Manufacturing 4.0 Relevance to Commonwealth LDCs
This section provides background information and analysis of the relevance of Manufacturing 4.0 to Commonwealth Least Developed Countries (LDCs), according to UN classification.
Commonwealth LDCs are spread across three regions: Africa, Asia and the Pacific.
Africa is home to largest number of Commonwealth LDCs. These are The Gambia, Lesotho, Malawi, Mozambique, Rwanda, Sierra Leone, Togo, Uganda, the United Republic of Tanzania, and Zambia.
The Pacific is home to the second largest number of Commonwealth LDCs. These are Kiribati, Solomon Islands and Tuvalu.
There is one Commonwealth LDC in Asia, Bangladesh.
Considering their unique geographies, economies and challenges as island states, we have included the three Commonwealth Pacific LDCs in the Commonwealth SIDS section of this Guide (see Section 5).
As the sole LDC in Commonwealth Asia, we have included Bangladesh amongst developing countries to enable regional analysis and comparison (see Section 4).
This leaves the ten Commonwealth Africa LDCs for analysis below.
As with Commonwealth SIDS, Manufacturing 4.0 in the context of Commonwealth LDCs is an emerging area of research for academics, international organisations and private consulting firms. As a result, there can be significant gaps in information currently available.
Commonwealth Africa LDCs
Commonwealth Pacific LDCs
Commonwealth Asia LDCs
Regional Manufacturing Trade & Value-Add
All stats most recent available. Source: World Bank
Manufacturing baseline in Commonwealth Africa LDCs
Manufacturing contributes US$19.2 billion of Manufacturing Value Add (MVA) in the ten Commonwealth Africa LDCs. This represents 9% of regional GDP, which is on par with Commonwealth SIDS in the Caribbean and Indian Ocean.
Commonwealth Africa LDCs run a significant merchandise trade deficit, importing nearly 70% more goods than they collectively export (US$47.2 billion versus US$32.1 billion). Of the ten countries, only Zambia runs a merchandise export surplus.
Commonwealth Africa LDC snapshot
- Manufacturing value added (MVA) totals US$19.2 billion, or 9% of total output (GDP) in the region
- Uganda (16%), Lesotho (15%) and Togo (14%) enjoy the largest contribution of MVA to their national GDPs, and Sierra Leone (2%) and The Gambia (3%) the lowest
- Uganda (35%) and Tanzania (29%) contribute by far to the ten country's collective MVA, though are also the two largest economies with a combined 58% of collective GDP
- Papua New Guinea (75%) has by far the largest GDP in the region, as well as the highest population (79% of the Commonwealth Pacific)
- GDP per capita is quite low across the ten countries, with only Lesotho (US$1,166), Tanzania (US$1,136) and Zambia (US$1,121) exceeding US$1,000 per capita
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Africa LDC MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Africa LDC MVA
Manufacturing value-add contribution to national GDP
Manufacturing contribution to Commonwealth Africa LDC MVA
Challenges to M4.0 Development
The following provides a series of examples for how Manufacturing 4.0 technologies can address specific industrial challenges faced by Commonwealth LDCs.
Many of these challenges are similar to challenges faced by SIDS, though without the island context. However their larger population size magnifies some challenges while diminishing others. Attempts are made here to generalise, though each country can face these challenges in more or less acute ways, as well as face their own unique challenges due to national circumstances.
LDC Regional-level Challenges
- Geography: LDCs are often faced with challengingeographic circumstances including distance from main consumer markets and centres of global value chains
- Economy of scale issues: LDCs often have large public sectors which hinder private sector industrial development as the wages would be lower in the private sector.
- Competition: several LDCs have competitive rather than complimentary economic profiles.
- Climate Change: all LDCs face adverse impacts because of climate change, which can hinder foreign investment in these countries.
LDC Country-level Challenges
- Production facilities can halt due to unusual weather conditions, impacting labour availability access to inputs, and requiring repairs to damaged plants and equipment.
- Brain-drain occurs as young labour forces are pulled towards advanced economies where there are greater perceived opportunities.
- Small technical labour forces in several LDCs preclude large scale industrial development, despite their larger populations relative to SIDS.
- Complexity of doing business can deter investments in some countries, with most LDCs ranking low in ease of doing business factors.
- Internet usage rather than access can be a challenge, as increasing mobile penetration broadens mobile internet access, however internet usage remains below 50% of the population in most LDCs.
- Large public sectors can dominate economies in many LDCs because of diseconomies of scales, which further hampers private sector industrial development.
Example M4.0 solutions to regional industrial challenges
Market size disadvantage
- Potential solution: upgrading and connecting local SMEs to regional and global markets and value chains
- M4.0 application: distributed technologies such as 3D printing allow localised production of textiles, foods containers, components, construction materials, etc, gradually reducing the need for imports of these items
Poor connectivity and logistics linkages
- Potential solution: developing strategic and physical infrastructure to connect to global value chains
- M4.0 application: embedding internet of things (IoT) sensors such as tracking devices enhances transparency of supply chains and readily identify bottlenecks
Lack of economic diversification
- Potential solution: identify new product and market opportunities, prioritising specific sectors
- M4.0 application: climate change concerns will lead to new products being manufactured using clean technology, where enhanced tracking for rule of origin and verified information to consumers becomes more important, including connecting consumer with suppliers through big data capabilities.
Limited sources of economic growth
- Potential solution: upgrading existing value chains, reducing barriers to export competitiveness and opening potential new markets to local businesses
- M4.0 application: digital twins / simulations provide novel revenue streams through for example virtual designs created locally which can then be commercialised via licensing arrangements with countries around the world
Aging population coupled with increasing youth unemployment
- Potential solution: enhancing skills of local populations to improve enterprise productivity and enable a future-ready workforce
- M4.0 application: a M4.0-ready workforce can be developed by supporting local curriculum reform and focusing vocational education on STEM subjects
Limited institutional strength and public sector capacity
- Potential solution: provide competitive advantage to manufacturing sectors by providing industry-specific insights into local consumer demand or anticipating bottlenecks
- M4.0 application: enhance vertical (within a firm) and horizontal (across supply chains) data sharing within industries to create large data pools to leverage big data and analytics applications
M4.0 Application in Commonwealth LDCs
The following provides a series of examples for how Manufacturing 4.0 technologies can be applied in Commonwealth LDCs.
Many of these applications are similar to challenges faced by Commonwealth SIDS given similar levels of development at the medium and higher levels, though without the island context. Many M4.0 technologies benefit from scale advantages, therefore the larger market sizes and economies of LDCs may increase their potential compared to SIDS. Attempts are made here to generalise application, though each country faces unique circumstances with unique technology application potential.
Big Data & Analytics
Large amounts of data are analysed by advanced computing technology to provide insights and predictive analysis to support decision making.
LDC Application
Application to large scale production sites which generate significant amounts of data where small efficiency gains will have disproportionately positive impacts. If firms come together to share data, they could distribute the costs for meaningful insights.
Unmanned Autonomous Vehicles
Such vehicles include cars, trucks and drones. They navigate without human input or via remote human control.
LDC Application
Such vehicles can overcome geographic challenges in many LDCs where infrastructure can be lacking beyond capital cities. Applications include last mile delivery of goods and increasingly services, remote maintenance or even substitution of infrastructure.
Simulations / Digital Twins
Real world environments can be simulated virtually, such entire factory floors, using sensors. This allows experimentation, virtual training or exploration without the need to visit or modify real world sites. Additionally, entire product information life cycles can be retained from primary production to end user.
LDC Application
This can immediately be applied to light and emerging manufacturing sectors across LDCs, as well as in commodity sectors to experiment with and maximise agri-production.
Horizontal/Vertical Data Integration
Large producers have capabilities to share data within their own firm (vertical data integration); further maximised by sharing relevant data with other firms in the value chain such as suppliers (horizontal data integration).
LDC Application
Most applicable to larger firms who are able to integrate larger pools of data, better integration can help consolidate existing basic manufacturing sectors and introduce additional areas of value add such additional quality assurance, provenance and labelling applications.
Internet of Things (IoT)
Internet of Things (IoT) is enabled by small sensors with computing capabilities that deliver real-time information. A simple example is the use of radio-frequency identification (RFID) devices to determine how fast a production item is moving, which when combined with Big Data analytics can provide meaningful insights.
LDC Application
IoT has a very broad potential application in LDCs as more devices become available at lower costs:
- Large firms can monitor how quickly items are produced and where there are blockages to optimise production set-up or offer enhanced training.
- For logistics and supply chain management, RFID’s can help with real-time location and tracking information.
- Sensors for energy inputs can provide necessary data to enable savings on energy consumption, while enabling "smart grids" which treat energy sold as a service through internet-enabled devices.
Cybersecurity Technology
Cybersecurity technology encompasses anything that protects digital systems from internal and external attack. Modern cybersecurity involves technology such as blockchain or artificial intelligence to protect infrastructure and technology such as IoT devices.
LDC Application
This would benefit production processes where digital assets are important, especially in light manufacturing and emerging creative sectors, as well as in payment systems underpinning e-commerce.
Additive Manufacturing
This technique involves adding layers of material to create a finished product, and is also known as 3D printing. This contrasts with traditional processes where manufacturing has been based on subtractive methods such as cutting from fabric, removing wood etc.
Regional Application
Applications include:
- Replacing imports of small parts and components with local produced/"printed" alternatives.
- In clothing and apparel sector, shoes and clothing could be manufactured using synthetic materials.
Artificial Intelligence
Artificial intelligence and machine learning allow machines to use algorithms to process data and reach conclusions that were not originally programmed into them. It is used in manufacturing for demand forecasting and predictive maintenance, among other applications.
LDC Application
AI has potentially larger potential in LDCs than in SIDS on account of larger population sizes and therefore larger potential datasets to feed algorithms that drive AI-assisted processes and decision making. This has broad potential across a number of sectors, from credit scoring and disbursement in finance to soil and weather analysis in agriculture.
Augmented Reality
Augmented reality utilises extra sensory virtual input, usually visual, overlaid onto the actual world.
LDC Application
This is still a niche area for LDC potential, though use cases can include:
- Improving quality and safety standards through spectroscopy technology in the food and beverage industry.
- Identifying and assisting in the exploration of new sites in the mining sector.