This vulnerability also calls into question the continent’s стремление to reduce poverty through what is known as structural transformation — the transfer of workers from low‑productivity sectors, such as subsistence agriculture, to more productive industries, including manufacturing and modern services. Africa has not been able to fully capitalize on the wave of export‑oriented industrialization that has transformed East Asia since the 1960s.
Currently, realizing the continent’s industrial ambitions has become even more challenging, as geopolitical competition, the fragmentation of supply chains, and artificial intelligence are reshaping the global economy. As an economist who has written about how the use of global trade as a tool of pressure affects African economies, I believe that structural transformation remains a key task. However, it needs to be rethought in light of four priorities: larger markets, reliable power supply, Africa’s comparative advantages, and agriculture.
Japan, South Korea, Taiwan, China, and Vietnam industrialized largely following a similar pattern. They increased exports of labor‑intensive industrial products, such as clothing, footwear, furniture, and electronics. These industries created millions of jobs for people with limited formal education, while gradually developing technological capabilities, increasing companies’ productivity, and improving the efficiency of logistics systems. This development was facilitated by a relatively stable global trading system.
Trade barriers generally decreased, demand for industrial goods grew, and wealthier countries gradually moved out of low‑paying segments as incomes rose. Governments could focus on enhancing competitiveness, since the rules of international trade remained fairly predictable. Africa has not been able to fully capitalize on this window of opportunity. Manufacturing accounts for only about 10% of the GDP of sub‑Saharan African countries, whereas in East Asia and the Pacific region this figure is approximately 22%.
The continent’s share of global industrial production has declined from about 3% in the 1970s to less than 2% today. It has been difficult for the continent to develop an internationally competitive industry, even in conditions of relatively open global trade.
Constraints included unreliable energy supplies, high transport and logistics costs, small and fragmented domestic markets, weak industrial capacity, limited access to finance, and unpredictable policies.
As a result, many economies remained dependent on the export of raw materials while simultaneously importing most industrial goods. These long‑standing constraints have not disappeared. Moreover, today Africa faces a dual challenge. It needs to overcome the structural barriers that previously hindered the implementation of the traditional model of industrialization and, at the same time, adapt to a global economy that has changed significantly. This does not mean that structural transformation is impossible. It merely indicates that the old approaches no longer yield the same results.
Four changes have rewritten the rules: first, trade itself has become a tool of geopolitics. Countries use export controls, financial sanctions, and restrictions on access to strategic technologies to achieve national security goals. The situation in the Strait of Hormuz serves as a clear example.
Second, industry is no longer capable of creating jobs on the same scale as before. Automation has reduced the demand for low‑skilled labour, which previously absorbed millions of workers. This is especially important because by 2030, sub‑Saharan Africa is expected to account for roughly half of all new entrants into the global labour market — around 15 million young people annually. Creating productive employment will require growth not only in industry but also in modern services and high‑income agriculture.
Third, China still maintains its competitiveness in labour‑intensive industries. The growth in wages has led many economists to expect that the production of clothing, textiles, and footwear will shift to countries with lower incomes. However, China continues to dominate these segments. This significantly complicates African manufacturers’ entry into industries that previously served as «entry points» for other countries.
The fourth change is artificial intelligence. AI is becoming a general‑purpose technology capable of helping the economy direct labor and capital into more productive areas. For example, AI‑based tools can help farmers make more accurate decisions regarding weather, pests, resource use, and market prices; businesses, in turn, can use AI to reduce costs, improve quality, and participate in regional and global value chains.
The African continent still needs millions of better‑paying jobs and significantly higher productivity to reduce poverty and raise the standard of living. What has changed is not the target itself, but the path to achieving it. First, countries should achieve economic security collectively, not individually. Structural transformation requires companies to invest in new industries. But such investments are unlikely if export markets are unstable and supply chains are easily disrupted. A larger and more integrated market can reduce these risks. Joint efforts also strengthen the negotiating positions of African countries, as the United States, China, and the Gulf states are competing for investments in the continent’s digital and physical infrastructure.
Under these conditions, the full implementation of the African Continental Free Trade Area becomes even more important. Secondly, it is necessary to invest in the power sector. This is the foundation of both industrialization and the digital economy. Industry, digital services, and industries that use AI will not be able to grow without a reliable power supply. At the same time, electricity remains one of the main constraints. In sub‑Saharan Africa, 78% of businesses face regular power outages. As a result, they lose an average of 8.4% of their annual revenue, while the global average is 5.2%. In Nigeria, 86% of businesses own generators or use them jointly. In Kenya, this figure reaches 65%, and in South Africa — 63%. This dependence on diesel generators increases reliance on imported fuel, which in turn creates additional vulnerability. Thirdly, competition should be focused on areas where Africa truly has comparative advantages: in industries related to natural resources and growing domestic markets. These include the processing of critical minerals, agro‑processing, the production of construction materials, and the pharmaceutical industry. Finally, it is important to recognize that agriculture is not a separate sector but a central element of structural transformation. About half of the workforce in sub‑Saharan Africa is employed in agriculture. Increasing the productivity of farming households increases the income of the rural population, frees up labor for more productive activities, and creates demand for goods and services. AI can accelerate this process by helping farmers.
Countries that manage to link these new realities with the long‑term goal of moving workers and resources to more highly productive sectors will have the best prospects for sustainable and inclusive growth.
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