Industrialisation

Africa’s development debate often pits traditional industrialisation through factories, refineries and ports against leapfrogging to a digital, technology-led future. The careers of two very different businessmen suggest this is a false choice. Aliko Dangote and Elon Musk represent distinct forms of entrepreneurship, and Africa needs many more of both to achieve sustained structural transformation. For decades, Nigeria lived with a costly paradox. Africa’s largest oil producer exported crude while importing much of the refined fuel it consumed, exposing the country to foreign-exchange pressures, supply disruptions and enormous subsidy bills. Dangote set out to break that cycle. Building a refinery capable of processing 700,000 barrels of oil daily required a significant financial commitment, years of construction, and the stamina to push through repeated delays and widespread scepticism. The refinery reached full production capacity earlier this year, and the results are already visible. Nigeria has become a net exporter of petrol. In a good month, the refinery supplies up to 80 per cent of domestic petrol while also shipping product to Europe and West African neighbours. It should cut Nigeria’s foreign-exchange demand for fuel imports by around 40 per cent, easing pressure on the naira. Dangote’s strategy has been to replace imports with domestic production in industries vital to development At full operation, the company expects to create at least 100,000 direct and indirect jobs, and its offshore terminal is scaling up towards nearly 1000 tanker calls a year. Dangote is not standing still. In late July, he raised $2.5bn to double the refinery’s capacity. On 14 September, he launched what has been billed as Africa’s largest initial public offering, seeking to raise around $1.6bn. Shares can be bought in lots as small as 10, and the offering aims to attract up to 10 million investors across the continent. Dangote invites comparison with Amazon, whose early shareholders saw their investments multiply many times over. Whether or not that ambition is realised, the IPO is a significant test of whether ordinary Africans can be drawn into owning a share of the continent’s industrial base. His ambitions also extend eastwards. The contest to host another mega refinery in East Africa has now settled on Lamu Island, on Kenya’s northern coast. Tanzania, having lost that bid, is now exploring Dangote’s proposals for a coal-fired power plant, a urea fertiliser plant and investments in ports and roads. Dangote built his empire in Africa, primarily in Nigeria, and for African markets. His strategy has consistently been to replace imports with domestic production in industries fundamental to development: cement, fertiliser, sugar refining, salt processing and petrochemicals, relying on significant import protection. Dangote showed that Africans could build and operate industrial capacity on a world scale. Visionary investment can move countries from resource extraction towards industrial value addition South African-born Elon Musk represents a different but equally important type of business leadership, whatever one thinks of his politics. While Dangote concentrates on heavy industry and manufacturing, Musk pursues disruptive frontier technology. Through SpaceX, Tesla, Starlink and xAI, he backed technologies that initially looked commercially unrealistic: reusable rockets, mass-market electric vehicles, satellite internet and advanced artificial intelligence. In each case, Musk challenged entrenched industries by combining technological innovation with extraordinary ambition. Perhaps the most important lesson from Musk is not any single technology but his tolerance for failure. His companies suffered numerous setbacks before they succeeded. For African policymakers and entrepreneurs, the principle is clear: innovation requires accepting uncertainty and learning from failure rather than avoiding risk altogether. Musk’s most direct footprint in Africa is Starlink, now authorised or operating in 30 countries on the continent. Better connectivity enables digital entrepreneurship, remote education, telemedicine, financial inclusion and participation in the global digital economy. For many rural communities, satellite internet can bypass decades of inadequate fixed-line investment. But it must come with safeguards to ensure that insurgents don’t use Starlink registered offshore to evade local telecommunications measures, as set out in forthcoming Institute for Security Studies research. The notable exception for Starlink on the continent is South Africa, where Musk has baulked at the 30 per cent local ownership requirement under the country’s empowerment rules. Even if he invested heavily in South Africa, his wealth alone would probably not transform its economy. Musk’s businesses are highly capital- and technology-intensive. A satellite network, a battery plant or an AI data centre could raise productivity and attract suppliers. Still, none would directly employ millions of semi-skilled workers, which South Africa has in abundance. The larger employment gains would come indirectly, through spillovers and improved productivity: better internet access, cheaper energy, new supplier networks, digital services, construction activity, entrepreneurship and greater confidence among other investors. Even a multibillion-rand investment would be small relative to an economy grappling with mass unemployment. Like most large capital investments, it would likely widen inequality at first, before broader growth gradually softened the effect. Yet it would send a powerful market signal to others with deep pockets. Musk could be a catalyst for South Africa, but not its economic saviour. Both Musk and Dangote’s initiatives are a reminder that big business must take corporate responsibility seriously to avoid pushback from local communities. This is particularly the case in Africa where levels of poverty and destitution are high. Large-scale entrepreneurship of the Dangote and Musk kind succeeds only within an enabling environment Dangote’s achievement matters beyond Nigeria. It shows that Africa need not remain confined to exporting raw materials and importing higher-value manufactured goods. Similar thinking could reshape copper processing in Zambia, cobalt in the Democratic Republic of the Congo, lithium refining in Zimbabwe, battery manufacturing in Morocco, fertiliser production in Ethiopia and pharmaceutical manufacturing in Kenya, Egypt and South Africa. Visionary investment can move countries from resource extraction towards industrial value addition, but it does not happen without active government support. Large-scale entrepreneurship of the kind practised by Dangote and Musk succeeds only within an enabling environment that plays to a country’s strengths. And in Dangote’s case, in combination with a healthy dollop of protection from competition. Beyond that, stable macroeconomic policy, reliable electricity, functioning financial systems, efficient logistics (or at least a credible promise of greater efficiency), secure property rights and predictable regulation are essential. Governments cannot manufacture a Dangote or a Musk. They can, however, create the conditions in which ambitious builders and innovators can emerge, invest and stay. Africa needs both: industrialists willing to commit capital to the unglamorous business of refining, processing and manufacturing, and technologists willing to bet on ideas that seem improbable. Africa’s future will be shaped by how well its governments enable both. Jakkie Cilliers, Head, African Futures and Innovation, ISS Pretoria This article is republished from ISS Today. Read the original article.

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