A robot welcomes guests for the annual results conference of German media group Bertelsmann on March 27 in Berlin. Robots are increasingly taking over factory jobs. photo | AFP
The Fourth Industrial Revolution, with increasing use of advanced technologies such as 3D printing and robotics, is expected to have a major impact on the manufacturing process globally.
The Overseas Development Institute (ODI) recently released a paper on Digitalisation and the Future of Manufacturing in Africa.
The Fourth Industrial Revolution, with increasing use of advanced technologies such as 3D printing and robotics, is expected to have a major impact on the manufacturing process globally.
The paper seeks to answer this question: Are robots taking our jobs? What ODI’s research found is that it depends on the stage of automation in the country as well as the strategy the country employs.
The analysis reveals that African countries have a window of opportunity to link manufacturing with job creation even as the uptake of automation becomes more aggressive. There is an inflexion point where the cost of automation will become cheaper than the cost of labour in manufacturing.
In the USA, the inflexion point is fast approaching and robots may become cheaper than US labour by 2023, that is in five years.
The risk of automation taking jobs is even higher in other countries. Studies indicate that the impact of automation on employment can be considerable and that 57 per cent of jobs in the OECD, 69 per cent in India and 77 per cent in China are at risk of being automated.
Coming back to Kenya, the risk of jobs being automated is less acute because the inflection point at which automation becomes cheaper than labour comes in 2034; that is a window of opportunity that is roughly 10 years longer than in the US.
Ethiopia faces the inflection point between 2038 and 2042. What this means is that Africa has about a 15-25 year window where labour will remain cheaper than automation, thereby creating an incentive to shift manufacturing to the continent due to cheap labour. Human labour rather than robots will continue be the cheaper option for factory floors in Africa for a while to come.
But there is another inflexion point that is equally as important; the point at which robots in other countries become cheaper than African labour.
The paper predicts that US robot costs will become cheaper than Kenyan wages (in the furniture sector) by 2033. Thus, by 2033, using robots in manufacturing in the US will be cheaper than using Kenyan labour to make the same product.
This is bad news because as the cost of capital falls for producers in developed economies, they may find it increasingly efficient to re-shore production from offshored plants back to their own “smart” factories. This will mean Africa will no longer be able to use the “cheap labour” narrative to attract manufacturing to the continent.
This research points to the reality that African countries must adapt to a digital future. While there is still window of opportunity where human labour continues to be cheaper than automation, this window should be used for two purposes.
The first is to leverage automation for the creation of new employment opportunities such as “digital” jobs. Secondly, Africa must begin the process of developing sectors that are less vulnerable to automation and skill Africans to work in those sectors.
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