Productivity gains enable more goods and services to be produced from existing resources and technology. Manufacturing value added per manufacturing worker is one indicator of labor productivity in manufacturing. Dividing this indicator by total wages in manufacturing gives labor productivity in manufacturing per dollar paid in wages.
Manufacturing value added per worker in Sub-Saharan Africa and the ACET 15 is lower than in the comparators, especially before 2008 (see chart here), but the gap is narrower when wages are taken into account (see chart here). In fact, adjusted for wages, Sub-Saharan countries have been slightly above the comparator countries since the mid-1990s. This suggests that Africa could compete on wage costs in manufacturing if it could control and gradually reduce its other considerable disadvantages, such as infrastructure deficits, regulatory and governance constraints, and the tendency in resource-rich countries toward overvalued exchange rates. In many Sub-Saharan countries the majority of the population lives in rural areas, mostly dependent on agriculture. Increasing agricultural productivity would thus be a powerful way to raise incomes and make inroads into poverty reduction. It would also facilitate overall industrialization and economic transformation. Indeed, in most industrialization experiences, a rise in agricultural productivity allowed agriculture to release labor to industry, produce more food to moderate rises in urban food prices and thus industrial wage demands, produce raw materials for processing in industries, increase exports, and enhance the domestic market for industrial products. Boosting agriculture’s productivity thus has to be a key part of the economic transformation agenda.
Ranking African Countries on Productivity Gains
At the top in productivity are Uganda, Mauritius, Gabon, South Africa, Benin, Côte d’Ivoire, and Senegal. The ranks for Uganda, Gabon, and Benin are influenced by large values for manufacturing value added per manufacturing worker, values likely for a small number of large establishments that are not representative of manufacturing in the countries. At the bottom are Malawi, Rwanda, Madagascar, Kenya, Nigeria, Ethiopia, and Botswana. Zambia, Mozambique, and Malawi made good progress on productivity over 2000–10.