Trade liberalisation without enhanced production is a recipe for disaster

By Prosper Ndlovu

Trade liberalisation without enhanced production will be a recipe for disaster and southern Africa needs to urgently incorporate industrial and infrastructural development in the corpus of market integration, a top United Nations (UN) official has said.

SADC is key member of the Tripartite Free Trade Area (TFTA), an initiative aimed at integrating African economies in creating a regional free trade area for 26 African countries of 632 million people.

This geographic segment represents 51 percent of Africa’s Gross Domestic Product (GDP) and is constituted by three regional economic communities – COMESA, SADC and the EAC.

In his address during the Ad-hoc Expert Meeting on Deepening Regional Integration in Southern Africa hosted by Zimbabwe in Bulawayo this week, UN Economic Commission for Africa director, Professor Said Adejumobi, said concrete steps should be taken quickly to ensure Southern Africa benefits immensely from the TFTA. He warned that pursuit of free trade alone without improved production backed by sound industrial and infrastructure framework would expose the region to serious risks and long term challenges.

“In many African countries and those of Southern and Eastern Africa, the process of de-industrialisation has not abated. Manufacturing as a share of GDP continues to fall. Market or trade liberalisation without enhanced production will be a recipe for disaster,” said Prof Adejumobi.

“What we may likely see would be the capture of those markets by rebranded but dumped goods from other parts of the world mostly Asia, Europe and America.

“Conscious efforts must be made in the industrial pillar of the TFTA to promote the development of indigenous capitalist or entrepreneurial class that would increasingly assume a multinational character as we have seen in the likely of Aliko Dangote (Africa’s top billionaire).”

SADC is already seized with the regional industrialisation agenda, which was adopted in 2014 when President Robert Mugabe assumed chairmanship of the bloc. The move followed realisation that robust industrialisation was critical to cementing sustainable economic integration and fulfilling founding fathers’ dream of economic freedom.

Prof Adejumobi implored regional leaders to prioritise wealth creation investments and increase focus in unlocking opportunities in the small to medium enterprise (SMEs) sector, which is fast becoming a hub for wealth creation in developing economies.

As such, Prof Adejumobi said the innovative approach towards the TFTA should be buttressed by industrial and infrastructural development as a pillar to market integration.

“Without production, trade and market liberalisation will be meaningless. The industrial pillar seeks to boost the productive capacities of member states, promote value addition and beneficiation and enhance economic diversification.

“The infrastructure component aims to ease the challenge of doing business, open up the continent from Cape to Cairo and allow the free flow of goods and services,” he said.

Negotiations for the TFTA began in Kampala in 2008 when leaders from the three blocs committed to creating a larger integrated market in boosting inter-regional trade, attracting investment and deepening regional integration in Africa. The second Tripartite Summit was to be held in 2011 where leaders adopted a developmental approach to regional integration anchored on three main pillars – market integration, industrial and infrastructure development.

It was on June 10, 2015 in Sharm el-Sheik, Egypt that, after intense deliberations, the TFTA was officially launched by Heads of State and the agreement in trade in goods was signed. So far, 21 member states have signed the TFTA Agreement with one ratification while Egypt and Uganda are in the process of doing so. Fourteen ratifications are needed for the agreement to go into force.

The TFTA also provides a framework and architecture of development that would be crucial in realising the aspirations of African Continental Agenda 263 and global Agenda 2030. Prof Adejumobi said if the TFTA is implemented well, supported by sound regional production, it has capacity to promote trade, spur economic competition and thereby improving the quality of goods and services across regions. The model could also be useful in encouraging creativity and innovation, enlarging job markets, alleviating poverty and broadening regional development.

The weeklong deliberations were centred on how to deep regional integration in Southern Africa with focus on the role, prospects and progress on the implementation of the TFTA.

This also covered aspects of free movement of people within the bloc. There was also discussion on the need for greater harmonisation of industrial policies of the three tripartite blocs.

“The SADC Industrialisation Strategy and Roadmap of 2015, the COMESA Industrialisation Policy and EAC Industrial Policy agenda must coalesce together. Otherwise there will be disconnect and discontinuities in the industrial focus of three organisations and their member states,” said Prof Adejumobi.

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