Unproductive manufacturing sector hinders SADC intra-trade

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Timo Shihepo

Windhoek - The Southern African Development Community (SADC) countries are failing to trade among themselves due to an ineffective manufacturing industry.

As a result, the share of manufacturing to Gross Domestic Product (GDP) for the SADC region has not been able to industrialise, declining from 17.6% in 1990 to 13% in 2013.

Despite all the preaching about the SADC-Free Trade Area, intra-SADC trade continues to be low, recorded only at 17% of the total SADC trade. This is attributed to the fact that the region has been struggling with productive capacity.  This, in turn, has seen the region parting ways with its raw minerals, and buying them back as finished products for a high fee from international markets.

Exports from the region remain dominated by unprocessed or minimally processed products, mainly from the agricultural and mineral sectors, resulting in very low value returns.

These statistics were highlighted during the 3rd annual SADC Industrialisation Week (SIW) held in Windhoek, Namibia, this week ahead of the SADC heads of state and government summit in a fortnight.

This year’s SIW theme was “Promoting Infrastructure and Youth Empowerment for Sustainable Development.”

SADC Secretariat’s Director of Industrial Development and Trade, Tapiwa Samanga admitted that trade within member states is very low and that there is a need to strategise so that the region can start producing what it can sell to each other.  

“Regional integration is the ultimate goal that regional countries cannot walk away from, deliberate steps needs to be taken to improve every year and the push for regional industrialisation needs to continue,” he said.

Executive secretary of the United Nations Economic Commission for Africa (ECA), Vera Songwe, has also frequently urged SADC countries to increase trade among the member states as this would not just accelerate regional integration but the Continental Free Trade Area, too.

SADC member states acknowledge that industrial development is central to diversification of their economies; development of productive capacity; employment, income and wealth creation; resulting in poverty reduction and sustainable growth of economies.

Member states also acknowledge that industrialisation is key to deepening integration in SADC. A major challenge for the region however, has been to move off an economic growth path built on consumption and export of primary commodities.

To address this challenge, the 2014SADC heads of state and government summit decided to develop a strategy and roadmap for industrialisation of the region.

The SADC Industrialisation Strategy and Roadmap (2015 -2063) was subsequently developed and approved in Harare, Zimbabwe, in April 2015. In order to give impetus to the industrialisation process, summit also approved the Revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020, which prioritises industrial development and market integration, places industrialisation at the centre of the regional integration agenda. The summit directed the Secretariat to develop a Costed Action Plan for implementing the industrialisation strategy, which was developed and approved in March 2017.

The strategy seeks to economically and technologically transform the SADC through beneficiation and value addition to the region’s diverse resources. It seeks to address the development challenges of the region by progressively moving from a factor-driven development phase to investment and efficiency-driven phase, and ultimately to a high a regional economy driven by knowledge, innovation and business sophistication.

The strategy is anchored on three pillars: industrialisation, competitiveness and regional integration. It covers the years 2015 to 2063, which is a deliberate policy decision to align it with the African Union Agenda 2063. The Phase I of the period covers the remaining period of the RISDP (2015-2020) and constitutes a period of active frontloading of the Industrial

Development and market integration component of the RISDP and related infrastructure and services support to industrialisation.

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