Industries to watch as West African governments and regional institutions plan for ‘post-COVID’ economic growth
Written by Layusa Isa-Odidi, Committee Member of AACC, Associate Partner with Dalberg Advisors
We’ve all probably gotten tired of hearing the phrase ‘don’t waste a good crisis’, but this is the mentality that many government and non-government actors are taking in West Africa as they plan for the next 5-10 years of economic development on the continent. Below are some industries to watch:
Manufacturing (multiple industries) – According to the World Bank, as the percent of value added to GDP in sub-Saharan Africa, manufacturing has grown almost 2% since 2012. COVID-19 has further highlighted pre-existing vulnerabilities to disruptions in global supply chains and many West African governments are looking to minimise their dependence over the long-term. This is especially true for machinery, basic pharmaceutical products, and processed foods.
Pharmaceuticals – The level of attention being directed towards this industry had increased in recent years and COVID-19 is spurring the investment to follow. The West African Health Organization (WAHO) and the UN Industrial Development Organization (UNIDO) had released a regional roadmap framework for the pharmaceutical manufacturing industry in the Economic Community of West African States (ECOWAS) in February of 2020. Since then, multiple actors, including regional and international development banks, have been in serious discussions with the private sector about how to catalyse the industry. The industry is projected to grow beyond US$25 billion in 2022, according to IQVIA.
Domestic agricultural production – While competitive dynamics make national self-sufficiency a difficult proposition for some African countries, the notion of increased regional self-sufficiency (and, eventually, increased export capacity) is more reasonable and increasingly attractive. McKinsey predicts Africa could be 155% more productive if it increased its agricultural productivity. The key is seeking out cross-national value chains that can benefit from investments in R&D and infrastructure.
Telecommunications – Smartphone connections are expected to grow over 20% in sub-Saharan Africa over the next five years. As with many regions of the world, a growing demand for and adoption of digital tools and services across a variety of sectors is likely to boost existing investment.
There will be many organisations in the coming years looking to leverage private sector investment with their concessionary finance. However, positioning oneself best for these opportunities as a non-African investor will require approaching Africa as a consumer market and not just a source of commodities for export.