PRODUCTION SECTORS OF AN ECONOMY


From our previous lesson, introduction to West African economy   , we made it clear that There are three main production sectors in any given economy. These are explained bellow:

The Primary Sector

Primary sector of production in any given economy refers to that sector of the economy which uses natural resource to produce goods that are basically raw materials. Primary sector is concerned with the extraction of raw materials. In this sector, atural factors play crucial role in the production process. Primary Production sector include agriculture and allied activities like mining, fishery, forestry, dairy and poultry are included in this sector. Primary sector dominates the two other sectors in underdeveloped countries.

  The Secondary Sector 

The sector that is responsible for transforming one physical good into another is called secondary sector. This is also called manufacturing sector or industrial sector. The primary sector cannot satisfy all human requirements in any given economy. Without being told,  every society needs  industrial goods to make  lives comfortable. The manufacturing of crucial goods like electricity, gas, water supply etc. are included in this sector.

The Tertiary Sector

The sector where  service are produced in any given economy  is called tertiary sector.  All Services of various kinds like  our health services, education, banking, insurance, trade and transport are included in tertiary sector. In advanced countries like United States, the contribution of tertiary sector to national income is the highest. However, the contribution of this sector to national income is still low.

Some historical Perspective of Sector's Contributions to GNP and the Growth of Economy

The three various productive sector  treated above (primary, secondary and tertiary) have a lot of contributions to the gross domestic product (GDP) and economic growth of the various countries in West africa and the region in general. Our case study here is the agricultural sector and will be used to represent the primary sector.  In the case of the secondary, the  manufacturing sector will be used whike lastly, the services sector will represent the tertiary sector.

Contribution of Agriculture to the GDP and Economic Growth of West Africa

The agricultural sector in West Africa  is central to achieving food security and broad-based economic growth. It is representing approximately thirty-six percent of the region’s GDP and sixty ore more percent of the active labour force in the region. According to a journal, Agricultural exports generate around 6 billion Dollars  annually, or sixteen percent of all products and services exported from the sub-region. Morover, west africa is constrained  by low productivity and major environmental challenges.  According to report, there is a drastic drop of about 25%  rainfall over the last 50 years and that  had serious consequences for dry land areas without irrigation. Yields Per-hectare  for most crops are among the lowest in the world due to poor facilities and climatic conditions. Agricultural products only increasing by an average of 42% between 1980 and 2005 respectively. This account for total 30% of the increase in agricultural and food production in the region. There is no specific records of  West Africa’s agricultural production performance over the past 30 years. Clearly, production of basic food staples has the highest increase per capita while  Some crop and livestock products with the most unstable markets, like meat, dairy products, rice and vegetable oils has  much less and were not able to meet the daily  increasing demand. Some agricultural products like Maize, yams, cassava and cowpeas indicate  the strongest growth (which is around 3% per capita annually). Mext in the list is  oil crops and vegetables.it has annual per capita growth rates of 1% to 2% and some times drops. Let's consider grains,  Per capita production of rice, millet, sorghum,  and fruits increased by less than 1 percent yearly for the region in general, while that of meat, milk and sugarcane clearly declined over the last thirty years or more. In  livestock production, pork had the highest annual average growth rates per capita, at two percent, followed by sheep and goat meat with avarage growth of 1.6%. Conversely, beef and milk production declined on a per capita basis.

Statistical data on the distribution of the GDP show relatively little differences since the 1980s and we shall be looking at a table for details.  The contribution of agriculture in GDP  has highly declined in countries with high GDP per-capita and high growth rates such as Cape Verde, Ghana and Nigeria as we will see later on in our table. In some countries, however, agriculture’s share of GDP increased significantly  during the 1980s ( e.g, Burkina Faso, Guinea-Bissau, Liberia, Niger, Sierra Leone and Togo).
The agriculture's share of total GDP is only slightly above that of part of Asia, the Middle East, and other parts of North Africa. Accoding to according to Badiane, 2012, the latter regions have per capita incomes that are trice higher than sub-Saharan African countries.

 The major Contribution of Manufacturing Sector to the GDP and Economic Growth of West Africa

It is very clear that the  production base and prowess of West African countries is globally weak and low. It is characterized by obsolete capital and facilities due to lack of innovation. West Africa region is one of the least if not the most affected in terms of  integration into the global value chains(GVCs), particularly for processing activities as mentioned in the 2014 African Economic Outlook. This is a consequence of the industrial crisis that followed the tariff barriers from 1980s, and the wars and several conflicts that occurred in several countries in the weste african region.
Manufacturing, which has been the key driver of most growth and structural transformation in Asia and other region, has underperformed in West Africa due to some factors. More importantly, the share of the industrial sector in GDP only increased in 7 of the 15 countries between the 1980s and the 2000s and remains, on average, at 23% as we will see in our table shortly. Within this sector in West africa, the main growth drivers have only  been extractive industries (mining and oil) - which are capital-intensive but generate little percentage of employment. According to UNIDO and UNCATD (2011), the total share of manufacturing in GDP decreased from the usual 13% in 1972 to 5% in 2008 for the entire  region.

In 2014 when Nigeria economy was rebased, the GDP revealed and clearly showed that the country was actually experiencing a total  industrial renewal. With that new computations, the share of manufacturing industries in GDP  increased from 2.4% in 2008 to 9% in early 2015. Given The predominance of the Nigerian economy in the region as at that 2014 to 2015,the  developments reflect an increased contribution of non-extractive industries in the entire West africa. The share of manufacturing industry in the regional GDP increased from 5.9% in 2005 to nearly 9% in 2015. Clearly, when excluding Nigeria, the share decreased from 11.2 % to 8.5% over the same period. This is to say that  the rest of the region is experiencing an industrial decline and major economic crisis.

The share of industrial value-added  increased in the region, from 12 billion in 2005 to nearly 20 billion in 2015. However, apart from Nigeria, where GDP rebasing reversed the economic trend, industrial growth is much lower than that of other sectors. Without Nigeria, the manufacturing sector in West Africa recorded only  an average annual growth of only 2%, compared to a total  economic growth of 5% GDP. In comparing this, the services sector recorded annual growth of 12%, driven mainly by trade and other sectors like  transportation, telecommunications and financial services.

Main Contribution of Services Sector to the GDP and Economic Growth of West Africa

According to statistics, the services sector has over the years continues to dominate the economy.  The major contribution of some services sector are: accounting 42% of GDP on average during 2000 to 2009 for the ECOWAS countries. The next on list is  agriculture which has  36% while  industry 23%. The avarage share of the services sector in west africa is higher than what is seen in other developing economic regions, taking into account differences in per capita income. Example, average share of the services sector in West Africa region is only slightly lower than in Latin America, which obviously  has an average per capita income that is nearly eight times higher when campared. Sign up to read more..

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