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19 Dec 2014 00:00
Border post refurbishment is an important initiative to increase intraregional trade. (Photo:moWoza)
The Southern African Development Community (SADC) has recorded tremendous achievements in a number of areas, including peace, security, political stability and socio-economic development — and continues to do so -— but this has not been adequately communicated to the people who are the real drivers of change.
The results of the 2014 Mo Ibrahim Index on African Governance show that of the top 10 ranked countries in Africa, six of them are from the SADC region. Southern Africa continued to score highly in three of the four categories that the index measures, namely safety and rule of law; participation and human rights; and sustainable economic opportunity.
Sadly, according to the index, our region did not do well in human development.
This is an area that our regional integration agenda must address more vigorously.
To maintain the momentum, the 34th SADC summit of heads of state and government in August decided that industrialisation, and infrastructure that will leverage industrialisation and foster socio-economic integration should be prioritised in the regional integration agenda.
No country or region can develop without an industrial base supported by the required infrastructure. In this regard we are currently working with like-minded institutions to develop a strategy for industrialisation in the region.
Low intra-regional trade
Statistics reveal that intra-regional trade in Africa rates among the lowest in the world, with less than 20% of what is produced in Africa actually traded within Africa. Essentially what this means is that more than 80% of Africa’s products are traded outside Africa, mainly to Europe, China and the United States.
By comparison, 60% of Europe’s trade is within that region; in North America, 40% of trade is within.
In the SADC region, even though the SADC launched the Free Trade Area in 2008 to benefit members with tariff-free trade for all goods originating within the region, the volumes of intra-trade are still very low.
Our economies continue to be characterised by high dependence on agricultural, mineral and other natural resource-based commodity production and exports, with too little value addition, and limited forward and backward linkages to other sectors of the economy.
Despite some gains made in manufacturing over the last decade, the continent has yet to reverse the de-industrialisation that has defined it in recent decades. Between 1980 and 2010, its share of manufacturing in aggregate output declined from more than 12% to around 11% — contrary to the experience of East Asia, where it remained at more than 31%, with labour-intensive industries inducing high and sustained growth that has helped lift hundreds of millions of citizens out of poverty.
Malaysian growth story
I wish to share with you a comparative analysis of Malaysia, a country that has frequently been compared to a number of African countries in terms of initial conditions.
Malaysia’s mainstay of the economy was the primary sector, that is, natural resources (rubber and tin) and agriculture, similar to the situation of most African countries.
Yet, the Malaysian growth story can be viewed as a narrative of economic transformation from a predominantly agricultural economy to a more industrialised economy. There was a further transformation in the latter part of the 1990s, towards a knowledge-based economy.
The Malaysia story demonstrates, among other things, the vital role that strategic interventions can play in transforming a developing economy. The main lesson to be drawn from such development experiences is that successful economic transformation can be achieved by deliberate, strategic interventions aimed at transforming the structure of the economy, as a driver of change.
Similar successes have been recorded in several Asian and Latin American countries, demonstrating two important aspects of effective economic transformation. The first is that there are common characteristics in the patterns of structural change and economic development processes in general, economic transformation through industrialisation value addition, and diversification in particular.
The second and overarching feature is the central role of strategic interventions in guiding and promoting successful socioeconomic transformation; indeed, this transformation was achieved through dedicated effort and commitment by the drivers of change.
The theme of the 34th SADC summit was “SADC strategy for economic transformation: leveraging the region’s diverse resources for sustainable economic and social development through beneficiation and value addition”.
This theme presents an opportunity for unlocking our potential to the fullest, and as such, an opportunity to utilise our diverse resources in transforming our economies, for the prosperity of our region and our citizens.
Our industrialisation strategy must take into account regional and global value chains, for there is no doubt that Africa’s growing markets will for a long time be the driver of growth. The potential for value chains is huge, given that today’s production processes have become scattered across the globe, as companies seek competitive locations for their various products.
Successful development of value chains requires a good balance between trade and industrialisation. In Africa, trade liberalisation undermines the continent’s industrial capacity, as cheap products from elsewhere crowd out Africa’s manufacturing sector.
Industrial policies will have to be both inward and outward looking so that they can prioritise beneficiation through micro, small and medium-scale industries that are aligned to our abundant natural resources.
It is also important for the region’s industrialisation strategy to be tied to investments in infrastructure development — both soft and hard — including technical capacity development, skills development, and huge investments in research, science, technology, engineering and mathematics.
Peace and security
SADC is aware of the relationship between trade and industrialisation, linkages between trade and infrastructure development, peace and security, and enabling initiatives that address poverty and issues of inclusion.
There is no doubt that improved infrastructure secures a firm foothold in global value chains. Any deficit in infrastructure makes doing business very costly, chases investment and turns Africa into an uncompetitive market even for its own people, leading to licit and illicit capital outflows.
Equally important is that if there is no peace and security, the very infrastructure necessary for industrialisation and market integration may be destroyed, leading to dismal performances of the private sector, the economy and public sector in general.
The basics of industrialisation in the region are in place, including huge deposits of natural resources and political commitment to regional integration agenda.
SADC has a number of protocols and programmes that are geared towards facilitating a smooth flow of goods, services and people. These continue to boost trade among member countries of the regional group.
A tripartite arrangement between the East Africa Community, the Common Market for East and Southern Africa and SADC contributes meaningfully to the deepening of our regional integration aspirations.
Free trade area
The three regional groups have identified the refurbishment of border posts as an important initiative to improve infrastructure and increase intra-regional trade under the tripartite framework. They are spearheading one-stop border posts as a means of facilitating faster and smoother movement of goods and people, which will in turn boost trade. The Chirundu one-stop border post between Zambia and Zimbabwe, for example, has since inception in 2009 more than halved the waiting period for transport operators and facilitated the general movement of people and goods.
Other one-stop border posts under negotiation and construction include those between Malawi and Tanzania at Tunduma-Nakonde, as well as between Namibia and Angola at the Oshikango-Santa Clara entry points.
The three regional groups are also finalising negotiations to establish a free trade area to be launched in 2015, and are already implementing a tripartite infrastructure development programme, enhancing connectivity among the three.
These are important initiatives that require commitment and support from all stakeholders, public, private and civil society, and are indeed potential drivers of socioeconomic transformation. The important contribution of informal cross-border trade to alleviating poverty in the region cannot be overemphasised. In order to address the vulnerability of marginalised groups such as women in economic activities, SADC adopted an Informal Cross Border Trade Advocacy Strategy.
The strategy seeks to support women in gaining full access to productive resources for a better quality of life, and to create a mechanism for informal traders to engage with key stakeholders such as government at national level.
Dr Stergomena Tax is executive secretary of the Southern African Development Community. These are excerpts from her keynote address at the Mail & Guardian Investing in the Future Awards and Southern Africa Trust Drivers of Change awards on October 28
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