Comments Industrialisation, Private Sector Development and Economic Transformation in Africa Dirk Willem te Velde (Overseas Development Institute) TICAD VI Nairobi 28th August 2016

Wage and productivity gaps / failed connections in Africa Large / small firms within sector Foreign / domestic firms Services / manufacturing / agriculture Rural / urban Between Asia and Africa (levels / changes) Global and regional exporters / domestic markets How much are these gaps hampering industrialisation? Should we go back to the notion of balanced growth as a policy objective? Building linkages / fostering co-ordination

Seizing the (African manufacturing) moment Past Future? High absolute wages in Africa Import substitution in weak domestic markets Weakly implemented EPZs Weak policies and no active support for private sector Weak skills and infra Relatively rising wages in Asia Competitive manufacturing with growing markets Clusters / agglomerations and well managed SEZs Active support by public sector for private sector (addressing co-ordination failures) Support for skills / infra

Policy design and implementation In past bad policies (Ikiara/Fukunishi) There are opportunities (Gelb) BUT, also Heterogeneity in quality of implementation Lack of political incentives, lack of central co-ordinating agency, lack of quality state-business relations Learning from Japan?

Summary of TICAD VI - JICA-ODI meeting on Industrialisation in Africa: Kaizen and beyond KAIZEN is a bottom-up complement to the top-down investment climate instrument and important for Africa’s industrialisation KAIZEN has been implemented flexibly in 8 African countries: ranging from being well-embedded in govt strategies (Ethiopia), to starting with small scale industry (Ghana) or in large firms (Kenya). KAIZEN works; saving $100mn in Ethiopia in 4 years and improving Kenya’s GM East Africa plant labour productivity by more than 5% p.a. 2012-2015 KAIZEN is about worker motivation, team working and a shift in mind set KAIZEN is only the start: other government policies (skills, technology transfer) are also needed for industrialisation KAIZEN will be supported further by JICA and NEPAD through a KAIZEN platform that can help public-private dialogue Source: TICAD VI meeting, 27 August 2016, http://set.odi.org/ticad-vi-2016/