Definition of Industry and Industrialization
What is an Industry?
The term industry refers to a group of firms which produce broadly similar goods or offer broadly similar services e.g. all the firms producing cement belong to the cement industry.
What is a Firm?
The firm on the other hand refers to an independently administered business unit which carries out production, construction or distribution activities, or offers services. e.g. University Press Plc, Osondu Bottling Company Ltd.
What is Industrialisation?
‘lndustrialization’ is a deliberate policy by governments to create many industries in a country. The process of industrialization involves the production, increasing use of machinery and power tools, as well as the use of improved technology in production, all of which lead to a higher level of output of industrial goods.
Types of Industries
Industries can be classified in various ways. We shall concentrate on those forms of production which use machinery and power tools in production.
- Mining Industry: This comprises all those forms of production which deal with the extraction of mineral resources such as petroleum, coal, limestone, etc. from the earth’s crust. The mining industry belongs to a class of extractive industries.
- Manufacturing Industry: This comprises all forms of production which transform materials into finished and semi-finished forms e.g. breweries, textile firms etc.
- Construction Industry: This comprises all forms of production which deal with the assembling of components and the transformation of materials to structures which are usually long lasting e.g. the construction of houses, bridges, dams, etc.
- Transportation Industry: It comprises those forms of production which help in the movement of goods and persons from one place to another e.g. transportation by road, vehicles, trains, aircrafts etc.
- Electricity Industry: It consists of all the forms of production which generate electrical energy using sources such as water, gas, coal, petrol etc.
Stages of lndustrialization in Africa
A number of stages can be identified in the process of industrialization in West Arica.
- Traditional Crafts Industries: This was the earliest stage which was in existence before colonization by the Europeans. The industries in this category includes those that engage in mat-making, pottery, metal work, cloth weaving, leather works etc.
- Processing Industries: They use the earliest form of modem industries to develop. They help to process agricultural and mineral products for export. They include cotton gins, saw mills, palm-oil processing industries etc.
- lmport-Substituting Industries: After independence, many West African countries set up industries to produce certain goods which were being previously imported. This was partly aimed at conserving foreign exchange in order to improve the balance of payments. Examples include those which produce soft drinks, textiles, detergents, cement, etc.
- Assembly Industries: As a way of further reducing the outflow of foreign exchange and developing indigenous technology, a number of industries import component parts from abroad and assemble them locally. Examples include those that assemble cars and trucks, machinery, electronic equipment etc.
- Heavy Manufacturing Industries: The emphasis at this stage is to produce intermediate and capital goods in order to lay a solid foundation for a sound economic development. Industries in this category include steel plants, petrochemical plants, etc.
- Export Industries: This is the last stage of industrialization in West Africa whereby there is increasing emphasis on the production of industrial goods for exports. The export-promotion strategy would increase the number ofexport-orientcd industries.
Factors that Encourage Industrialization
- Availability of raw materials.
- Provision of in frastructural facilities.
- Existence of conducive environment.
- Political stability.
- Availability of skilled manpower.
Strategies of Industrialization
A number of strategies can be adopted in the process of industrialization.
- Export promotion (export drive): This involves deliberate efforts by government to encourage the production of a variety of products for export. It is a strategy which is used to diversify the export base and to create a more favourable balance of payments.
- Exports could be promoted through such ways as granting tax concessions to exportbased industries, liberalizing the export licensing procedure and allowing exporters to retain their proceeds of foreign exporters exchange, etc.
- Import-substitution: This involves deliberate government policy to encourage domestic production of certain commodities which would otherwise be imported. It is a strategy which is pursued in order to create a more self-reliant economy and to improve the balance of payments through a reduction of imports.
- This strategy could be encouraged by adopting strict import control measures such as quota, bans, etc. And through tax concessions granted to import-substituting industries.
- Agriculture-led Industrialization: This is a strategy which involves an adequate development of the agricultural sector before embarking on massive industrial expansion. This strategy is pursued because of the numerous contributions which a well developed agricultural sector could make to industrial development.
- Such contributions made by agriculture include: provision of raw materials for industry, provision of food for the industrial working population, generation of income for investment in agriculture source of foreign exchange for investment, provision of market for finished products of some industries, etc.
- Small-scale versus large-scale industrial development strategies: The small-scale industries scheme involves deliberate efforts by government to encourage the growth of small scale industries such as rice mills, oil palm mills, etc.
At present, many West African countries are encouraging the establishment of small scale industries by providing loans, use of tax incentives, etc. They are meant to provide employment opportunities and reduce the ruralurban drift ofpopulation, etc.
A large scale industrial scheme involves deliberate policy by government to encourage the growth of certain large scale industries which are thought to be indispensable for the production of certain basic goods. These include iron and steel plants, petrochemical industries, petroleum refineries, etc.