The Sunday Mail
Dr Tinashe Eric Muzamhindo
SEVERAL African countries are transitioning the structure of their economies from agricultural to manufacturing to promote the development of competitive industries.
Industrial development strategies are developed to enable the manufacturing sector to foster a strong synergy among small, medium and large industries to carry out their role in the supply chain.
Industrial development strategies are generally divided into two:
Industrial development strategy involving introduction of external capital
Industrial development strategy involving use of local resources
The first strategy entails attracting and incentivising businesses to set up factories in special economic zones that have the necessary infrastructure, a sound traffic system, abundant water supply, electricity and favourable tax systems, among other necessities.
The second strategy generates value-added products and promotes industry through strategic utilisation of local resources such as minerals, agricultural land, forests, culture and human resources.
In most African economies, a strategy is not developed by only one approach. When manufacturing is focused on primary industries, it mainly produces agricultural, forestry and mining outputs or makes materials for such production.
The industrial development inevitably relies on usage of local resources.
In spite of such differences between the two approaches, there are many common factors like preparation of production bases, labour force development and human resource development.
Spin-offs from engineering innovation or product innovation through a linkage among industry, the academia and the Government also accelerate attraction of external capital. In other words, it is not easy to develop a new industry where people have a negative attitude towards the idea of introducing enterprises from outside.
Development of leading industries
No two countries will ever have identical resources and economic systems. It becomes important for a country to identify its leading industry that best places it to enjoy unique competitive advantages over other nations.
The development of leading industries not only determines the priority of resource allocation and policies but is also expected to be able to build a positive image that becomes a country brand which can indirectly increase the country’s competitiveness.
Determining the leading industry can be based on what absorbs the most labour, has the largest share of the national output and is capable of developing productive and progressive links with other industries.
The leading industry will play a major role as the prime mover economy and its competitive advantage is formed from the uniqueness of its products in its respective domains.
Competitive advantages originate from the abilities of a business to produce or to develop goods and services of superior quality with high efficiency and lower costs.
Strategic management is a set of managerial decisions and actions that help determine an organisation’s long-term performance and helps the company to achieve competitive advantages in the market.
Requirements for industrial growth strategy based on external capital
Attraction of external capital is realised when expectations of the industrialist are met by local conditions.
Firstly, industrial requirements vary with the kind of business in question.
Secondly, industrial requirements are different depending on the type of industry.
Industries generally fall into the following four types:
- Infrastructure-oriented industry
- Consumer-market-oriented industry
- Labour-oriented industry
- Resource-oriented industry
Industry is not always involved in only one category, but sometimes in two or more types. Each type of industry is characterised as follows:
1) Infrastructure-oriented industry: The term “infrastructure-oriented industry” can be defined as the type of industry that shows a strong tendency to be located in countries with unique infrastructure, an abundant supply of industrial water or a high-speed traffic network.
This type of industry mostly depends on imported resources or the mechanical industry handling large and heavy goods. A typical example is the iron and steel industry.
2) Consumer-market-oriented industry: This is the type of industry that shows a strong tendency to be located in countries close to the product market or where there is large consumption.
Products requiring an urban population are related with knowledge, information, logistics and construction.
Typical industries requiring an urban population are steel processing, printing and publishing, manufacturing of electronic gadgets, construction and medical equipment.
Most products requiring a huge population are those related to food, clothing, shelter, textiles and furniture.
3) Labour-oriented industry: These show a strong tendency to be located in countries where labour is available at low wage rates. Industries requiring a large labour base are steelmaking, mineral processing and electric machinery, among others.
4) Resource-oriented industry: This type of industry shows a strong tendency to be located in countries that have vast mineral resources, agricultural products and forest products.
Typical industries that fall under this type involve cement, agro-processing, livestock processing and forestry.
Interrelatedness of industries
Textile industries are attracted by an abundant labour force and low labour wages in a country. Formation of clusters for these types of labour-intensive industries enables further development of infrastructure and location of related industries like logistics and services, followed by location of processing/assembling industries such as those for printing, fashion and machinery.
Dr Tinashe Eric Muzamhindo is head of the Zimbabwe Institute of Strategic Thinking. He can be contacted at: [email protected]
