U.N.: Manufacturing Is Africa's Ticket Out of Poverty

Africa accounts for just 1% of the world's manufacturing output and needs to boost the sector if it wants to reduce poverty, a United Nations report said Monday.

While developing Asia saw its share in global manufacturing rise from 13% in 2000 to 25% in 2008, Africa recorded a drop from 1.2% to 1.1% in the same period, according to a study by the U.N. Conference on Trade and Development and the U.N. Industrial Development Organization.

"Africa now accounts for about 1% of global manufacturing, and cannot realistically hope to reduce widespread poverty if its governments don't take effective measures to expand this vital economic sector," said the report.

In labor-intensive manufacturing, Africa's share slid from 23% in 2000 to 20% in 2008.

"Given the fact that most African countries are at an early stage of industrial development, one would expect the region to have very good performance in labor-intensive manufacturing activities," noted the report.

This has been the case in developing Asia, including China, where manufacturing has played a key role.

However, in Africa, the share of labor-intensive manufacturing is at just 18% of the region's total exports.

Rather, the region is heavily dependent on resourced-based manufacturing, including refined petroleum, basic metals, as well as food and beverages. Such products make up about half the region's exports.

Domestic Demand Could Present Opportunities

The U.N. study said the region must broaden its manufacturing base and develop the sector.

"African countries should intensify efforts to develop manufacturing because it presents great opportunities for sustained growth, employment and poverty reduction," said the report.

In particular, building a strong intra-Africa market could boost demand for manufactured goods.

While the rest of the world is buying mainly commodities from Africa, there is demand for manufactured products in Africa itself, the report pointed out.

"The region is increasingly becoming an important source of export demand that could form the basis for initiating and sustaining industrial development," it said.