Expanding the Secondary Sector: Adding Value

By: HENRY XUAN


posted on: May 24th, 2019

The economy can be divided into different sectors to explain the purpose of industries.

The three main sectors of an economy are:

  1. Primary Sector

This involves taking raw materials from the land. For example, part of the primary sector is mining metal ores and drilling oil from the ground. This also includes agriculture like growing and harvesting crops.

  1. Secondary Sector

This sector transforms the raw materials extracted in the primary sector into useable products. This is called manufacturing. For example, the metal needs to be separated from the ores. This metal may then be used to build machinery. When oil is drilled from the ground, it needs to be refined. This means that different parts of the natural crude oil need to be separated from each other into useful products such as petroleum, diesel and gasoline.

  1. Tertiary Sector

This sector includes services. For example, it involves selling the products created by the secondary sector such as supermarkets. It also involves other services like teaching, healthcare and insurance.

WHICH SECTOR IS THE LARGEST TODAY IN AFRICAN ECONOMIES?

The primary sector is the sector with the most workers in most African economies. The largest industry in Africa is the agricultural industry. On average, around 54% of workers are working in agriculture with some countries such as Burundi having above 80% of workers in the agricultural industry. This is part of the primary sector.

Many African countries also have many natural resources. For example, Sudan and Nigeria have large oil reserves and extract a lot of crude oil. There are many copper ores extracted from mines in Zambia and Congo. There are also many diamonds in Botswana, Congo and Angola. Removing these resources from the land also contributes largely to the primary sector.

Generally, compared to the primary sector, the secondary and tertiary sectors of the economy are much smaller. There are much fewer people working in these sectors.

Some African countries do have important secondary and tertiary sectors. For example, in Botswana, there is a large manufacturing industry for diamonds. Debswana, half-owned by the government of Botswana, separates diamonds from their ores so that they are ready to sell as a shiny, pure product. The service sector is also growing with the tourist industry getting much larger in countries like Algeria, Kenya, and Tanzania. However, the primary sector still employs the most people in Africa.

ADDING VALUE FOR MORE PROFIT

For the value of output to grow and increase the level of GDP in African countries, “structural change” is important. This means a change in how the economy is operating and how many workers are in each sector.

This structural change could involve increasing manufacturing. Making the secondary sector larger boosts the economy because it adds value to raw materials. An iron ore costs much less than iron which has been removed from the rock and turned into a steel beam. Finished products sell for much more than raw materials. When Botswana processes their diamonds, they turn them into products which can sell for a high value. This makes the most of their natural resource base and largely benefits the economy.

Manufacturing in Sub-Saharan Africa was only around 10-14% in 2014. Many have recognised Africa’s large natural resource base. African economies would benefit from their governments trying to increase manufacturing so value is added to these resources for more profit.

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