The issue of creating productive jobs for Africa’s growing labor force through sectors outside of manufacturing has been a significant area of research. This focus stems from the recognition that Africa’s structural transformation is unfolding differently than in other regions. Historically, industrialization, particularly manufacturing, was the primary driver of mass employment and rising incomes, as seen in East Asia starting in the 1960s. Today, however, many developing countries are experiencing a global phenomenon dubbed “premature industrialization.” This trend involves reaching manufacturing employment peaks earlier in the development journey and at much lower income levels due to globalization and the increasing reliance on capital in production. This has raised doubts about the viability of the traditional development model for Africa.
Unlike the conventional development path of shifting labor from agriculture to manufacturing, industry, and then to services, Africa’s shift away from subsistence farming has relied less on manufacturing and increasingly on sectors such as horticulture, higher-value agriculture, agro-processing, tourism, business services, and information communications technology (ICT). These modern sectors, referred to as “industries without smokestacks,” are becoming new engines of growth, employment, and productivity. Beyond job creation for Africa’s burgeoning young population, research explores how countries can foster development in a world where the old model no longer applies. This involves rethinking the entire development model itself.
Industries without smokestacks include tourism, business services, agro-processing, horticulture, ICT, and modern transport and logistics. These sectors share many growth-enhancing characteristics with manufacturing but operate in different spaces. They are tradable across borders, rely on workers with moderate skill levels, demonstrate higher-than-average productivity, and provide opportunities for both technological upgrading and economies of scale. Importantly, they also have the ability to absorb large numbers of workers—a critical factor for countries with rapidly growing youth populations. Their average employment elasticity is estimated at 0.9, meaning that each percentage point of growth in these sectors tends to generate more jobs than growth in other parts of the economy, including manufacturing.
This potential is already playing out across Africa. Tourism, for example, contributes at least 3% of sub-Saharan Africa’s GDP and is even more significant in countries like Tanzania, where it accounts for roughly 14% of GDP and 3.2% of total employment. In Ethiopia, travel and tourism represent more than 11% of GDP and nearly 10% of jobs. Agribusiness also plays an outsized role: Kenya’s cut-flower industry alone employs between 40,000 and 70,000 workers, while Ethiopia’s flower exports generate more than 180,000 jobs. In South Africa, fruit packing supports around 300,000 workers. These cases illustrate how industries without smokestacks are already acting as engines of growth and job creation—and why they represent a powerful pathway for structural transformation in the region.
Realizing the Potential of Industries without Smokestacks
Realizing the potential of industries without smokestacks requires deliberate policy action. The foundations for success in these new, modern sectors are not so different from those that support traditional manufacturing. Reliable electricity, efficient transport systems, and strong digital connectivity remain essential. While some of these industries may require lower upfront infrastructure spending, governments cannot sidestep investments in core infrastructure if they want to unlock broad-based growth. This means prioritizing reliable power and internet access, strengthening transport and logistics, building skills training programs aligned with market needs, and fostering regulatory frameworks that encourage competition and innovation.
Another key takeaway relates to skills. Industries without smokestacks tend to demand a higher share of skilled workers compared to traditional manufacturing. At the same time, there is room for both low- and high-skill job creation across different sectors. Agro-processing, export agriculture, horticulture, transport, and construction offer significant opportunities for lower-skilled workers, while tourism, ICT, and financial services are better positioned to absorb higher-skilled labor. For policymakers, the implication is clear: Investing in education and training must go hand in hand with sectoral strategies to ensure Africa’s young population is equipped to take advantage of emerging opportunities.
Key Resources
For those interested in delving deeper into this topic, several key resources are recommended. The first is a seminal paper on premature deindustrialization, which frames the economic and political consequences of the observed deindustrialization trend. The second resource is a collaboration focused on industrialization trends in Africa. Finally, a book launch event brought together several experts and practitioners from the African continent and beyond to discuss the implications of the book’s findings as it relates to the development challenges of today.
Book: New Pathways to Job Creation and Development in Africa
The book “New Pathways to Job Creation and Development in Africa: The Promise of Industries without Smokestacks” documents prospects for large-scale job creation and structural transformation through more than just manufacturing. It highlights how Africa can foster development in a world where the old model no longer applies. The book explores a central question of how countries can foster development in a world where the old model no longer applies. This involves rethinking the entire development model itself. The book is not just about productive jobs but also about rethinking the entire development model itself. The book is a culmination of several years of research and collaboration with think tank partners across Africa.
El libro proporciona importantes perspectivas e recomendaciones para los formuladores de políticas en la región para considerar. Las industrias sin chimeneas tienen un enorme potencial pero para lograrlo requiere una acción política deliberada. Las bases para el éxito en estos nuevos sectores modernos no son tan diferentes de las que apoyan la manufactura tradicional. La electricidad confiable, los sistemas de transporte eficientes y la conectividad digital sólida siguen siendo esenciales. Si bien algunas de estas industrias pueden requerir un gasto de infraestructura inicial más bajo, los gobiernos no pueden eludir inversiones en infraestructura básica si quieren desbloquear un crecimiento amplio. Esto significa priorizar la energía eléctrica confiable y el acceso a Internet, fortalecer el transporte y la logística, crear programas de capacitación de habilidades alineados con las necesidades del mercado y fomentar marcos regulatorios que fomenten la competencia e innovación.
La importancia de las habilidades
El libro también destaca la importancia de las habilidades. Las industrias sin chimeneas tienden a demandar una mayor proporción de trabajadores con habilidades especializadas en comparación con la manufactura tradicional. Al mismo tiempo, hay espacio para la creación de empleos tanto de baja como de alta habilidad en diferentes sectores. La agroindustria, la agricultura de exportación, la horticultura, el transporte y la construcción ofrecen oportunidades significativas para trabajadores de baja habilidad, mientras que el turismo, las TIC y los servicios financieros están mejor posicionados para absorber el trabajo de alta habilidad. Para los formuladores de políticas, la implicación es clara: invertir en educación y capacitación debe ir de la mano con estrategias sectoriales para asegurar que la población joven de África esté equipada para aprovechar las oportunidades emergentes.
