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Industrial Development of Africa – JICA’s commitment at TICAD IV and its follow-up

Chapter 6:
Industrial Development of Africa
JICA’s commitment at TICAD IV and its
Go Shimada, Toru Homma, and Hiromichi Murakami
1. Introduction
In the 1960s, there were high hopes for newly independent Sub-Saharan
African countries. At that time, Africa was economically better off than
Asia. In 1970, Zambia’s GNI per capita was $432 and that of Malaysia,
$392 (at current prices), indicating that the Zambian economy was doing
better than Malaysia’s. In 1968, Gunnar Myrdal published Asian Drama,
which was very pessimistic about the development prospects of South
and South East Asia.
Almost a half century later, however, the situation has reversed and
Asian economies have surpassed African economies. In 2011, GNI per
capita was $9,656 for Malaysia and $1,425 for Zambia. This leads to a
question: What were the reasons for this divergence between the two
regions? This question was one of the issues heavily discussed at TICAD
After TICAD IV, building on its analytical work concerning the Asian
growth experience and African development, JICA enhanced support of
industrial development to follow up the meeting. JICA has launched a
comprehensive approach to support African industrial development,
i.e., combining policy-level support with concrete project assistance to
private sector development. Such initiative has matched the challenges
and priorities of African development today, as well as the political
commitment of African leaders, and has developed into tangible actions
in Ethiopia and Zambia, among others.
This chapter will rst discuss the need for the industrial development of
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Africa in order to achieve its sustainable economic growth, touching
upon issues such as youth unemployment, de-industrialization
processes, diversication of economic structure, and investment climate
improvement. It will then examine strategies to tackle these challenges
and the strong determination of African leaders to industrialize. These
will be followed by three cases of JICA’s cooperation for Africa since
TICAD IV, which include (1) research of the Asian experience and
African development, (2) industrial policy dialogue and quality and
productivity improvement (kaizen) in Ethiopia, and (3) support for
investment promotion and economic diversication (“Triangle of Hope”
approach) in Zambia.
2. Possibilities and Challenges Necessity of Industrial
Development of Africa
Africa’s long-term prospects for growth are good. The Economist
Intelligence Unit (EIU) (2012) has forecast that average growth of the
regional economy in 2013-16 will be around 5% a year. The economic
performance of Sub-Saharan Africa, as Figure 1 shows, has been better
than that of most developed countries.
There are challenges, however, to sustain this economic growth. First,
the youth population in Africa (including North Africa) is rapidly
expanding, with close to 200 million people aged between 15 and 24.
Although the expansion means a demographic bonus in the future and
will make Africa a huge market by 2050, it also means that creating jobs
for the younger generation will be a critically important issue.
Otherwise, the dividend could become a curse. This has an important
bearing on political stability as well as inclusive growth in the region.
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
Figure 1. Africa’s sustainable GDP growth
(Source: International Monetary Fund (2012), World Economic Outlook Database, October 2012)
Second, despite the importance of the industrial sector in creating jobs,
the employment share of this sector in Sub-Saharan Africa was only
10.6% of the overall population in 2009 (ILO 2011). Furthermore, the
share of the manufacturing sector as a percentage of GDP has been
declining since the 1980s (Figure 2) (Page 2012 and Page 2013). Industrial
development is the key to creating more productive jobs, transforming
the economic structure from rural agriculture-based economies to more
diversied economies with much larger industrial and service sectors.1
This includes light manufacturing, such as the agro-processing industry,
which adds value to primary products.
1. Benin et al. (2010) estimates that agriculture’s share of GDP fell at an average annual rate of almost
7% between 2003 and 2009.
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Figure 2. Share of manufacturing in GDP
(Source: Lin 2012)
Third, to transform the Sub-Saharan African economy, private sector
development needs to be promoted. In a large number of Sub-Saharan
African countries, the general operating environment for the private
sector remains difcult, with more complex and expensive regulatory
processes and weaker legal institutions, compared with any other
regions (World Bank and IFC. 2012), and the manufacturing sector is still
The fourth issue concerns foreign direct investment (FDI) promotion.
Even though Africa has largely been enjoying an investment increase
since 2000, most investment goes into the natural resources or mining
sector. As Table 1 shows, the top 20 African countries that have the
largest inward stock of foreign direct investment in 2011 are mainly
natural resource-rich countries, and just 10 countries count for almost
80% of the investment amount into Africa. This means investment in
Africa is highly concentrated and in specic sectors.
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
Table 1. FDI inward stock in 2011, top 20 African countries (mil $)
(Source: by this author based on data from UNCTAD World Investment Report 2011 and 2012)
Figure 3 shows that a gradual sectoral shift of investment is taking place.
Investment in the service sector is emerging in particular. Contrary to
popular perception, investment in primary industry is declining in the
long run. This trend, however, does not necessarily mean a decline in the
presence of primary industry. For example, coke and petroleum
products are emerging in the manufacturing sector and many
investments in the manufacturing sector play a supporting role for the
extractive industry. UNCTAD (2012) describes this shift of investment as
a diversication of natural resource-related activities rather than a
decline of the extractive industry. This indicates that the industrial
structure still heavily depends on natural resources.
Diversication of economic structure is imperative. First, natural
resource-rich countries must diversify their economies to correct their
over-dependency on their given endowments (natural resource curse
and Dutch disease) and promote other sectors with more job creation
effects, such as the manufacturing and service sectors. Resource-poor
countries, on the other hand, need to diversify their economies by
developing local industry, adding value to agricultural products (value-
chain development).2 To make these strategies work, African countries
also need to diversify investment.
2. The One Village One Product Program (OVOP) could be one of the effective approaches.
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Figure 3. Value of greeneld investments in Africa, by sector, 2003–2011
(Billions of dollars)
(Source: UNCTAD 2012).
3. Africa’s Leaders’ Determination to Industrialize – Accelerated
Industrial Development of Africa (AIDA)
Africa’s leaders have shown strong determination to industrialize their
countries. One occasion at which such determination was articulated
was the January 2008 African Union Summit that focused on the
Industrial development of Africa. The African Union (AU) (2008)
adopted the Action Plan for the Accelerated Industrial Development of
Africa (AIDA). This is the declaration by African leaders for national
development through industrial development. 3
“[I]t is Africa’s turn.... No country or region in the world has achieved
prosperity and a decent socio-economic life for its citizens without the
development of a robust industrial sector” (AU 2008:1).
AU (2008) emphasized that the crucial factors for African industrial
development are, among others, general skills, stimulating productivity,
promoting investment, providing infrastructure, technology transfer,
and upgrading enterprise operations.
Development partners must increase their support for industrial
development, aligning their support with the African initiative. JICA has
3. In line with such determination of African leaders for industrial development, there have
been support activities from African academics; the establishment of the African Center for
Economic Transformation (ACET) in 2007 by K.Y. Amoako is an example of the initiatives
from the academic side to support governments with rigorous policy research and advice on
transforming their economies.
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
been aligning its assistance to AIDA, and as a part of the AIDA
monitoring process, in 2010, JICA and its partner, the National Graduate
Institute for Policy Studies (GRIPS), were invited to make presentations
in the Addis Ababa meeting organized by the AU and the Economic
Commission for Africa (ECA) to introduce Japan’s SME development
policy (ECA 2010; Shimada 2010). This illustrates the growing interest in
Asia’s development experience on the part of Africa, especially in terms
of Asia’s industrial development.
There are numerous constraints for industrial development, ranging
from lack of basic education to infrastructure. In the next two sections,
we will focus on two aspects. One is how to make realistic strategies for
industrial development. The other is how to promote more FDI,
especially for non-resource-based sectors.
4. Development Strategies toward Industrial Development
At TICAD IV, held when there was a growing interest among African
leaders in the Asian development experience, the JICA Research
Institute organized a symposium on “Economic Development in Africa
and the Asian Growth Experience.”4 The symposium aimed to hear
African leaders’ insights on the relevance of the Asian experience in
accelerating economic growth in Africa. The symposium particularly
highlighted the role of the state in promoting economic growth while
maintaining equity through appropriate public policy.5 Professor Stiglitz
emphasized the relevance of the Asian lessons to strike a good balance
between the state and the market (JICA 2008a).
Following TICAD IV and the G8 Hokkaido Toyako Summit, held in
4 . The symposium featured several eminent African leaders as panelists: H.E. Jakaya Mrisho
Kikwete, President of the United Republic of Tanzania and Chairman of the African Union;
H.E. Meles Zenawi, the late Prime Minister of the Federal Democratic Republic of Ethiopia;
H.E. Joachim Alberto Chissano, former president of the Republic of Mozambique; and Dr.
Donald Kaberuka, President of the African Development Bank Group. Professor Joseph
Stiglitz of Columbia University also joined the discussion via a video link. Mrs. Sadako
Ogata, then President of JICA, served as Chairperson.
5 . The main points of the discussion in the symposium were as follows. It was noted that
Africa is certainly growing; but the challenge is how to sustain accelerated growth. For this
purpose, Africa needs to have an appropriate development strategy in which government is
given more policy space to design a practical strategy that suits the unique situations in
respective African countries.
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Japan just one month after TICAD IV, JICA started several initiatives to
follow up on Japan’s commitment to Africa at the two meetings. One of
them is research collaboration between the JICA Research Institute and
Professor Stiglitz’s Initiative for Policy Dialogue (IPD) with the late
Prime Minister Meles of Ethiopia participating. The research aimed to
open a debate on facilitating economic growth and poverty reduction in
Africa by applying Asia’s development lessons, and also to promote a
more active role of governments in economic policies. The published
results of the research called for fresh approaches to learn the lessons
from successes both within and outside Africa, particularly drawing on
the experiences of Asia.6 While they maintain there is no policy package
that ts all sizes, they argued that at the center of the policy misstep in
Africa was a failure to get the balance right between the state and the
After a JICA-IDP meeting in Addis Ababa, Ethiopia, the then Prime
Minister Meles made two requests to JICA (Ohno 2011; Shimada 2010;
Kuwajima 2011). One of these requests was to help formulate industrial
development policy. The other proposal was to support and nurture
private companies. In response to these requests by the Prime Minister,
JICA has taken a comprehensive approach to the issue of industrial
development in Ethiopia.
JICA’s comprehensive approach is based on the assumption that as the
following gure shows, industrial development needs a multifaceted
policy and actions (Shimada 2013).
6. The research resulted in the publishing of a book, which was brought out by Oxford
University Press (Noman et al. 2012), titled “Good Growth and Governance in Africa: Rethinking
Development Strategies.”
7. This book addressed the following important questions: Why has the overall economic
growth performance of Africa been disappointing during the past 50 years? More
importantly, what are the policy options for reversing that trend? What are the possibilities
and policies for Africa?
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
Figure 4: Comprehensive approach to industrial development
First, at the policy level, macro-policy such as a ve-year development
plan must be in place to set the overall policy goal and plan. A lack of
clear policy and plan on the part of the government generates a sense of
uncertainty among the private sector, resulting in less-than-optimal
Second, in addition to the ve-year development plan, detailed sectorial
policy and SME development policy are needed to provide more precise
guidance for policy implementation.
Third, at the private rm level, human capital accumulation (learning) is
essential to improve productivity. There are two types of knowledge that
need to be learnt. One is new skill/technology, and the other is
management capabilities. These two components are inseparable for
successful industrial development.
With the above comprehensible approach in mind, in response to the
two requests from the late Prime Minister Meles, JICA started its
initiatives. Regarding the rst request, in partnership with GRIPS
Development Forum, JICA decided to conduct a policy dialogue with
Ethiopian authorities on the country’s industrial development. Hand in
hand with the policy dialogue, regarding the second request, JICA
initiated a project on quality and productivity improvement (kaizen),
aiming to improve productivity in the industrial sector in Ethiopia
(Shimada 2011; GRIPS Development Forum 2011).
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4.1 Industrial policy dialogue and productivity improvement in
The policy dialogue with Ethiopian authorities, headed by the Prime
Minister, covered issues from the policy level to actual implementation
on the ground. The dialogue started with “policy visions,” which is an
overall long-term policy guidance. The visions included Agricultural
Development Led Industrialization (ADLI) and Democratic
Developmentalism (DD), which are the guiding principles that the
Ethiopian government has been adhering to. Discussions then moved
toward the ve-year development plan, “the Plan for Accelerated and
Sustained Development to End Poverty (PASDEP) (2005-2009),” and
culminated in a debate over the new ve-year plan, “the Growth and
Transformation Plan (GTP) 2010/11-2014/15.” Also discussed were
sector policies such as those for basic metals and engineering industries.
The sector survey provided a useful reference in the design of an
industrial master plan.
The dialogue tried to ll in the gap in terms of the mindset and
methodology of industrial policy making, mostly based on international
comparison of good practices in Asia such as Japan, the Asian Tigers,
and ASEAN. It was pointed out that self-study, learning from neighbors,
and trial and error are the factors commonly found in the Asian
experience. Further, it was argued that simply copying specic policies
of an Asian country would not be a solution. The understanding was
that there is a set of policy menus for industrial policy, and specic
policies should be selected and adjusted to the unique conditions of each
country, creating a climate of collaboration for Private-Public
Partnership (PPP) (Ohno, K. 2011 and 2012).
Another factor emphasized as important was the coordination among
government ministries in formulating industrial policy (Ohno, I. 2011).
This coordination was the key to the success of Asian countries. In Asia,
the functioning coordination mechanism among the government
bureaucracy as well as with the private sector helped to make
development policy making transparent and accountable, and to avoid
the politicization of the process.
Based on the policy dialogue, the GTP expanded the policy scope to
include the promotion of import-substitution industries. The new Micro
and Small Enterprise (MSE) Development Strategy also encourages the
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
introduction of the kaizen concept.8
4.2 Quality and productivity improvement (kaizen)
The kaizen project started in October 2009, together with the policy
dialogue.9 Kaizen is a Japanese word that in this context refers to
“continuous improvement” of productivity and quality without
additional cost, promoted in a participatory process and through a
bottom-up approach. Various instruments are used, such as the working
environment improvement methodology called “5S”: Seiri (orderliness),
Seiton (tidiness), Seiketsu (cleanliness), Seisou (cleaning up), and Shitsuke
(discipline); these terms are normally referred to in English as Sort, Set in
Order, Shine, Standardize, and Sustain.
Japan itself introduced productivity and quality improvement in 1955 at
the start of the country’s era of rapid economic growth, learning from the
business management tools from the United States. This management
practice method has spread among Japanese companies operating in
Japan and abroad. JICA has also offered assistance to spread the practice
of kaizen to many developing countries in Asia. In 1983, JICA started
cooperation with Singapore’s National Productivity Board (NPB), which
evolved into the present SPRING-Singapore. After the success of the
project, cooperation expanded to Thailand, the Philippines, Hungary,
Brazil, Tunisia and Ethiopia, among others (Ueda 2009).
In terms of sustainable private sector development, the introduction of
management tools is critical. Otsuka and Sonobe (2011) explain this
process as follows (see Figure 5): once a new business is established, the
pioneer receives sizable prots. The success of the pioneer rms will
attract imitators to the industry, and in this way an industrial cluster is
formed. During the early period when prots are reasonably high,
entrepreneurs are not interested in introducing new ideas and
knowledge. However, with more companies entering the industry,
protability of the rms starts to decrease. Without introducing new
ideas and knowledge to improve operations, especially management
tools, the protability of many rms will decrease, making it impossible
for them to continue business, and as a result, the number of companies
8. In a meeting, the late Prime Minister evaluated the JICA-GRIPS exercise as “lling the
knowledge gap.”
9. Before JICA’s initial technical assistance, the Kaizen Unit was created in the then Ministry
of Trade and Industry (now the Ministry of Industry), and local kaizen leaders were devoting
themselves to kaizen promotion.
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will decrease (as shown by the dotted line in Figure 5). Many empirical
studies have proven that management skill improvement is the key for
cluster development (Sonobe and Otsuka 2011; Sonobe et al. 2011). This
is why the Government of Ethiopia and JICA-GRIPS agreed to start
introducing kaizen as a component of the country’s industrial
Figure 5. An illustration of industrial cluster development patterns in terms of
changing protability and the number of rms.
(Source: Otsuka and Sonobe 2011)
To provide guidance on the kaizen approach, a team comprising JICA
and Ethiopian experts visited a total of 30 selected private
manufacturing companies, each of which received 10 consultation visits
from the team. The team’s method was not to give readily available
solutions to the problems that the companies had, but to ask them
questions on what the companies needed to think about to improve their
operations. After the 10 consultations, extending over a half-year, as
Table 2 shows, the 30 rms had obtained an average benet of Ethiopian
Birr (ETB) 500,000 (equivalent to around $30,030). Given that the average
number of employees was 402 per company, the pilot project generated a
benet of ETB 1,240 ($74.5) per head, which almost equaled the
prevailing gross monthly wage ($75). Various quantitative data on
successful cases are shown in Table 2. The highest benet to a single
company was ETB 3.25 million, around $195,195.
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
Table 2: Quantitatively measured results from the kaizen pilot project
Company Notable results
Overall Average quantitative benet of ETB 500,000 ($30,030)
per company.
Given that the average number of employees is 402
per company, the average benet per head is ETB
1,240 ($74.5), which is comparable to the prevailing
gross monthly wage ($75).
Company A (Metal) Recovered ETB 118,995 ($7,146) as additional value.
Per-head value is ETB 1,000 ($60).
Company B (Metal) Reduced lead time from two weeks to one week.
Company C (Textile) Halved time wasted by 780 min./month for a certain
process and 624 min. for another process.
Company D (Chemical) Reduced overproduction waste by 50%.
Increased motion and movement by 100%.
Company E (Agro) Additional production of 12,000 liters/day, which
accounted for ETB 204,000 ($12,252)
Company F (Metal) Regained reusable materials worth ETB 2,400,000
($144,144), compared to company capital of ETB
770,000 ($46,246). Per-head regain is ETB 58,500
Company G (Agro) Identied, repaired, and reused machinery and
equipment worth ETB 3,250,000 ($195,195), compared
to company capital of ETB 20,000,000 ($1,201,201).
Per-head benet is ETB 9,420 ($566).
(Source: By this author)
Figure 6 shows pictures taken before and after the project. The top-left
pictures show the disorganized stock conditions before kaizen, and the
pictures on the right, the conditions after kaizen. Everything became
easier for factory workers to manage. They no longer needed to waste
time in looking for misplaced materials. The bottom pictures show a
small improvement at a metals factory, where they simply installed a
table. With this table, workers could do away with heavy lifting work,
thus reducing wasted time and effort.
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Figure 6: Visual comparison of before and after the pilot project
(Source: By this author)
There are also challenges. The pace of progress is different among
companies participating in the kaizen movement. The key lies in the
corporate mindset. Workers should actively participate in improving
productivity and directors have to listen to the workers’ voices.
Leadership is indispensable to thoroughly apply such a working
It must be highlighted that this success has been brought about by the
initiatives of Ethiopian experts, who work enthusiastically with factory
workers at private companies to improve their operations. This
management skill was new to the Ethiopian experts before the project,
but after the project, six out of nine experts who worked for the project
became classied as consultants, authorized as competent in providing
consultancy services, and three experts were classied as assistant
The initial project successfully ended in June 2011, including the kaizen
dissemination plan. Encouraged by this achievement, the Ethiopian
Government, in October 2011, established the Ethiopian Kaizen Institute
(EKI), under the Ministry of Industry, with 65 technical staff. The
institute is the world’s rst ever governmental institute that has the term
kaizen in its name. The Ethiopian Government and JICA began the Phase
2 Kaizen Project in November 2011 for capacity building of EKI and
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
related organizations in order to disseminate kaizen throughout the
country. This project is expected to contribute to establishing a system to
disseminate kaizen in Ethiopia in a sustainable manner.
JICA’s cooperation to support kaizen in Ethiopia was the rst case of its
kind in Sub-Saharan Africa. The experience and the results of this project
will form a useful basis for further projects in other African countries in
the future.
Though not a magic wand, kaizen could be a useful method that will
contribute to private sector development in Africa; if appropriately
introduced, it will bring about changes in motivation and consciousness
and help the acquisition and/or creation of knowledge and skills in the
process for effective production and quality management.
To support the kaizen approach in other countries in Africa, it is crucial to
secure an empirical base to provide a rationale for the conditions under
which the approach will be functional and effective, and to identify what
constraints should be overcome. From such a point of view, a greater
emphasis on scientic analysis of individual projects with appropriate
data is warranted.
5. Investment Promotion and Diversication through “Triangle
of Hope” Approach in Zambia
Turning now to investment promotion and diversication, which are
other important factors for economic transformation, we would like to
present a case study from Zambia. Zambia has been struggling to put an
end to its over-reliance on mineral resources and to diversify its
economy, as suggested in the Sixth National Development Plan (SNDP)
formulated in 2011. The promotion of FDI in various sectors is
considered one of its solutions. Zambia has been addressing this issue,
and JICA has been supporting the comprehensive approach towards
investment promotion, through the project called “Triangle of Hope
(TOH),” that contributes to economic diversication.10 The “triangle”
represents a tripartite combination of (1) government will, (2)
streamlining public administration, and (3) private sector participation.
The idea was devised by Dato’ J. Jegathesan, who was the former
10. JICA’s assistance was rst initiated as the “Project for Triangle of Hope, Strategic Action
Initiative for Economic Development (TOH-SAIED)” (referred to as the Phase 1 Project)
implemented from 2006 to 2009. Then the Phase 2 Project called the “Zambia Investment
Promotion Project – Triangle of Hope – (ZIPP –ToH)” followed from 2009 until 2012.
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Deputy Head of the Malaysian Industrial Development Agency (MIDA)
and JICA consultant for the project.11
Impacts and contributions of the project are summarized as follows
(JICA 2012b; Homma 2013). First, the project successfully brought 9
investment projects to Zambia. (One of the investments is worth over
$200 million. These investments include Africa’s rst mobile phone
factory; a large-scale university invested in by Malaysian investors; and
a hospital project invested in by an Indian medical enterprise group.)
Second, the project diversied investment from the mining sector
towards non-traditional sectors such as education and health. Third, the
project contributed to improvement of the Doing Business environment.
For example, Zambia was identied as the world’s 7th top reformer in
Doing Business 2011 (World Bank and IFC 2010). Fourth, the project
contributed to a dramatic increase of FDI inow (FDI inow for 2011
became 4 times larger than that of 2006). Last but not least, the project
enhanced the capacity of the Zambia Development Agency (ZDA) as an
investment promotion agency and improved services for investors.12
To achieve these results, a strong government will was initiated by the
late President Dr. Levy Patrick Mwanawasa. Under his direction, 12
taskforces were formulated and 12 Action Agendas were prepared for
development of 12 diversied areas.13
Throughout its cooperation period, the project focused on capacity
building by the Zambian Government, in particular ZDA. The capacity
building streamlined public administration on investment approval by
reforming the investment application process, preparing manuals/
guidelines, establishing one-stop shops, monitoring processes by tracer
studies and others. It also aimed at promotional activities such as
11. MIDA was renamed as the Malaysian Investment Development Authority in 2011.
12. ZDA was established under Zambia’s Ministry of Commerce, Trade and Industry by
merging ve governmental agencies, namely Zambia Privatisation Agency, Zambia
Investment Centre, Export Board of Zambia, Zambia Export Processing Zones Authority and
the Small Enterprises Development Board. Although the ZDA has multiple functions, the
basic function to promote inward FDI as the investment promotion agency (IPA) does not
signicantly differ from other countries’ IPAs which are exclusively established for
investment promotion purposes.
13. The twelve areas are as follows: education, medical and health, tourism, agriculture,
cotton, banking and nance, air cargo hubs and inland ports, government streamlining,
information and communication technology (ICT), Multi Facility Economic Zone (MFEZ),
mining and micro, small and medium enterprises (MSME).
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
dispatching targeted investment promotion missions for Malaysia,
India, South Africa and Japan and preparing promotional materials such
as guidebooks, websites and sector/project proles. The missions were
sometimes implemented in the form of public-private joint missions.
These activities contributed to further private sector participation in
investment in Zambia even in the sectors which were not traditionally
considered to be associated with private investment.
The TOH approach shows the importance of integrated efforts at the
policy making level and implementation level to promote investments.
This is an innovative approach and the difference from prior efforts in
this area. It is also suggested that the TOH approach, including
investment diversication, could serve as one of the solutions for
African natural resource-rich countries which need economic
6. Ways forward
As we have seen, the keys to sustainable economic growth in Africa are
industrial development (job creation), doing business improvement, and
investment diversication. This chapter examined strategies to tackle
these challenges and African initiatives for industrial development,
AIDA, taking up cases of JICA’s cooperation for Africa, which include
(1) the analytical work of the Asian experience and African
development, (2) industrial policy dialogue and quality and
productivity improvement (kaizen) in Ethiopia, and (3) support for
investment promotion and economic diversication (“Triangle of Hope”
approach) in Zambia. These results of the projects designed and
implemented as follow-up activities after TICAD IV imply that these
approaches should be scaled up after TICAD V in accordance with
AIDA. The international community is expected to support this African
The subsequent chapters will discuss the role of infrastructure. Without
soft and hard infrastructure, such as Special Economic Zones (SEZ),
roads, bridges, electricity and operational systems for industrial
promotion, it is impossible to industrialize. Infrastructure is also very
important to encourage the private sector, including Japanese
companies, to invest more in Africa. In the process of the development of
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Asia, this ODA-FDI linkage worked very well in countries such as
Thailand and Vietnam.
Industrial Development of Africa
– JICA’s commitment at TICAD IV and its follow-up
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... The firms simply improved their method of operations through kaizen by conducting 5S activities and reducing seven types of waste (overproduction, inventory, repairs/rejection, motion, processing, waiting, and transport). 17 Source: the author based on Shimada, Homma, andMurakami, 2013 andJICA, 2011b Note: 1 ETB = US$16.65 Table 3 shows qualitatively measured results by the Ethiopia-JICA team. ...
... The firms simply improved their method of operations through kaizen by conducting 5S activities and reducing seven types of waste (overproduction, inventory, repairs/rejection, motion, processing, waiting, and transport). 17 Source: the author based on Shimada, Homma, andMurakami, 2013 andJICA, 2011b Note: 1 ETB = US$16.65 Table 3 shows qualitatively measured results by the Ethiopia-JICA team. ...
Industrialization is the key for sustainable economic growth in Africa. The role of industrial policy has been discussed intensively recently. This paper sheds light on the learning (or learning how to learn) aspect of industrialization policy, proposing a comprehensive approach. A great deal of past literature focuses only on the technological aspects of learning, but industrialization is a multi-faceted task, covering policy planning, policy implementation, and managerial knowledge. This paper took up a case from Ethiopia. The case study confirmed that learning on managerial knowledge improved performance of private firms. It also confirmed that policy learning expanded the policy scope of the government to help private sector development. These two aspects are inseparable, and this comprehensive approach should be used by donor countries for the industrialization of Africa.
... Note 3: In the items from (7) to (16), Type 1 refers to a company within the same province with the surveyed company; Type 2 means a company in a different province but within the same island with the surveyed company; Type 3 means a company on a different island as the surveyed company but within Indonesia; Type 4 means a company outside Indonesia; SOE means State-owned enterprise; and NGO/CSO means nongovernmental organization/civil society organization. Note 4: 5S is a working environment improvement methodology including Seiri (Sort/orderliness), Seiton (Set in order/tidiness), Seisou (Shine/cleaning up), Seiketsu (Standardize/cleanliness), and Shitsuke (Sustain/discipline) (Shimada et al. 2013). ...
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This chapter examines the dissemination of Kaizen in Southeast Asia. It compares the experiences of Malaysia, Indonesia, and Myanmar. Malaysia is considered to represent government-led dissemination with an organization’s significant role and the private sector’s awareness, while Indonesia is considered to represent private sector-led dissemination in automobile industry supply chain and others. Myanmar provides an example of a country at an initial stage in Kaizen dissemination. Based on these cases, this chapter sets up Kaizen dissemination models, focusing on two aspects: the relationship among stakeholders and the five-stage path of Kaizen dissemination comprising introduction, diffusion, customization, evolution, and standardization.
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Although “inclusive development” is a relatively new term, the concept has deep roots. In one of its first appearances as a concept, Kuznets discussed links between economic growth and income inequality (Kuznets in Am Econ Rev 45 (1):1–28, 1955). This chapter discusses strategies for jobs and inclusive growth in countries where extreme poverty is high, with a focus on sub-Saharan Africa. It begins by exploring why the need for inclusive growth is so great on the continent. It reviews the analytical drivers of the need for inclusive development. It also provides lessons from Asia and case studies of how development cooperation has contributed to inclusive growth.
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The need to construct an effective strategy for industrial development in low-income countries has been largely ignored by development economists because industrial policies have failed in many developing countries. This does not imply, however, that industrial development cannot be promoted. This paper attempts to synthesize the conventional wisdom in development economics with recent advancements in various fields of economics (such as theories of endogenous growth and agglomeration economies) to provide a useful framework to design a strategy for industrial development, which consists of investments in managerial human capital followed by the provision of credit and the construction of industrial zones.
This book examines how to promote industrial development in low-income countries. It considers the role of traders in the evolution of a cluster, the role of managerial human capital, the effect of the 'China shock', and the role of industrial policies focused on international knowledge transfer in supporting the upgrading of clusters. © Tetsushi Sonobe and Keijiro Otsuka 2011. All rights reserved.
In the 1990s, development policy advocated by international financial institutions was influenced by the so-called Washington Consensus thinking. This strategy, based largely on liberalization, privatization, and price-flexibility, downplayed, if not disregarded, the role of government in steering the processes of technological learning and economic growth. With the exception of the Far East, many developing countries adopted the view that industrial policy resulted in inefficiency and poor economic growth. However, industrial policies have been successfully employed in the past in the countries that are now developed industrial leaders, including the USA, Germany, and Japan, and more recently by in what are now some of the most vibrant emerging markets. India, China, Brazil, and many NIE Asian countries nurtured technology intensive industries to jumpstart their production and (later) exports. They have had remarkable success not only in boosting economic growth, but also in diffusing the benefits of technological learning to the rest of the economy. The book analyzes the impact of an ensemble of industrial policies, including those affecting the accumulation of technological knowledge, institutions supporting scientific and technological learning, the profitability of different lines of business, the protection of "infant industries", competition and intellectual property rights, and trade policies. Ample historical evidence, which the book explores, shows that industrial policies do work when appropriate combinations of measures are adopted. Well beyond a "market failure" perspective - whereby "perfect" markets are the purest benchmarks - institutions and policies embed both learning and non-learning behaviors, the construction of domestic learning organizations, national systems of production, imitation, and innovation. Together, the book discusses the opportunities and constraints facing the implementation of industrial policies associated with the current regime of international economic relations (WTO, TRIPs).
Why has the economic growth performance of Sub-Saharan Africa overall been so disappointing over the past fifty years? More importantly, what can be done to sustain and improve upon the accelerated growth experienced in recent years? What are the possibilities and policies for Africa to achieve sustained, rapid economic growth, poverty reduction, and begin to catch up? What are the lessons of success in both Africa and elsewhere? Could some of the policies that proved so successful in East Asia help reverse the de-industrialization of Africa in the past three decades and be the basis of its structural transformation? These were the questions posed to a diverse group of experts on development convened by the Initiative for Policy Dialogue (IPD). This volume reflects the highlights of their deliberations. It broadens the policy debate, expands the policy options and proposes alternative development strategies. This book captures the lively, and sometimes contentious, debate, but in the end, it provides a note of optimism for the future of a subcontinent whose economic experience has been so disappointing. Neither geography nor governance present an insurmountable obstacle in much of Africa, but the dominant governance agenda needs to be radically overhauled. Though success is not assured, there is good reason to believe that policies based on lessons of successes, notably in East Asia, can be adapted successfully in African contexts. And indeed, there are already a few notable successes, and more are in the offing.
Industrialization is the key for sustainable economic growth in Africa. The role of industrial policy has been discussed intensively recently. This paper sheds light on the learning (or learning how to learn) aspect of industrialization policy, proposing a comprehensive approach. A great deal of past literature focuses only on the technological aspects of learning, but industrialization is a multi-faceted task, covering policy planning, policy implementation, and managerial knowledge. This paper took up a case from Ethiopia. The case study confirmed that learning on managerial knowledge improved performance of private firms. It also confirmed that policy learning expanded the policy scope of the government to help private sector development. These two aspects are inseparable, and this comprehensive approach should be used by donor countries for the industrialization of Africa.
The essence of East Asian development experience should be sought in the methodology of policy formulation rather than individual policy measures whose applicability differs greatly across countries. East Asia approaches development as a joint process of political and economic factors. Policy formulation in East Asia is characterized by real-sector pragmatism, goal orientation, and aspiration for building the country's unique strength rather than removing general negatives. The problem of weak policy capability is overcome through focused hands-on endeavor to achieve concrete objectives, which we call dynamic capacity development, rather than trying to improve governance scores generally vis-à-vis the global standard. These features are sharply distinct from the dominant development thinking of Western donors which emphasize good governance and an early adoption of policies and institutions that copy international best practices. Examples of dynamic capacity development are presented, and four entry points for bringing this methodology to Africa are suggested.
This article explores the possibility of industrial policy in Africa based on Asia's experience from the 1970s onwards. African economies have seen a good performance in recent years. The growth pattern, however, remains largely dependent on world commodity prices. For the economies to realize a sustainable growth, the structure has to be diversified and upgraded. In this context, government-led industrialization can be an effective means for latecomers where markets are imperfect and risks are high for nascent private enterprises, despite persistent skeptical views on the governments' insufficient capacity, rent-seeking, and corruption. It is certainly ridiculous to simply transplant the Asian experience to Africa because of the differences in international/domestic political, economic, geographic, and social conditions. Donors may want to acknowledge the diverse national contexts and to encourage Africa's trial-and-error approach and closer collaboration between public and private sectors, rather than to lay down "best practices."
The theoretical case for industrial policy is a strong one. The market-failures which industrial policies target—in markets for credit, labor, products, and knowledge—have long been at the core of what development economists study. The conventional case against industrial policy rests on practical difficulties with its implementation. Even though the issues could in principle be settled by empirical evidence, the evidence to date remains uninformative. Moreover, the conceptual difficulties involved in statistical inference in this area are so great that it is hard to see how statistical evidence could ever yield a convincing verdict. A review of industrial policy in three non-Asian settings--El Salvador, Uruguay, and South Africa--highlights the extensive amount of industrial policy that is already being carried out and frames the need for industrial policy in the specific circumstances of individual countries. The traditional informational and bureaucratic constraints on the exercise of industrial policy are not givens; they can be molded and rendered less binding through appropriate institutional design. Three key design attributes that industrial policy must possess are embeddedness, carrots-and-sticks, and accountability. * This is a paper prepared for the Commission on Growth and Development. I thank Michael Spence for suggestions and guidance, Roberto Zagha for inspiration and detailed comments, and Ricardo Hausmann and Chuck Sabel for many lengthy conversations that substantially influenced my thinking on these matters.
Africa needs structural change to sustain growth. Industry with and without smoke stacks is key, but Africa has deindustrialised since the 1970s. Can Africa industrialise? Rising costs and domestic demand in Asia offer an opportunity. However, trade in tasks, firm capabilities and agglomeration will drive industrial location choices. Strategies to deal with these drivers of change are needed. Investment climate reforms should focus less on regulation and more on the gaps in infrastructure and skills. Policies to push exports, build firm capabilities and support agglomerations are also needed. Success will depend crucially on new donor attitudes and how policy is implemented.
1 publ. Vol. 1. 30, 705 s., il. -- vol. 2. S. 16, 707-1530, il. -- vol. 3. S. 17, 1531-2284, il.