This article is part of a Synergies series on African trade and sustainability priorities and interests. Any views and opinions expressed are those of the author(s) and do not necessarily reflect those of TESS or any of its partner organizations or funders.

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Africa’s priorities for trade and sustainability are shaped by an evolving global polycrisis defined by weaponized interdependence, supply chain disruptions, climate change, and a digital revolution. What remains uncertain is how to respond. Combined with rising domestic pressures and risks of stranded assets, Africa’s response to the polycrisis will determine whether it moves towards its Agenda 2063 aspirations for a prosperous Africa based on inclusive growth and sustainable development or further away.

Sustainable structural transformation is the overarching policy priority to lift the continent out of poverty, generate decent jobs for its growing population, and ensure high productivity. Yet, structural transformation will not happen by chance; it will require deliberate design. Industrial policies, particularly green and inclusive industrial policies, are powerful drivers of this transformation: boosting economic competitiveness while promoting sustainable growth. To unleash the benefits of green industrialization, African countries must first upgrade the practice of industrial policymaking itself to better support their trade and sustainability objectives.

The challenges of industrialization today cannot be resolved by simply emulating the export-oriented model of the past. Instead, contemporary industrial policymaking requires a diagnostic systems-thinking approach that identifies scale and productive capacity across sectors, while addressing social and environmental challenges. Drawing on the Firoz Lalji Institute for Africa’s white paper on The Art of Upgrading Industrial Policymaking Itself, the following five transitions constitute the foundation of an upgraded industrial policymaking approach to transform African economies. 

First, upgrading industrial policymaking calls for a shift from fixed, prescriptive policies to an adaptive approach that responds to fluctuating global and regional demands. The dual green and digital transitions have created new demands for critical minerals, renewable energy, and low-carbon technologies, while simultaneously closing the window for fossil-fuel dependent industrialization. For many resource-dependent African countries, this calls for a policy shift towards redirecting stranded asset risks into productive capacities across renewable energy, green infrastructure, and climate finance. The key to successful green industrialization is not to perfect policy design, but to learn through experimentation, such as pilot eco-industrial parks in Ethiopia and green energy special economic zones in Kenya. Fostering a learning society that rewards risk-taking amidst uncertainty supports the development of green innovations and strengthens the implementation capacity for industrial policymaking through an iterative cycle of doing, assessing, and adapting. 

Second, there needs to be a transition from siloed decision-making to multistakeholder consultation. At its core, green industrialization is a process of creative destruction. Digitized platforms and new green industries are creating new production opportunities, while replacing labour-intensive, fossil-fuel dependent activities. Public-private consultations help identify this new direction of change, overcome informational asymmetries, and locate new sectoral opportunities to design industrial policies for the right place, at the right time. The transition away from fossil fuels inevitably creates winners and losers. A just transition, thus, remains a priority, which African states recently reaffirmed at the Santa Marta Fossil Fuel Transition Conference. Multistakeholder consultations across the design, implementation, and monitoring stages, particularly with micro, small, and medium-sized enterprises and underrepresented civil society organizations, can help build consensus on the trade-offs of the green transition and enhance equitable distribution of costs and benefits.

Third, green industrial policymaking requires forging development-oriented partnerships beyond transactionalism and extraction. Such partnerships should prioritize technical support, knowledge-exchange, and the transfer of low-carbon technologies. This entails greater co-development through joint-venture arrangements and building network and reputational capital to crowd-in investment opportunities. The direction of investments equally matters. The IEA estimates over half of energy investments in Africa is in oil and gas. This stands in sharp contrast to the continent’s mere 2% share of global clean energy investments, despite its vast renewable energy reserves. Without redirecting investments towards renewable energy, Africa’s fossil fuel dependence will exacerbate energy poverty and accelerate stranded asset risks. Africa’s partners can help by aligning their investments with regional industrial priority sectors, such as agro-processing, value-added manufacturing and green infrastructure development. Securing this alignment requires African countries to develop their technical negotiating capacities to secure sustainable and industrial development-centered contracts.

Fourth, fragmenting multilateralism and weakening supply chain resilience are shifting how transboundary networks are arranged. Preferential market access, alone, is no longer a sufficient instrument for fostering development. Instead, building economic competitiveness must be at the centre of transboundary cooperation. For Africa, industrial development must be a collective regional endeavour, anchored in the African Continental Free Trade Area (AfCFTA) as a platform for catalysing regional integration, export diversification, and economies of scale. Given the limited bargaining power and technical capacity of individual African states, they must build regional consensus around trade and sustainability interests in international fora. Developing regional industrial strategies, such as the East African Community Industrialisation Policy (2012-2032), is a starting point for leveraging regional complementarities and converging industrial development goals, although implementation remains lagging. Africa’s partners, too, can support the continent’s developmental priorities by building a supportive trade regime that sequences with the AfCFTA to avoid disrupting intra-African trade and regional integration efforts. 

Finally, underpinning all four tenets is the need for well-capacitated industrial policymaking. Across African countries, the orchestrators of industrialization, typically ministries of trade and industry, often possess limited institutional capital and financial influence to design and implement industrial policies. Effective industrial policymaking must be a whole-of-government endeavour that utilizes incentives, both carrots and sticks, sunset clauses, and embedded conditionalities to track industry-level performance. While the industrial policy space has widened, overcoming fiscal constraints demands better mobilization of national savings, intermediation through national development banks and sovereign development funds, combined with blended multilateral co-financing arrangements. Rather than defaulting to external support, investing in upgrading institutional frameworks leverages local expertise and experimentation capacities.

Five Tenets of Upgrading Sustainable Industrialization

Advancing Africa’s trade and sustainability priorities, amidst a global polycrisis, requires a curated response focused on internal capacity building and external support. Designing, implementing, and monitoring a collective industrial vision that is agile in the face of trade disruptions and shifting sustainability priorities requires both experimentation and adaptability. Central to this process are multistakeholder consultations across the state-market-society nexus, which build consensus around green industrialization strategies and manage its distributional trade-offs. Amidst fragmenting multilateralism, Africa’s ability to turn this vision into reality will depend on leveraging regional and national financial mechanisms to mobilize public savings for infrastructure and domestic development. 

This must be compounded by a supportive external framework of development-oriented partnerships and transboundary networks. While the industrial policy space has widened, successful industrialization remains constrained by an asymmetric global trade architecture dominated by patent monopolies and restrictive dissemination of green technologies. The current shift by global and regional partners from traditional aid models to co-investment and regional value chain development is a step in the right direction. Efforts to prevent new forms of dependency and extractive lock-in will be equally driven by African countries to realign external support with the AfCFTA’s trade and sustainability priorities. 

Taken together, the five tenets form an interdependent framework designed to upgrade Africa’s industrial policy response across different political-economic realities. Instead of a narrow focus on policy instruments, advancing Africa’s sustainable structural transformation demands rethinking the practice of industrial policymaking itself. 

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Hana AlWakeel is a political economy researcher at the Firoz Lalji Institute for Africa, London School of Economics and Political Science.

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