Africa’s structural transformation cannot be judged against an industrial model that is being reshaped by technology, decarbonisation, and geopolitics. Carlos Lopes argues that the next decade should focus less on sectoral labels and more on the productive capabilities that allow African economies to create, retain, and diversify value.
For much of the past decade, debates about Africa’s structural transformation have been framed by a persistent concern: economic growth has not been accompanied by the level of industrialisation, productivity growth, and job creation associated with other regions’ earlier development experiences. This concern remains justified, but the terms in which it is usually expressed deserve reconsideration. Africa is attempting to transform at a moment when technological change, decarbonisation, demographic divergence, and geopolitical fragmentation are altering the organisation of production itself. The challenge for the coming decade is therefore not only to accelerate structural transformation, but to reconsider whether the sectoral categories traditionally used to describe it still capture the processes through which productive capabilities are accumulated, and value is created.
Classical theories of structural transformation attach considerable importance to sectoral change. William Arthur Lewis emphasised the movement of labour from traditional activities to modern forms of employment. Nicholas Kaldor identified the importance of manufacturing because of its economies of scale, technological learning, and productivity effects. Albert Hirschman offered a less linear account, highlighting instead the cumulative effects and linkages generated by productive investment.
However, Dani Rodrik’s analysis of premature deindustrialisation showed that developing economies have been reaching peak manufacturing at lower levels of income and employment than earlier industrialisers. Africa’s experience is nevertheless more complicated than a straightforward story of industrialisation failure. Labour has moved between activities, cities have expanded, and services have grown, but without the large manufacturing transition that historically accompanied these processes elsewhere.
Contemporary African economies are simultaneously confronting agricultural transformation, industrialisation, rapid urbanisation, digitalisation, expansion of services, and the transition towards lower-carbon energy systems. These processes, which appear as distinct stages in stylised accounts of earlier development, are increasingly compressed into the same historical period. This “structural compression” is occurring while automation and artificial intelligence alter the relationship between employment and production, and while geopolitical competition reorganises trade, technology, and investment. Africa is therefore not simply arriving late to an established model of industrialisation; it is navigating a model that is changing in real time.
A new model for new economies
The conventional distinction between agriculture, manufacturing, and services is becoming less informative about where productive capabilities are located. Modern agriculture can incorporate biotechnology, engineering, digital technologies, and sophisticated logistics. Manufacturing increasingly depends on finance, data, and intellectual property, while some services have become highly tradable, scalable, and technologically dynamic. In other words, the capabilities once associated mainly with manufacturing are now spread across several sectors. This is what is meant by questioning “sectoral exceptionalism”. Rather than asking which single sector should be the privileged engine of transformation, policy should ask which combinations of activities generate technological learning, productivity gains, and the capacity to create more sophisticated forms of production.
African industrial strategies have understandably emphasised domestic processing and movement into higher stages of global value chains. Yet research on global value-chain governance shows that these chains are not simply sequences of production activities; they are also structures in which control over technology, standards, intellectual property, branding, and market access influence the distribution of returns. An African economy may therefore progress from mineral extraction to processing and eventually manufacturing while remaining dependent on technologies, finance, and distribution systems controlled elsewhere. Increasing domestic value addition is unquestionably desirable, but it cannot establish the depth of structural transformation required by itself.
The practical question is therefore not simply whether a country manufactures more, but what it learns and acquires by doing so. Does a new activity create engineering skills, research capacity, financing expertise or access to new markets that can subsequently be used elsewhere in the economy? This is close to the idea of economic complexity, which sees development as the accumulation of productive knowledge that allows economies to diversify into progressively more sophisticated activities; the Atlas of Economic Complexity develops this approach in detail. There is no contradiction here with saying that modern manufacturing relies on finance, software, logistics, and research. The point is precisely that these capabilities reinforce one another: manufacturing can help generate them, but manufacturing is also more transformative when it becomes rooted in the domestic or regional economy rather than being imported as a complete package.
This is the basis for thinking about structural transformation through productive ecosystems. The proposition does not imply that manufacturing has become less important. Manufacturing remains a powerful mechanism for technological learning, supplier development, and diversification. But its transformative effects increasingly depend on the ecosystem in which it is embedded. A factory relying overwhelmingly on imported technology, inputs, and finance, with little connection to domestic suppliers or knowledge institutions, has a different developmental impact from one that contributes to the progressive accumulation of capabilities around it. Industrialisation, in this sense, concerns the development of systems within which industries can emerge, evolve and capture increasing shares of value.
The African Continental Free Trade Area takes on additional significance from this perspective. The limited size of most national markets has long constrained African industrialisation, but market size is only part of the problem. Few African countries individually possess the full combination of finance, research capacity, infrastructure, specialised suppliers, technological expertise, and demand required by increasingly complex productive systems. Continental integration offers the possibility of assembling these capabilities across national boundaries. Regional integration can therefore become a mechanism for integrating production and productive capabilities, rather than being assessed principally through the increase in trade generated by tariff liberalisation.
The decade ahead
This ecosystem perspective offers a different way to evaluate Africa’s progress over the next decade. Manufacturing value added, employment, exports, and economic diversification will remain essential measures, but they should increasingly be complemented by evidence about the capabilities generated through productive activity: the technological sophistication of domestic suppliers, the acquisition and adaptation of technology, the development of engineering and research capacity, participation in standards-setting, access to productive finance, and the extent to which one activity creates possibilities for diversification into others.
The underlying objective of structural transformation has not changed. African economies still need sustained productivity growth, technological learning, economic diversification, and large-scale creation of productive employment. What is changing is the relationship between these objectives and the sectoral composition of economies. Structural transformation will therefore be better understood as the cumulative process through which economies acquire, connect and deepen productive capabilities, progressively expanding the range and sophistication of activities they can undertake. For Africa, whose transformation is occurring while the technological and geopolitical environment itself is being reconfigured, this broader conception may provide a more useful framework for understanding the decade ahead.
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