Chronicle Editor
Joseph Ngwawi Correspondent
The Southern African Development Community (SADC) is in the process of finalising a draft Regional Industrialisation Strategy and Roadmap that provides the framework for major economic and technological transformations at the national and regional levels within the context of deepening regional integration.The strategy and roadmap, whose drafting was spearheaded by a team of regional and national consultants appointed by the SADC Secretariat, aims to accelerate the growing momentum towards strengthening the comparative and competitive advantages of the economies of the region.
An interim report by the consultants was presented to the meetings of the Ministerial Task Force on Regional Economic Integration and the SADC Council of Ministers held in Harare, Zimbabwe in March.
“The development of the industrialisation strategy commenced in December 2014, following completion of the preparatory phase which included resource mobilisation, preparations of terms of references and assembling experts,” SADC Executive Secretary Dr Stergomena Lawrence Tax said.
The interim report identifies industrialisation, competitiveness and regional integration as three main pillars on which the strategy should be anchored.
The strategy will present concrete and innovative short-, medium- and long-term actions for the attainment of the objectives of the three pillars and will be aligned to the African Union’s Agenda 2063.
While there is no one size-fits-all prescription, the interim report proposes a wide range of industrial policy options that are available to the SADC region.
One of the options is the adoption of Special Economic Zones (SEZs).
“These are an attractive option where the logistics are favourable — proximity to markets, ports, modern infrastructure — and where funding is available,” the report said.
“They can form the basis for clustering, including value-chain creation, so that firms can exploit the benefits of external spin-offs such as being located close to input suppliers, repair shops and financial institutions.”
Industrial parks act as a magnet for new entrants and a base for clusters, while also attracting foreign direct investment.
However, the disadvantage is that firms cannot be forced to locate within SEZs and there will always be risks that incentives, such as tax breaks used to attract investors, will prove costly relative to the benefits obtained.
“Moreover, few SADC economies have the fiscal space to spend lavishly, either on investment in SEZs or capital grants,” the report said.
The draft strategy also calls for the promotion of domestic, regional and global value chains as one of the interventions that should be pursued by SADC in its efforts to industrialise. The SADC region could benefit immensely from the experience of the Asian economies in the area of regional and global value chains.
Participation in value chains played a major role in the industrialisation of Asian economies and is, therefore, seen as a promising industrialisation path for the southern African region.
Starting with Japan in the late 20th century, Asia has been one of the regions that have exploited global value chains (GVCs) successfully. GVCs can be credited for China’s rapid industrialisation while also contributing substantially to the Asian region’s rapid growth in incomes, output and employment.
The main Asian exporters rank highly in GVC participation because a large proportion of their exports are imported inputs (foreign value-added) and a similarly large number of their exports are intermediate goods that are used in exports for third countries. Asian exports are, therefore, integrated in GVCs both upstream and downstream.
Promotion of value chains will enable SADC Member States to specialise in those productive processes and activities where they have competitive advantages.
Participation in regional and global value chains also promotes intra-regional trade and opens up access to technology and brand names while also accelerating export diversification and growth.
The report also advocates for a powerful case for SADC governments to invest in the collection of information and knowledge, and to make it readily available to actual and potential investors. — SADC Today.
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