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Ivan Zhakata, Herald Correspondent
Industrialisation and innovation should help to unleash dynamic and competitive economic forces that generate employment and income opportunities in SADC, Minister of Finance, Economic Development and Investment Promotion Professor Mthuli Ncube said yesterday.
At the investment conference being held during the 7th SADC Industrialisation Week, Prof Ncube said attracting investment was one of the core objectives of SADC and was a powerful vehicle for developing infrastructure and enhancing participation of economies in value chains.
He said, they were a key in empowering the youths and women as well as alleviating poverty.
Prof Ncube said SADC member states had acknowledged the importance of creating favourable investment climate to add value to natural resource endowments as well as diversify economies in pursuit of regional industrialisation.
“The SADC region is endowed with strategic natural resources, from oil, gas, and a variety of minerals, gold, diamond, copper among others, to fertile arable lands that sustain agricultural production, inland waterways which enable hydropower generation, as well as unique flora and fauna and astonishing marine resources that sustain the development of the tourism industry,” Minister Ncube said.
“Notably, these are some of the sectors with guaranteed return on investment for investors. SADC as a region, account for an average 28 percent of Africa’s GDP, 26 percent of Africa’s total population and attracted 30 percent of total foreign direct investment inflows into Africa over the last decade.
“The SADC region is among the eight regional economic communities working towards integration of the continent. The SADC regional economic growth averaged 2,2 percent in 2023 according to the IMF Regional Economic Outlook of April 2024.”
Minister Ncube said most balance sheets in SADC had been severely weakened and the average public debt in the region was around 59,2 percent of GDP, with some countries at high risk of debt distress, spending more on servicing external public debt than investing in transformative programmes and projects.
“In addition, rising geopolitical tensions and climate change impacts have affected all member states, resulting in reduced productivity, high levels of unemployment ranging between 25 percent and 80 percent and high poverty levels, with estimates suggesting that 132 million people in the SADC region were acutely food insecure in 2022.
“Furthermore, the majority of SADC countries are still dependant on primary industries and rely heavily on South Africa as the major trading partner.
“Hence, excluding South Africa, the majority of SADC countries are yet to be significantly industrialised.
“The major challenges facing the region to industrialise include, the lack of affordable long-term financing, macroeconomic imbalances and limited fiscal space to address gaps in economic enablers, coupled with a long-term decline in Official Development Assistance (ODA) flows.”
Minister Ncube said attracting foreign direct investment and intra-SADC investment would enhance the productive capacities of the region, promote macroeconomic convergence, integration of financial markets as well as build the capacity to participate in continental and global value chains.
This would ensure the region transitioned from exports of unprocessed natural resources primary products to processed high-value goods and services.
“On a positive note, over the years, member states have managed to align policies and regulations with the regional frameworks for improving the business environment in line with the World Bank doing business indicators,” Minister Ncube said.
“Achievements have been registered, in particular, in reducing the time and cost of starting a business, by simplifying procedures and accelerating processing of applications. Furthermore, several countries have set up electronic single-window service systems, enabling investors to identify and apply for approvals as per their business requirements.
“To attract investment in specific sectors and increase exports, countries in the SADC region have developed special economic zones, backed by physical infrastructure and the necessary tax.
“The primary orientation of the SADC Industrialisation Strategy places importance on technological and economic transformation of the SADC region through industrialisation, modernisation, skills development, science and technology, financial strengthening and deeper regional integration.”
He said the key priority sectors for an inclusive and mutually compatible growth of the region had been identified as agro-processing, minerals beneficiation and downstream processing and enhanced participation in value chains at the national, regional and global levels.
“Consequently, aligning to the SADC Vision 2050, which envisages the economic development of the region through sustainable use of natural resources and progressive industrialisation of the region anchored on the development of regional value chains identified in key sectors and these sectors are also key for the SADC region to participate in regional value chains under AfCFTA,” Minister Ncube said.
“In this regard, Industrial Development and Market Integration, Infrastructure Development in Support of Regional Integration, and Social and Human Capital Development are, therefore, key to the attainment of SADC Vision 2050, where all stakeholders have a role to play, in particular, the private sector which is instrumental in both the development of infrastructure and the industrialisation process.”
Online Reporter