Inclusive Growth Through Industrialization: South Africa’s G20 Moment

Africa stands at a pivotal moment where industrialization must drive inclusive economic growth. Despite years of GDP expansion, the continent’s reliance on raw commodity exports has constrained job creation and economic resilience. Shifting toward value addition, manufacturing, and regional integration is critical for sustainable development. South Africa’s presidency of the G20 in 2025, alongside the African Union’s (AU) new permanent seat in the forum, presents an opportunity to place Africa’s industrialization agenda at the center of global discussions. The challenge is to leverage this platform to attract investment, expand regional value chains, and integrate micro, small, and medium-sized enterprises (MSMEs) into a broader economic transformation that benefits all segments of society.

The African Union Development Agency-NEPAD (AUDA-NEPAD) has played a leading role in advancing Africa’s industrial strategy. As the AU’s development agency, it has been instrumental in implementing frameworks such as the Accelerated Industrial Development for Africa (AIDA) and the African Continental Free Trade Area (AfCFTA), ensuring that industrial policies align with the continent’s long-term vision. It has also driven infrastructure development through the Programme for Infrastructure Development in Africa (PIDA) and championed skills-building programs like the Africa Kaizen Initiative, which has enhanced productivity among thousands of African firms. However, despite these efforts, implementation gaps remain, and translating industrial policies into tangible results requires stronger coordination, financing, and political commitment.

South Africa and the AU now hold significant influence within the G20 and should work together to shape global conversations on Africa’s industrialization. South Africa’s presidency in 2025 provides a unique opportunity to push for global commitments to industrial financing, trade reforms, technology transfer, and infrastructure investment. Meanwhile, the AU’s permanent seat in the G20 ensures that Africa’s voice will remain present beyond South Africa’s term, institutionalizing African priorities within the world’s most powerful economic forum. Together, they can advocate for initiatives that expand investment in African manufacturing, secure fairer trade terms for African industries, and establish financing mechanisms that support industrialization. The alignment between South Africa’s diplomatic leadership and the AU’s strategic coordination will be crucial in mobilizing global support for Africa’s industrial transformation.

For industrialization to be inclusive, it must prioritize regional value chains and MSME participation. MSMEs are the backbone of Africa’s economy, yet they often operate on the margins of major industries. Integrating them into regional and continental production networks will ensure that industrialization creates widespread employment, fosters innovation, and drives local wealth creation. Strengthening regional value chains allows African countries to specialize in different stages of production, fostering efficiency and competitiveness while spreading the benefits of industrial growth. The AfCFTA provides the framework for this integration, but successful implementation will require significant investments in infrastructure, financing, and capacity-building. AUDA-NEPAD’s “100,000 MSMEs Initiative” demonstrates how targeted support for small businesses can drive productivity, improve market access, and create jobs. If scaled up with support from South Africa, the AU, and development partners, such initiatives could accelerate Africa’s industrial expansion.

Global experiences offer valuable lessons for Africa’s industrial ambitions. East Asia’s rapid industrialization was built on export-driven manufacturing, strong state-led industrial policies, and deep integration into global value chains. Countries like South Korea and China strategically nurtured key industries, invested in technical education, and attracted foreign capital while ensuring technology transfer and local capacity-building. Africa can learn from these models by focusing on select industries where it has a competitive advantage—such as agro-processing, pharmaceuticals, and digital manufacturing—and by building industrial clusters that foster collaboration between firms. At the same time, Africa must avoid the pitfalls seen in parts of Latin America, where premature trade liberalization weakened domestic industries before they had achieved competitiveness. A careful balance of protection, investment, and integration is necessary to sustain long-term industrial growth.

South Africa and the AU must use their G20 presence to cement Africa’s industrialization agenda within global development priorities. Concrete actions could include launching an Africa Industrialization Pact within the G20 framework, securing commitments for expanded investment in manufacturing and infrastructure, and institutionalizing an annual G20-Africa consultation on industrial development. Such measures would ensure that Africa’s industrial ambitions remain a sustained priority beyond South Africa’s presidency. The G20’s development finance institutions should also align their support with Africa’s needs, prioritizing blended finance instruments, industrial parks, and technology transfer programs.

Africa’s industrialization is not just an economic necessity but a social imperative. Inclusive growth requires deliberate policies that empower women, youth, and marginalized communities, ensuring they have access to skills, capital, and market opportunities. AUDA-NEPAD’s role in coordinating policies, mobilizing resources, and tracking progress remains essential to bridging the gap between vision and execution. The AU, as Africa’s political and institutional voice, must reinforce this agenda by rallying member states to commit to industrial policy reforms and implementation. South Africa’s leadership within the G20, combined with the AU’s strategic engagement, can accelerate the momentum toward an industrialized, self-reliant, and globally competitive Africa. If this moment is seized effectively, it could mark a turning point in Africa’s economic trajectory, positioning the continent as a key player in the global industrial landscape.