Wednesday, February 8

From the first to the fourth industrial revolution: How has Africa fared?

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We have mentioned in an earlier article that one of the indelible hallmarks for which the 2016 edition of the World Economic Forum (WEF), that takes place annually at Davos, Switzerland, will be long remembered is the launch of a ground breaking report on the then latest state of affairs regarding inequalities in the world by Oxfam International. But an equally exciting and memorable presentation to the Forum was made in a very vivid manner and probably for the first time on the notion of the “Fourth Industrial Revolution” by Professor Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum. This was underpinned by a book just then completed by Professor Schwab, entitled: “The Fourth Industrial Revolution: What it Means and How to Respond to It”, whose publication was timed to coincide with the eve of the opening of the 2016 WEF. The predicted highly revolutionary nature of the Fourth Industrial Revolution was captured by the following words: “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before”.

It could be argued that the heralding of the Fourth Industrial Revolution by Professor Schwab caught the full and rapt attention of the wider international community, well beyond the confines of the meeting hall where it took place in Davos, because of what industrialization itself has meant for the progress of humanity across the world. At this point, it is therefore, natural if one is prompted to ask the questions: so what were the three preceding Industrial Revolutions like?; when did they take place?; and what impacts did they make on the progress of mankind? As Chimezirim Young and Ayo Oyewale aptly reminded us, “History is important …as it provides a road map that shows where you were from, where you are and navigates you to the future”. Nothing else could be truer than the case of the trajectory industrialization has followed in the course of human history so far.

In this article we will, therefore, first make a recollection of what industrialization means, the notable role it has played in revolutionizing production structures as well as institutional and organizational frameworks in societies across the world over the last several decades. We will then look at the four major phases it has passed through historically since the second half of the 18th Century, which are now commonly referred to in the literature as the First, Second, Third and Fourth Industrial Revolutions, before assessing how Africa has fared in them. This will constitute Part One of this serial article. In Part Two of the article, we will undertake an assessment of the prospects for the continent to better exploit the potentials industrialization offers it for accelerating broad based growth, transformation and provision of prosperity for all its people as set out in the African Union’s Agenda 2065.

What is industrialization and what are the four industrial revolutions humanity has witnessed so far?

Industrialization is defined in the literature as the process whereby the economy of a country or region is transformed from a predominant dependence on agriculture to reliance on manufacturing and technological development. Manufacturing is defined by Wikipedia “as the production of goods with the help of equipment, labour, machines, tools, and chemical or biological processing or formulation.” In short, manufacturing entails mechanization of processes for producing goods as opposed to the reliance on hands, rudimentary tools and guilds for producing goods, which predominated in the pre-industrial eras. Mechanized methods of mass production, therefore, constitute an essential element of industrialization. There is broad agreement that the transition from the mainly agrarian societies to industrialized ones has been one of the most far-reaching structural transformations in human history. This important transition started with the Industrial Revolution in the 18th Century, first in Europe, with its cradle in England, and later spread to North America in the 19th Century, before spreading to the other parts of the world like Japan. In the first part of the 20th Century, Russia and other Soviet Bloc countries also underwent rapid industrialization followed by China, the South East Asian countries, notably the Asian Tigers and Latin America. The first industrial revolution was fuelled and necessitated by measurable improvements in agricultural productivity, urbanization as well as a series of inventions and technological progress that were being registered at the time.

Industrialization is generally deemed to be highly desirable for any nation or society owing to the positive characteristics associated with it. These include the potentials for solid and sustainable economic growth, more efficient divisions of labour, mutually reinforcing backward linkages e.g. with the domestic agricultural sector and forward linkages, e,g, with the service sector and global and regional value chains. It is also broadly appreciated that industrialization gives strong impetus to technological innovation. Furthermore, industrialization is normally associated with higher average incomes and living standards. Importantly also, industrialization has consistently demonstrated the impetus it provides to the development of increasingly more sophisticated financial and capital markets, institutional and organizational arrangements as well as managerial and human capabilities.

It is also noteworthy that industrialization can be driven by a combination of factors, especially government policy, technological changes, entrepreneurial ambitions, labour-saving inventions and new demands for goods and services. It normally impacts significantly on urbanization processes, as it triggers and/or facilitates waves of migrations from rural small farms of agricultural workers to cities and towns in the search of better paying jobs. But industrialization has not always had a completely benign trajectory.

At this point, it is useful to briefly recapitulate how the process of industrialization has evolved over the past three centuries, commencing with the First Industrial Revolution that started in England in the 18th Century, before spreading to other parts of Western Europe and America. Useful lessons could be drawn from this review of the history of industrialization for the possible courses it might take in the future, globally and in Africa in particular. The following subsections drew extensively on materials provided by Investipedia.

As noted above, the First Industrial Revolution began in the late 18th century in England through to mid-19th Century and was propelled by mechanization of, and improved, farming methods. These spurred higher agricultural outputs per worker and shifts from small-scale subsistence farming to commercial farming. This process freed excess farm workers who started looking for work in the incipient urban areas. At the same time, the introduction of mass production and assembly lines in factories began to replace manual labour and guild and craft systems. Expansion of these new production processes were facilitated measurably by the introduction of steam power and mechanisation of production. “What before produced threads on simple spinning wheels, the mechanised version achieved eight times the volume in the same time. The use of steam power for industrial purposes was the greatest breakthrough for increasing human productivity (at the time).

Instead of weaving looms powered by muscle, steam-engines could be used for power. Developments such as the steamship or (some 100 years later) the steam-powered locomotive brought about further massive changes because humans and goods could move great distances in fewer hours”. (Investipedia)

The Second Industrial Revolution began in the second half of the 19th century through the discovery of electricity and further development of assembly line production. For instance, Henry Ford (1863-1947) took the idea of mass production from a slaughterhouse in Chicago: “The pigs hung from conveyor belts and each butcher performed only a part of the task of butchering the animal. Henry Ford carried over these principles into automobile production and drastically altered it in the process. While before one station assembled an entire automobile, now the vehicles were produced in partial steps on the conveyor belt – significantly faster and at lower cost”. Further, improvements in the transport and communications also provided important boost to the Second Industrial Development, which began to take firmer root in America and other Western European countries.

The Third Industrial Revolution began in the 1970s “through partial automation using memory-programmable controls and computers”. Since the introduction of these technologies, automation of entire production processes was made possible – without human assistance. Cases in point regarding this are robots that perform programmed sequences without human intervention. Further developments in the transport (e,g, jet engine planes, ships and railways) and ICT gave further boosts to the Third Industrial Revolution.

As revealed vividly by Professor Schwab, the world has now reached the stage of the Fourth Industrial Revolution. This is characterised by more widespread and deeper application of information and communication technologies to industry. It builds on the developments of the Third Industrial Revolution. “Production systems that already have computer technology are expanded by a network connection and speak to each other. This is the next step in production automation. The networking of all systems leads to “cyber-physical production systems” and, therefore, smart factories, in which production systems, components and people communicate via a network and production is nearly autonomous”.

When these enablers come together, the Fourth Industrial Revolution, sometimes referred to as Industry 4.0, has the potential to deliver some incredible advances in factory environments. Examples include machines which can predict failures and trigger maintenance processes autonomously or self-organized logistics which react to unexpected changes in production.

And it has the power to change the way that people work. Industry 4.0 can pull individuals into smarter networks, with the potential of more efficient working. The digitalization of the manufacturing environment allows for more flexible methods of getting the right information to the right person at the right time. The increasing use of digital devices inside factories and out in the field means maintenance professionals can be provided with equipment documentation and service history in a timelier manner, and at the point of use.

In short, Industry 4.0 is a game-changer, across industrial settings. The digitalization of manufacturing will further change the way that goods are made and distributed, and how products are serviced and refined. The latest improvements in transportation and distribution systems are also additional enablers of the Fourth Industrial Revolution. Artificial intelligence, nanotechnology, internet of things (ToT) and block chains are also becoming prominent features of Industry 4.0. Another key feature of Industry 4.0 is the rapid emergence of Global and Regional Value Chains, which offers important potentials for Africa’s renewed industrialization efforts, for instance.

It is instructive that a common thread that runs through the four industrial revolutions so far is woven around certain critical enablers: onset of mechanization; higher productivity levels of capital and labour; inventions and rapid technological developments; increasingly more powerful and efficient energy sources; digitalization; markets; transportation and distributional systems; increasingly sophisticated organizational, institutional and financial frameworks; daring entrepreneurship; and the supporting but smart role of Governments.

How has industrialization proceeded in Africa?

According to Paula F. Mendes et al, who conducted a comprehensive review of industrialization in Africa, the development of the industrial sector in the continent took place in two phases. The first phase started in the 1920s, evidently during the colonial period, and ended in the late 1940s. The second phase began in the 1950s and gained momentum in the 1960s, when African countries were entering the period of Independence from the respective colonial powers. This phase was characterized by increasing emphasis on import substitution strategy of

industrialization as a key avenue for transforming the structure of the inherited colonial economies that were still principally dependent on production and exports of primary commodities. This phase lasted up to the late 1980s, when the onset of structural adjustment programmes across the continent virtually put an end to import substitution.

During the first phase of industrialization, the colonial masters and their local bureaucracies and agents, were more interested in perpetuating the dominant economic system of the colonial era, that was based on the production and exports of primary commodities from the colonies to the metropolises and the wider international market on one hand and imports of manufactured goods to the colonies from the metropolises on the other. Local manufacturing in the colonies was not actively promoted except for a few non-durable consumer goods and beverages as well as some inputs for the mining, construction and agricultural sectors. The development of the manufacturing sector picked up some momentum only in the 1940s, when there was a crisis in the world commodity markets, and even this was limited to a few countries and incipient regional groupings like the East African Community, the Central African Community, Belgian Congo (now DRC) and the Federation of Rhodesia (now Zambia and Zimbabwe) and Nyasaland (now called Malawi). Some of the countries in French Western Africa, such as Senegal and Ivory Coast then also witnessed gradual development of the industrial sector during this first phase.

In the second phase of Africa’s industrialization, which, as noted above, reached the stage of acceleration when the majority of the countries gained Independence in the 1960s. Industrialization, through import substitution, was seen as an important avenue for rapidly transforming the inherited economic structures from the colonial era, that were based mainly on production and exports of primary commodities. Import substitution industrialization would enable the countries to produce domestically the hitherto imported goods, which would result in a significant expansion of the domestic manufacturing sectors and more solid jobs creation, with higher earnings. Importantly also, import substitution was explicitly seen as a way for minimizing the declining terms of trade associated with exports of primary commodities, thus partly solving the persisting disequilibria in the balance of payments. Some researchers noted that implicitly embedded in the import substitution strategy of industrialization was the hope that a robust industrial sector would eventually emerge that would be able to turn outwards towards external markets for exports, as happened in the South East Asian countries.

Another notable feature of Africa’s industrialization process during its second phase was the extensive establishment of parastatals, in the face of limited domestic private savings. However, foreign investment also continued to be encouraged. In furtherance of that objective, the following measures were taken: tax exemption; preferential access to credit; low customs duties; favourable access to foreign exchange and rates for investors; and duty-free imports of capital goods. Together, these measures contributed to the establishment of capital-intensive industries that sacrificed comparative advantage in the use of labour and natural resources.

Indeed, in the initial stages of its implementation, import substitution strategy for industrialization resulted in significant expansion of the industrial sector in many African countries, notably DR Congo, Ghana, Senegal, Zambia, Zimbabwe, South Africa, Cote D’Ivoire, the East African Community countries of Kenya, Tanzania and Uganda. However, this strategy in African countries began to face serious obstacles with effect from the mid-1980s when severe internal and external macroeconomic imbalances led to the adoption of structural adjustment programmes, which discouraged this type of industrialization in the continent. The specific constraints arose from the following factors: failure of the agricultural sector to perform and provide requisite support to industrialization as in the case of the First Industrial Revolution in Europe; shortages of foreign exchange for importation of industrial capital goods and other inputs; lack of requisite human capital; smaller market sizes in the countries which constrained exploitation of economies of scale and associated competitiveness; and lack of more strategic and robust wholistic approach to planning the industrialization process based on import substitution. Consequently, there was almost an unmitigated contraction of the industrial sector across the African continent by the time the new century set in. Today, the average share of the industrial sector GDP in the continent is 13%

Conclusions and the way forward

Our foregoing historical review of the industrialization process in the world through the four industrial revolutions clearly demonstrates the fascinating trajectory it has traversed over the past three and a half centuries, starting with the First Industrial Revolution, whose cradle was in England, through to the Fourth Industrial Revolution, which has been rapidly unfolding over the past few years. The review also indicates that the transition from the predominantly agrarian societies to industrialized economies has been one of the most far reaching and consequential transformations in human history. Industrialization holds the potential for driving high levels of sustainable and quality growth, decent job creation, increasing productivity within itself and in other sectors like agriculture and services as well as innovation and technological progress. Consequently, industrialization has been a major driving force behind the beneficial structural economic transformation first in today’s developed countries and newly industrialized ones.

As also amply indicated above, the results of Africa’s industrialization efforts have significantly fallen short of the aspirations of its leaders and people. But given the crucial role industrialization has played in the transformation of economies and societies across the world through the four industrial revolutions mankind has witnessed, Africa cannot count on achieving the higher levels of sustainable growth and prosperity for its people it is now aspiring to without fully tapping into the potentials Industry 4.0 offers. It is, therefore, heartening that this has been realized by the recent and current crops of Africa’s leaders as reflected in African Union’s transformational Agenda 2065, a key component of which is meaningful industrialization. In the follow up article to this one, we will present our perspectives on the possible pathways for a more transformational industrialization process for Africa in the 21st Century.

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