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3 Stylized Trends: Manufacturing Sector, Infrastructure and Institutions

[1]

To understand the performance of the manufacturing exports of African countries (especially ECOWAS countries), this study first of all observes the performance of the manufacturing sector. The main indicator in achieving this is the manufacturing

Fig. 1 Manufacturing value added annual growth rate. Source: Authors' computation from World Bank (2013)

value added, which explains the net output of industries in a particular country after adding up all outputs and subtracting intermediate inputs (World Bank 2014).

Obviously, the manufacturing sector in many of African countries have experienced an undulating growth rate, as displayed in Fig. 1. However, this direction of flow is not peculiar to African countries, as the trend for world average was not stable as well. However, there is a need to appreciate the manufacturing sector growth rate of African countries, noting that apart from the earlier period prior to the financial crisis and during the crisis, these countries have exhibited a stable rising of the productivity of this sector. For instance, in the ECOWAS region, the manufacturing sector witnessed a consistent rising trend from 2008 onward from

-1.38 % to about 6.30 % in 2012. Similar trend was displayed for SSA countries,

except that after 2008, the rising trend was not as smooth as that of ECOWAS region.

Noting this seemingly 'success story' for ECOWAS countries, the extent to which the manufacturing sector contribute to the GDP of these countries is still minimal. For the period 1995–2012, the manufacturing sector contributed below 10 % to the GDP and this trend is decreasing by the year, except for 2012 as depicted Table 1. Other African countries in the SSA region also witnessed similar modicum contribution of the manufacturing sector to GDP, at-least when comparing both regions with the average of countries from other regions of the world as displayed in Table 1. For instance, countries in East Asia and Pacific (EAP)—such as China and Malaysia—experienced a whooping contribution of the manufacturing sector to their economy with rates above 20 % for most of the period. Likewise, countries in Europe and Central Asia (ECA), Latin America and the Caribbean (LAC), and South Asia (SA) all had manufacturing sector contributions rate of about 15 % or more in most of the period presented in the table.

The trifling contribution of the manufacturing sector of ECOWAS countries and countries in SSA to the overall economy reflects the performance of these countries in manufacturing export. As displayed in Fig. 2, the manufacturing sector in ECOWAS and SSA countries, are able to account for between 20 and 30 % of the total merchandise export. This rate is far below the global average that was consistently within the range of about 70 %. The manufacturing sector in countries

Table 1 Manufacturing, value added (% of GDP)

1995–

1999

2000–

2004

2005–

2009

2010

2011

2012

East Asia and Pacific—EAP

24.271

23.203

22.991

22.969

22.370

19.224

Europe and Central Asia— ECA

19.347

17.572

15.959

15.117

15.168

14.824

Latin America and Caribbean—LAC

18.646

18.436

17.349

16.753

16.300

15.228

South Asia—SA

15.862

15.136

15.647

14.852

14.870

14.344

Sub-Saharan Africa—SSA

13.558

13.076

11.695

10.941

10.340

9.835

ECOWAS

9.031

8.040

7.366

7.135

7.090

8.451

World

19.107

17.792

16.697

16.188

16.100

NA

Note: The region—Middle East and North Africa—was not included due to data unavailability for the period considered

Source: Computations from World Bank (2013)

Fig. 2 Manufacturing export as % of total merchandise export. Note: EAP East Asia and Pacific, ECA Europe and Central Asia, SA South Asia, SSA Sub-Saharan Africa. Latin America and the Caribbean and Middle East and North Africa were not included due to data unavailability for the period. Source: Computations from World Bank (2013)

in East Asia and Pacific, Europe and Central Asia and South Asia exported way above 70 % of the total merchandise export.

To be exact, not only have the manufacturing sectors of countries in these regions performed below the world average, they have experienced decreasing trend in terms of percentage of manufacturing export to total merchandise export. For instance, the percentage dropped from 26.39 % in 2005 to 20.64 % in 2012, after it increased from 19.44 in 1999. Of course, the manufacturing export in SSA countries also dropped from 29.84 % in 2005 to 25.75 % in 2012, after it increased from 25.61 % in 1999. No wonder the sea port of countries in this region have

Table 2 Container (20 foot equivalent units) Port Traffic

1995–1999

2000–2004

2005–2009

2010

2011

2012

EAP

50.83

52.00

52.98

53.70

54.12

ECA

21.06

19.24

17.44

17.50

17.32

LAC

6.55

6.77

7.40

7.15

7.17

MENA

0.00

5.32

8.58

8.61

8.55

SA

2.35

2.87

3.20

3.09

3.01

ECOWAS

0.20

0.07

0.07

0.07

0.08

Note: The region—SSA was not included due to data unavailability for the period considered

Source: Computations from World Bank (2013)

experienced low traffic compared to those in other regions (see Table 2), reflecting the low participation in international trade relative to the shipping activities in the ports. As a matter of fact, much more less than 1 % of the total global flow of containers from land to sea are to or from the sea ports of ECOWAS countries.

The poor infrastructural provision [2] in this region (ECOWAS) cannot be denied as a likely suspect (Table 3). Apart from policy submissions to this effect (e.g. African Development Bank-ADB 2010a, b; World Bank 2013), the statistics of some infrastructural indicators validates these claim. For instance, considering the electric power consumption per capita—presented in the first segment of Table 4—which measures the Kilo Watt per capita of electricity available for public consumption, ECOWAS countries (and SSA at large) had a dismal statistics. For the entire period, countries in these regions had a highest KWh per capita consumption of about 223 (for ECOWAS) and 534 (for SSA). This is many folds less than the global average KWh consumption and those countries in other regions such as EAP, ECA, LAC and MENA.

In the same vein, in Table 4, the average total rail lines in ECOWAS region dropped from 1,572.71 km in the period (1995–1999) to 630.50 km in 2013. Comparably, the statistics for countries in the EAP region presents a dissimilar trend. In the EAP region, the average rail lines increased from 276,655.75 to 374,221.00 km in similar period. The decreasing trend in the rail lines per km is likely traceable to poor maintenance of the rails and in some cases, fund mismanagement that would have been used to maintain the rails. For instance, Nigeria recounts incidences of misappropriation of public fund that would have hitherto improved public infrastructure. Recently, railway staffs of the Nigerian Railway Corporation were indicted for fraud that is worth over US$6 million (PM News 2014).

Likewise, the road and ICT (internet) infrastructure in ECOWAS and other SSA countries is still below the world average. In frantic, compared to other regions of the world such as the EAP, ECA, LAC and MENA, countries in ECOWAS and SSA region are many folds below the average infrastructural development obtainable.

Table 3 Logistics performance index on quality of trade and transportation and related infrastructure

2007

2010

2012

Benin

1.89

2.48

2.57

Burkina Faso

1.89

1.89

2.40

Cape Verde

NA

NA

NA

Cote D'Ivoire

2.22

2.37

2.31

Gambia

2.33

2.17

2.19

Ghana

2.25

2.52

2.05

Guinea

2.33

2.10

2.34

Guinea Bissau

2.25

1.56

2.68

Liberia

2.14

2.00

2.41

Mali

1.90

2.00

2.00

Niger

1.40

2.28

2.45

Nigeria

2.23

2.43

2.27

Senegal

2.23

2.43

2.27

Sierra Leone

2.09

2.64

2.31

Togo

1.83

1.61

2.50

ECOWAS

2.07

2.18

2.34

World average

2.58

2.64

2.76

Source: Authors' compilation from World Trade Indicators

However, there is need to emphasise that ECOWAS region records an impressive road network compared to other regions in Africa. From Table 4, we observe that the ECOWAS region had an average paved road network ranging from 19.12 to 35.50 % of the total roads, while those in other SSA countries ranged from 15.61 to 17.96 %.

Not beguiled by the seemingly impressive performance of ECOWAS countries compared to other sub-regions in Africa—in relation to some infrastructural provisions—the poor performance of the manufacturing sector of African countries in general (including ECOWAS countries) raises serious concerns. In this study, the poor institutional development in this region is ascribed as a likely culprit. The statistics for the indicators of institutions—as reported by the World Governance Indicators—and as displayed in Table 5 does not deny this fact. As it is, countries in ECOWAS region and SSA (at large), recorded lower scores for the control of corruption and government effectiveness. Although in regulatory quality measures, the performance of these countries in relation to those in other regions of the world, is kind of murky.

Emphasis is placed on the control of corruption and government effectiveness because of the significant role they play in the improvement of infrastructural facility. Considering the control of corruption, it measures the extent to which public offices are exercised for private gains—including both petty and grand forms of corruption—and other forms of “capture” of the state by elites and private interests (World Bank 2013). It also measures the strength and effectiveness of a country's policy and institutional framework that are put in place to prevent and combat corruption. On the other hand, government effectiveness captures the

Table 4 Infrastructural development

Electric power consumption (kWh per capita)

1995–1999

2000–2004

2005–2009

2010

2011

2012

EAP

1,465.55

1,837.81

2,558.37

3,063.47

3,263.54

ECA

4,722.48

5,107.15

5,457.38

5,515.09

5,465.18

LAC

1,434.98

1,589.24

1,804.44

1,954.67

2,045.50

MENA

1,547.43

1,910.07

2,327.01

2,667.04

2,704.73

SSA

534.46

524.71

536.85

529.92

534.93

World

2,255.15

2,457.13

2,781.32

2,981.61

3,045.01

ECOWAS

150.06

158.06

171.85

211.72

223.01


Roads, paved (% of total roads)

EAP

41.08

41.57

64.97

ECA

86.00

87.01

86.22

LAC

31.48

32.96

25.97

MENA

78.00

73.51

80.39

SSA

17.96

18.00

15.61

World

46.01

40.76

57.01

ECOWAS

21.67

19.12

20.88

35.50

20.57

Internet users (per 100 people)

EAP

1.41

9.00

21.36

34.23

37.24

41.15

ECA

4.18

22.67

43.01

56.30

59.29

63.97

LAC

0.86

8.83

23.72

34.71

39.35

43.43

MENA

0.35

4.20

15.44

26.63

30.99

35.92

SSA

0.20

0.96

4.43

10.16

12.74

14.68

World

2.40

10.38

20.62

29.35

32.02

35.58

ECOWAS

0.08

0.86

3.47

7.11

8.46

9.28

Note: The regions presented were based on data availability

Table 5 Institutional quality

Control of corruption

Government effectiveness

Regulatory quality

1996

2000

2005

2008

1996

2000

2005

2008

1996

2000

2005

2008

EAP

-0.43

-0.6

-0.53

-0.57

-0.3

-0.48

-0.46

-0.53

-0.35

-0.61

-0.56

-0.69

ECA

-0.70

-0.62

-0.52

-0.48

-0.58

-0.51

-0.37

-0.31

-0.59

-0.49

-0.32

-0.1

ECOWAS

-0.59

-0.61

-0.70

-0.62

-0.83

-0.76

-0.86

-0.79

-0.73

-0.57

-0.70

-0.64

LAC

-0.35

-0.18

-0.16

-0.12

-0.34

-0.15

-0.14

-0.10

0.22

0.07

-0.07

-0.12

MENA

-0.46

-0.57

-0.55

-0.62

-0.45

-0.63

-0.63

-0.61

-0.64

-0.78

-0.73

-0.63

SSA

-0.63

-0.58

-0.68

-0.62

-0.66

-0.72

-0.78

-0.78

-0.65

-0.64

-0.75

-0.7

World

-0.03

-0.02

-0.02

-0.02

-0.04

-0.01

-0.01

-0.01

-0.05

-0.03

-0.02

-0.01

Notes: The values ranges from -2.5 (worst) to +2.5 (best) i.e. the higher the better. EAP East Asia and the Pacific, ECA Europe and Central Asia, MEA Middle

East and North Africa, LAC Latin America and Caribbean, SSA Sub Saharan Africa. The years reported are those that have values for the regions afterwards

the data has been mainly reported for countries not regions

Source: World Governance Indicators as computed by Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010) for the World Bank (2010)

Table 6 Institutional quality of ECOWAS countries

Control of corruption

Government effectiveness

Rule of law

2001–2005

2006–2010

2001–2005

2006–2010

2001–2005

2006–2010

Benin

-0.664

-0.614

-0.393

-0.522

-0.462

-0.625

Burkina Faso

-0.088

-0.354

-0.616

-0.621

-0.598

-0.314

Cape Verde

0.283

0.746

-0.042

0.098

0.309

0.508

Cote D'Ivoire

-0.987

-1.119

-1.089

-1.234

-1.390

-1.379

Gambia

-0.496

-0.677

-0.560

-0.664

-0.167

-0.372

Ghana

-0.236

0.033

-0.121

0.009

-0.044

-0.044

Guinea

-0.774

-1.138

-0.896

-1.194

-1.221

-1.493

Guinea Bissau

-1.026

-1.078

-1.279

-1.079

-1.248

-1.348

Liberia

-3.032

-0.630

-3.954

-1.563

-4.369

-1.289

Mali

-0.527

-0.509

-0.676

-0.815

-0.224

-0.341

Niger

-0.921

-0.731

-0.839

-0.811

-0.779

-0.654

Nigeria

-1.248

-0.970

-0.955

-1.069

-1.380

-1.145

Senegal

-0.006

-0.552

-0.157

-0.366

-0.012

-0.311

Sierra Leone

-0.908

-0.915

-1.333

-1.181

-1.273

-0.980

Togo

-0.810

-0.991

-1.452

-1.469

-0.943

-0.894


Note: The three measures are valued from -2.5 (weak institutions) to +2.5 (strong institutions)

Source: Authors' computations from World Governance Indicators (World Bank 2013)

quality of the public services, the civil service and its independence from political pressures. Likewise, the quality of policy formulation and implementation, and the credibility of the government's commitment to its stated policies, is also indicative of the extent of government effectiveness. These two measures, in some form, are expected to affect the extent of infrastructural development. Pathetically, the performance of countries in ECOWAS and SSA were not impressive (see further description in Table 6).

  • [1] Emphasis was on the extent of productivity and export of the manufacturing sector.
  • [2] Other measure of infrastructure (Logistic Performance Index) was presented in Table 3
 
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