete the Action Prioritization Matrix below with the key short, medium and long-term leapfrogging actions.