Africa's Accelerated Industrial Development Action Plan “AIDA” AFRICAN UNION COMMISSION Department of Trade and Industry By Hussein Hassan Hussein Head of Industry -AUC

Contents Background Reasons for lack of industrial Development in Africa Industry Action for Africa’s Industrial Development “AIDA” Implementation Strategy of “AIDA” Progress and Challenges of Implementation of AIDA. Way Forward

Background Africa, the richest in the world in terms of natural and mineral resources endowment But the least in terms of industrial development Relies on the export of raw materials Vulnerable to exogenous shocks – e.g. fall in prices due to low demand, fluctuations in exchange rates etc.

Reasons for lack of industrial Development in Africa Lack of basic infrastructure for industrial development – poor roads, railways, ports, inadequate energy supply Lack of skilled labour Low purchasing power (low income) Small market sizes political instability Civil conflicts Underdeveloped financial institutions

Cont. Reasons for lack of industrial Dev. in Africa Weak industrial policies inadequate industrial investment

Plan of Action for Africa’s Industrial Development The Plan of Action (PoA) for Africa’s Industrialization was developed during CAMI 17 Conference in 2007 It (PoA) contains a long list of good intensions for Africa’s industrial development PoA was endorsed by the HoS during 2008 Summit, which was dedicated to Africa’s industrial development HoS requested the AUC to operationalize and implement the PoA

Implementation Strategy for the PoA For the purpose of implementing the PoA for the accelerated industrial development of Africa, an Implementation Strategy was developed. The long list of good intensions contained in the PoA was narrowed into 7 Programme Clusters

Implementation Strategy of the PoA (Cont.) The 7 Programme Clusters contains 49 projects in all, these include the following: 1. Industrial policy and institutional direction 2. Upgrading Production and Trade Capacities in Africa 3. Promotion of Infrastructure and Energy for Industrial Development

Implementation Strategy of the PoA(Cont.) 4. Human Resource Development for Industry 5. Industrial Innovations Systems, R&D and Technological Development 6. Financing and Resource Mobilization 7. Sustainable Development

Implementation Strategy (IS)of the PoA The Implementation strategy was presented to the Ministers of Industry for adoption during the last CAMI 18 Conf. the decision of CAMI 18 that Member States should allocate 1% of GDP to industrial development The Ministers recommended that a Monitoring and Evaluation Mechanism as well as project costing and Resource Mobilization framework be developed During CAMI 19 in 2011 the ministers adopted the Monitoring and Evaluation Mechanism as well as project costing and Resource Mobilization framework.

The CAMI 19 discussed the idea of allocating the member states a percentage of their national budget for support the implementation of AIDA and Industrial development The the Conference decided that all Member States should ensure putting aside part of their national budget for industrialization. Unfortunately, the conference didn’t adopt this proposal

The AU Conference of the Minister of Industry 20th ordinary session 10 – 14 June, 2013 has addressed the key issue of resources mobilization of AIDA Under the Long-term financing for African Industrialization the following recommendations were made :-  African Union Member States should:  Concentrate efforts in planning and mobilizing resources for industrialization;  Increase collaboration between Ministers of Finance and of Industry in mobilization of resources for industrialization;

 Request the African Development Bank to create a special window within the Bank to support the African Manufacturing sector;  Encourage Development Financial Institutions (DFIs) to provide financing for industrialization;  Strengthen the mandate and capitalize DFIs to support industrial development in Africa;  Learn from other regions that have succeeded in raising domestic resources for financing industrial development from such sources as the postal services and their role in financing.

 The Implementation Coordination Unit (ICU) of AIDA should be established at AUC Headquarters and sustainable resources mobilized to enable the AUC to fulfill its monitoring and coordinating role.

Way Forward What we are expected from our conference ? We need implementable policy option for the following :- – Allocation adequate of financing resources to support implementation of AIDA,ANV and BIAT – Regional integration should be extended to work on the concept of Joint venture and value chain for Industrial development. – Regional integration should be extended to work on the concept of Industrial Joint venture and value chain

Way Forward (Cont.) The efficiency of industrial policy and business law of member states should be reviewed to be :-  more attractive for FDI  Encourage the private sector to play a significant role in the development  PPP partnership  Productive capacity building, institution capacity building as well as Human resources capacity building

Thank You