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China's Manufacturing Slowdown to Hit African Suppliers

  • Peter Heinlein

ADDIS ABABA - A senior World Bank official says a slowdown of manufacturing in China is likely to hurt Africa's economic growth. But, that risk could turn into an opportunity for Africa's emerging economies.

World Bank Vice President for Africa Makhtar Diop says his institution is keenly interested to see the consequences of China's economic slowdown on its commodity suppliers, many of which are in Africa.

News agencies this week have reported that a decline in Chinese manufacturing is adding to concerns about the global ripple effect of Europe's sovereign debt crisis.

Diop, a former Senegalese economy and finance minister, said a downturn in China's manufacturing a decade ago would have been meaningless to Africa. But today it is critically important.

"I don't have the numbers, but it's something new that we need to take into account, that was not, when we were doing the same exercise 10 years ago, we would not look at that aspect because China was not a big trading partner with Africa," said Diop. "Today China is a significant trade partner, and we need to take into account what is happening in that market."

World Bank Country Director for Ethiopia Guang Chen says Europe's debt turmoil and the subsequent Chinese manufacturing slowdown might turn out to be an opportunity for Africa's developing economies. He says manufacturers looking to save money are likely to give poorer countries like Ethiopia another look.

"This is a risk and also an opportunity in the sense that some of these manufacturing companies in China will be under more cost pressure in competing in this environment, and they may have a much stronger urge to diversify into locations that where the input costs may be lower," said Chen. "So this is also an opportunity for Africa, countries like Ethiopia, to perhaps tap into that kind of diversification of products [in the] industrial base."

Makhtar Diop said among his priorities as World Bank vice president for Africa will be promoting greater agricultural productivity across the continent.

The former Senegalese banker told reporters he sees no "silver bullet" (magic solution) to end low productivity in so many African countries. He said a mechanism is needed to allow small farmers to adopt new technologies, as well as a system that insulates them from market shocks and allows them to take risks that lead to greater profitability.
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