By Sifelani Tsiko
The second SADC industrialisation week was held recently in South Africa amid calls to further promote regional integration and economic growth to help improve the quality of life for the majority of the 300 million people in this 15-member economic bloc.
Delegates at the event all agreed that industrialisation was the way to go and was key in facilitating increased export diversification, greater competitiveness, more inclusive growth and increased movement of goods and services.
South African hosted the SADC Industrialisation Week from July 31 to August 4 this year under the theme: “Partnering with the Private Sector in Developing Industry and Regional Value Chains”.
The event is an annual regional public-private engagement forum aimed at fostering new opportunities for intra-regional trade and investment.
This forum took place two weeks ahead of the SADC Heads of State and Government Summit which is expected to receive recommendations from actors who discussed various issues aimed at fostering industrialisation and region economic growth.
In a speech read on her behalf, Minister of International Relations and Cooperation, Maite Nkoana-Mashabane, said the regional industrialisation drive will require a strong SADC Free Trade Area (FTA) to facilitate increased export diversification, greater competitiveness, more inclusive growth and increased movement of goods and services.
She said this would create the economies of scale to facilitate new industrial capabilities to take advantage of a large integrated market. “The global economy is unfortunately characterised by serious push backs on globalisation and trade agreements. This has resulted in an increase in protectionism, with our small economies by global standards as SADC, we should therefore put more focus on improving efficiency in the regional market and to promote regional integration,” she said.
She further said that it was important to provide an attractive business environment for industrial growth and more opportunities for the traders.
The SADC Regional Industrialisation Strategy and Road-map, she said, can only be taken forward and implemented with the support of the region’s private sector.
Swaziland hosted the first SADC Industrialisation Week last August which led to the adoption of the Esibayeni Declaration which calls for specific actions on how to develop infrastructure required to spur industrialisation.
The declaration also tackles issues related to trade facilitation, non-tariff barriers and the movement of skills and innovation.
Nigel Gwynne-Evans, chief director of African Integration and Industry, urged all SADC member states to prioritise localisation in infrastructure development.
This, he said, would require long-term government plans and considerable preparation to achieve the requisite skills and industrial capacity to meet demand.
“State owned enterprises (SOEs) have a critical role to play in creating the environment that attract the private sector to invest,” he said.
“The Department of Trade and Industry in South Africa has worked closely with SOEs around driving localisation. From an industrialisation perspective, infrastructure can be a key driver of industrialisation through the supply of key services, equipment and infrastructure on the large scale projects.’’
Delegates also called for a stronger involvement of the private sector in the development of key regional plans and policy documents as well as the SADC Industrialisation Action Plan. Speaking at the same event, SADC industrial development and trade acting director Dr Lomkhosi Mkhonta-Gama said communication was critical in promoting the SADC industrialisation strategy.
In order for trade to contribute to sustainable and equitable development and poverty reduction, she said, there was need to complement the requisite capacities to produce goods and trade effectively and efficiently.
The main thrust of the strategy, Dr Mkhonta-Gama said, was the technological and economic transformation of the SADC region through industrialisation, modernisation, skills development, science and technology, financial strengthening and deeper regional integration.
At the event, delegates discussed various issues that included the SADC infrastructure master plan, project financing, standards of infrastructure, value addition and beneficiation.
Lynette Chen, chief executive officer of the NEPAD Business Foundation, urged regional countries to prepare their industries and SMEs to take advantage of the rapidly advancing technology to boost economic trade and integration.
“We may have economic growth, yes, but we may have jobless growth,” she said.
“We need African innovators who can take advantage of the revolutionary changes in technology. What will an industrialising SADC look like in 2030? Are we planning in the right way? We need to understand the technology trends better.
“Low skills jobs will disappear and new jobs and skills will emerge that are linked to technological advancement.
SMEs are agile and in – tune to changes that may take place and we need to support them.”
Gainmore Zanamwe, African Export Import Bank (Afreximbank), senior manager for Intra-African Trade Initiative, told delegates that if Africa addresses the issue of availability of market information, trade volumes can breach the $400 billion mark and thrust the continent firmly towards industrialisation.
“Lack of access to market information is still a major barrier to intra-Africa trade,” he said. “If we address this problem, our trade volumes can increase from 15 percent to 38 or even 40 percent. If we address the issue of availability of market information, trade volumes can double to $400 billion without even looking at other constraints.”
For years, analysts have bemoaned that lack of knowledge of the continent and limited access to trade information among African businesses constituted major constraints to trade.
Zanamwe also cited a study on the regional value chains for leather and leather products, jointly commissioned by Afreximbank, UNCTAD and the Commonwealth Secretariat, which found that Australia was the main source of tanned hides and skins for Southern Africa, including South Africa, even though Zambia exported the same products at lower costs and its exports were higher than South Africa’s imports.
The report, he said, also showed that South Africa imported leather that had been further prepared after tanning from India at double the price at which Ethiopia exported such leather while Mauritius and Nigeria imported leather products from Italy and Belgium at much higher costs than what South Africa and Botswana exported them for.
The Development Bank of Southern Africa (DBSA) pledged to invest at least two percent a year out of the R100 billion it has earmarked for the 2019 to 2020 period for SADC infrastructural development.
Mohan Vivekanandan, a DBSA group strategy executive, indicated his company’s willingness to support the 15-member economic bloc.
“It is crucial to come together and discuss what is happening around SADC projects and financing arrangements,” he said. “DBSA aims to deliver R100 billion for infrastructure development by the 2019 to 2020 period.
We are targeting to invest at least 2 percent out of this amount into SADC infrastructure every year in the medium to long term.”
Vice president of Group Regulatory Services at Sasol Limited, Johan Thyse, told delegates that building mutual partnerships among the bloc’s member states was key to tapping the region’s huge gas reserves to beat the energy woes facing the most countries in southern Africa.
“The successful development of the gas industry in South Africa was achieved through collaboration. Collaborations are key to the success of any project,” he said.
“This worked well for Mozambique and South Africa and I think this can work well for the entire region. According to new findings, there are some 600 TCF gas reserves in southern Africa. The region stands to gain if we build strong partnerships to exploit the reserves.”
The SADC Industrialization Week was hosted with the support of the NEPAD Business Foundation, the Southern Africa Business Forum (SABF), the Department of Trade and Industry South Africa (dti) and the Department of International Relations and Corporation (DIRCO)
Barclays Africa Group, the European Union and the Southern Africa Trust (The Trust) supported the hosting of the event.
Delegates were all agreed that the event is an important platform for public-private sector engagement that is critical for fostering new opportunities for intra-regional trade and investment.
The SADC Industrialisation Strategy and Road Map (2015 – 2063) was approved by regional leaders at a summit in Victoria Falls in 2015 when President Mugabe was chair of both SADC and the African Union.
This strategy, which is anchored on three pillars – industrialisation, competitiveness and regional economic integration — broadly aims to improve the region’s industrial capacity and competitiveness in key areas such as agro-processing, pharmaceuticals and mining, among others.
The strategy also aims to assist African countries to transition from a commodity driven growth path to value adding, knowledge-based industrial economies.
The SADC industrialisation agenda is linked to the AU’s African Agenda 2063 which also sees industrialisation as a major instrument for the continent’s political and economic integration.