Will manufacturing ever boom in Sub-Saharan Africa?

We observe that in recent decades, manufacturing jobs have moved around the world looking for spots that minimize costs. From the US to say South Korea, then to China, and now to Vietnam and others.

Will African countries be next? Well, a recent working paper from the Center for Global Development suggests that one factor standing in the way is comparatively high labor costs in SSA.

Here’s the “money shot” from the paper:

Image

Now, those lines might look close to each other, but the chart is in a log scale so the gaps are pretty large. At around $4000 value added per worker, the gap is about 50%!

At this rate, it’s not going to be the lure of cheap labor that will draw global manufacturing to SSA.

PS: the paper uses, 

 “comparable, cross-sectional data from 10,502 manufacturing firms in 12 Sub-Saharan African countries (Angola, Ethiopia, Ghana, Kenya, Mali, Mozambique, Nigeria, Senegal, South Africa, Tanzania, Uganda, Zambia) and 13 comparators from four regions (Indonesia, Philippines, Vietnam, Russia, Turkey, Ukraine, Argentina, Brazil, Chile, Colombia, Mexico, Uruguay, and Bangladesh).”

 

7 thoughts on “Will manufacturing ever boom in Sub-Saharan Africa?

  1. Pingback: Assorted links

  2. Maybe this means that because of high prices for their raw materials, SSA is on average suffering from “Dutch Disease?”

  3. Once there are no more workers in East Asia willing to work for under $5 a day, then surely firms will increasingly show interest in uneducated and poorly trained African workers to do jobs that require little education or training.

  4. African free labor has a 200 year history of failure.

    Barring a return of unfree African labor (Chinese overlordship?), I doubt we will see a manufacturing takeoff on the dark continent.

    Which is just as well. Offshoring to low-wage countries reduces technological progress, as it reduces the incentive to automate, manage production more efficiently, and invest in machinery.

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