Edited by Jennifer I. Considine
Chapter 9: Natural resource-led development in Sub-Saharan Africa: a role for local content and small, medium enterprises
Sub-Sahara Africa (SSA) has failed to industrialize despite past efforts toward that goal. In fact, the share of Sub-Sahara Africa industrial output is today similar to the one achieved more than 60 years ago. The surge on commodity prices in the last decade brought high levels of growth to many commodity dependent economies from Sub-Sahara Africa, but not industrialization. Since SSA's mineral and hydrocarbon wealth is substantial, expectations of ongoing investments in the extractive sector will continue, despite the more recent decline in commodity prices. In recent years increasing support for an industrialization strategy based on natural resources has gained traction among policymakers. The driver of natural resource industrialization is through linkages that can be created as a result of the investments made from the exploitation of the natural resources. Local Content Policies (LCP) are aimed at creating the development of those linkages. However, the adoption of LCP in SSA appears to have achieved, until now, modest results. A key challenge for building linkages in SSA is the lack of enterprises that can enter the supply chain. What seems to be missing in SSA is a large group of small and medium enterprises, described in the literature as the "missing middle". However, three emerging trends in SSA can offer some hope about the possibilities of LCP: rapid urbanization, growth of working age population and the surge of private Chinese investments in manufacturing activities in SSA.
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