Motoring Africa. Edward T. Hightower
Goal 6. Ensure availability and sustainable management of water and sanitation for all
Goal 7 Ensure access to affordable, reliable, sustainable and modern energy for all
Goal 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
Goal 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
Goal 10. Reduce inequality within and among countries
Goal 11. Make cities and human settlements inclusive, safe, resilient and sustainable
Goal 12. Ensure sustainable consumption and production patterns
Goal 13. Take urgent action to combat climate change and its impacts
Goal 14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
Goal 15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, halt and reverse land degradation and halt biodiversity loss
Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
Goal 17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development
The job- and innovation-creation benefits of industrialization have been shown to enable many of the goals listed above. Goals 8, 9, and 12 reference the benefits of industrializationa growth, stability, and prosperity. Nearly all seventeen goals give reference to the importance of sustainability.
It is no secret that industrialization in nineteenth-century Europe and twentieth-century America and Asia was not environmentally sustainable. The introduction of manufacturing in these regions, to again refer to Dictionary.com’s definition, was often harmful to the environment, overly depleted natural resources, and did not support a long-term ecological balance. Not only were the products harmful to the environment, but the manufacturing processes used in production heavily relied on coal and fossil fuels to generate electricity. In addition, waste products filled the air, water, and landfills.
Implementing sustainable industrialization on the African continent need not follow this old model. Given the greater understanding that scientists now have of man’s impact on the environment, and advancements in renewable energy and manufacturing technologies, Africa has the opportunity to take a different approach. The industrialization of automobile production on the African continent can be done in a manner that is both environmentally and commercially sustainable. It is imperative that African governments and African businesses set out on the sustainable industrialization approach as soon as possible. This will allow them to locally control their own destinies, industrialize using environmentally friendly technologies, and avoid becoming one of the leading countries contributing to greenhouse gasses. Currently that title goes to Asia and the Americas. Automaker BMW is a leader in sustainable manufacturing and industrialization. Their 3 Series sedan and X3 sports activity vehicle assembly plant in Rosslyn, Gauteng, South Africa currently generates 30% of the electricity needed to run the plant using renewable energy.8 They have announced that their new plant in San Luis Potosí, Mexico will meet 100% of its energy needs with renewables.9 Renewable energy innovations and advanced manufacturing technologies make sustainable industrialization more feasible at a lower cost.
More Money, Fewer Problems
Growing businesses lead to growing economies and growing incomes. Sustainable employment and higher incomes can lead to greater governmental stability. Economist Dambisa Moyo estimated that it takes per capita income of at least US $6000 per year to reduce the likelihood of political unrest.10 The creation, production, sale, and export of value-added products at scale is the fastest path to creating the most jobs and brining the largest percentage of a region’s population to this income level.
I recently visited the website of Kiva Microfinance (kiva.org). Kiva allows anyone in the world to make microloans via the internet, i.e., to lend small amounts of money (US $25 or more) to low-income entrepreneurs in order to support their businesses. According to the Kiva website, since their founding in 2005, Kiva Microfinance has made US $931 million in loans, funded by 1.6 million lenders, to 2.3 million borrowers in 87 countries, and has a 97% repayment rate. In looking at several of the borrower proposals from various countries on the African continent, I noticed that many of the borrowers were looking for loans to buy merchandise for their retail shops. While I still decided to participate in several proposals as a lender, I had to ask myself: How much annual income can these entrepreneurs realistically generate for themselves with such small amounts of inventory, which will only be resold? What if more of these entrepreneurs’ businesses could be organized around value-added production and volume manufacturing of this same merchandise? What if these markets and manufacturing businesses could become sufficient enough to develop a local industry? I applaud Kiva’s efforts and progress over the last decade and I wish them continued success. However, in addition to the microloans, I would like to see commitments to support industrialization strategies.
The Fortune Throughout the Pyramid
In 2004, the late C.K. Prahalad, a former corporate strategy professor at the University of Michigan Ross School of Business, co-authored the book, The Fortune at the Bottom of the Pyramid. The book presents how companies can help reduce poverty by building businesses that serve the world’s poorest regions, while enabling the local people to participate in owning and operating these businesses. The book advocates that his form of inclusive capitalism could lift the poorest billion people in the world out of poverty. Following this same basic premise, industrialization and sustainable industrialization can have an impact at the base and throughout the economic pyramid, i.e., on all rungs of the economic ladder. The multiplier effect not only multiplies jobs, but also multiplies opportunities for entrepreneurs and investors, which is an incentive for everyone to get involved.
For a manufacturing business to grow into an industry, the market must develop and competitors must enter. Competitors are created by local entrepreneurs stepping up and taking the risk of organizing a business to serve the new market. Industrialization is the next logical step. As local entrepreneurs and business leaders create an industry, they will need even more entrepreneurs to step up and become suppliers, transportation and logistics companies, tax accountants, lawyers and other service providers, to enable the businesses to grow and become more efficient. The need for these entrepreneurs creates opportunities for business ownership, which is at the foundation of community development.
The need for entrepreneurs to launch these supporting enterprises also creates the opportunity for investors to participate. Entrepreneurs need investors to step up in order to realize their vision. Investors get the opportunity to generate a return on their capital while participating in the transformation of a community, nation, and region. They get the opportunity to join a potentially virtuous cycle of growth. Investing in a manufacturing business is highly transparent. The needs and uses of the capital–whether for new plant construction, new safety equipment, raw materials, transportation equipment–are visible and easier to follow than an investment in an app company. Successful exits from industrial investments help build a region's business track record and are likely to attract additional investors. Over time, as the industries grow and spawn new local industries in other market sectors, the investments will likely become larger and even more impactful. The local community’s participation in these investment opportunities can range from deposits in their local banks to private capital investment funds, to (one day) stock purchases of locally based publicly traded companies. Persons at all levels of the economic ladder can have a place to participate and reap the benefits. With industrialization, multiple virtuous cycles are created.
Don’t “Bring some in,” Make it Here
Why continue to only be a customer? Replacing imports with the outputs of local industrialized manufacturers not only creates