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It is commonly suggested that the constraining influence on industrial development in Sub-Saharan Africa is the inadequate supply of technologically skilled workers. Many cross-country studies suggest that the low level of human capital in Africa is an important source of low growth in per capita income. The results of the analysis reported in this working paper do not necessarily dispute this view. They indicate that in non-competitive industrial sectors where there is no significant influx of new technology, the contribution of technological capability is limited. If economic liberalisation facilitated more competition, or if export growth were accelerated, thus enabling the import of goods incorporating new technology, then local skills could contribute significantly more in raising output. The experience of other countries also suggests that as the economy opens to flows of international knowledge, the technological capacity of local industry becomes important. The policy implications of this analysis are that continued attempts to develop high-level industrial skills may be ineffective without the prospect of a more competitive environment in the industrial sector. But the absence of such skills may limit the benefits to the industrial sector from future liberalisation so that the supply response to improved incentives may be weak.