African governments have only a few years to build up an industrial sector or risk failing growing numbers of young people unable to find a job, a UN agency warned today.

Governments must shift the emphasis from agriculture and mining to manufacturing and commercial enterprises that can absorb large numbers of young workers.

Unctad, the United Nations trade and development agency, warned that without a series of reforms to promote local businesses, the share of jobs in manufacturing will continue a decade-long decline.

Charles Gore, chief author of the report, Economic Development in Africa, said: "Africa is losing ground in labour-intensive manufacturing – which is generally the entry-level step in industrial development, and is a category especially important in Africa, where jobs are needed in rapidly growing cities."

He said countries that failed to attract large numbers of high-productivity jobs could be faced with an uprising of dissatisfied young people akin to the "Arab spring" or an exodus of workers to areas with better prospects for growth.

African countries would need to "box clever" to encourage homegrown entrepreneurs after a series of World Trade Organisation agreements prevented them adopting protectionist policies used by rich nations during their own early development.

He said inaction could also allow foreign entrepreneurs from Europe, the US and China to displace local businesses, while a reliance on agriculture and mining was likely to lead to further years of grinding poverty for workers in precarious jobs blighted by low productivity.

The report spells out the difficulties African countries face after a decade when the share of jobs in manufacturing has fallen.

More than half of African countries have seen declines in manufacturing as a share of total output, with many of them falling back on staple exports to benefit from booms in commodity prices.

"The share of labour-intensive manufacturing activities in manufacturing value-added (MVA) fell from 23% in 2000 to 20% in 2008," the report said.

In a report last year Unctad called on the world's developed nations to promote growth in Africa and other developing areas by making technology more easily available, offering advice on climate change and taking steps to stabilise global commodity prices.

The latest report comes as many developed nations, including the UK, are pushing hard for a further liberalising of trade rules by the World Trade Organisation.

Critics of the Doha round of talks, which have dragged on for more than 10 years, argue liberalisation is favoured by rich nations that have the resources and business muscle to exploit African markets, knowing African businesses lack the capability to do the same in Europe, the US or China.

Gore said Chinese entrepreneurs were already gaining a strong foothold in many African markets, adding to the urgency for governments to support local businesses. Only Egypt, Tunisia and South Africa could claim to have developed industrial sectors, he added.

Despite its oil riches, Nigeria languishes in the bottom half of the continent's manufacturing nations and is falling down the table along with Botswana, Zimbabwe, Algeria and Kenya. Central African Republic, Burundi and Rwanda have yet to start industrialising along with the sub-Saharan nations Mali, Niger and Chad, said the report.

Gore said it was encouraging that many governments understood the need to adopt sophisticated strategies that built on indigenous expertise and skills to increase growth and spread wealth beyond current elites.