Economic transformation requires the diversifcation and industrialization of an economy. The industrial sector includes a number of subsectors such as mining, manufacturing, construction, electricity, water, and gas. However, of all these, manufacturing is the most transformative subsector of industry. But not just any kind of manufacturing is suffcient to transform an economy. Distinction must be made among the three subsectors of manufacturing, namely manufacturing of consumer goods, intermediate goods, and capital goods.
Consumer goods industries produce goods that are ready for fnal use. These are the factories that process food, clothing, footwear, beverages, and the thousands of other ready-for fnal-use products. The machinery they use is produced by capital goods industries. Intermediate goods are inputs used in the manufacture of both consumer goods and capital goods. These include industries manufacturing bolts and joints, spare parts, industrial inputs, ingredients such as sugar used in the manufacture of confectionery, and many other inputs. The machinery for making all types of manufactures originates from the capital goods industries.
As can already be seen, capital goods are the manufactured goods that are used to produce all machinery, plus those used in machinery’s own production. It is a diverse sector used to manufacture machinery and equipment used in various types of manufacturing. They include engineering and construction machineries, agricultural, transportation, energy generation, and equipment, and so many types of machinery and equipment for various sectors. They have profound impact on various sectors of the economy. They are also the subsector where most technological innovations take place.
The embodiment of technology in capital goods industries makes the sub sector the most dynamic. Once a country establishes a substantial size of the capital goods subsector, it can supply many of its own industries with machin ery and equipment, and it can guide much of its own technological advance ment. Hence, the establishment of large capital goods manufacturing within Africa is crucial for African economic transformation. This is because Africa needs large-scale plants for the manufacture of strategic capital goods such as energy generation and transmission equipment, agricultural processing plants, chemical plants, transport machinery and equipment, mining machinery, and many other various manufacturing machinery and equipment.
Capital goods manufacturing is also characterized with economies of scale as many indivisibilities and high-skilled labor are involved in their construction and operation. Capital goods manufacturing is the most dynamic subsector. It supplies itself as well as the other two manufacturing subsectors with inputs. Capital goods industries are technologically dynamic; their regular supplies to all sectors of the economy ensure regular capacity utilization and technological fexibility in the whole economy. With fexible and rapidly changing technology, as consumer demand changes, the economy’s capacity to adjust to the changing demand patterns will instantaneously adapt, ensuring fairly stable adjustments in the economy. Metal processing and manufacturing is an important component of the capi tal goods industry. According to the International Standard for Industrial Clas sifcation, the metal industry consists of basic metal and engineering industry. The engineering industries can be further grouped into: manufacture of basic iron and steel; manufacture of fabricated metal products except machinery and equipment; manufacture of machinery and equipment; and manufacture of motor vehicles, trailers, and semi-trailers.1