Southern African Development Community countries are putting shoulder to the wheel to strengthen the comparative and competitive advantages of the region’s economies to stimulate intra-SADC trade.
Despite persistent efforts to boost trade within the region through the SADC Free Trade Area, the value of intra-SADC trade has remained very low, at only below 17% of total SADC trade.
The region is endowed with abundant and diverse natural resources, however, its productive sectors do not practice value addition, according to the regional bloc.
Exports from the region are dominated by unprocessed or minimally processed products mainly from the agricultural and mineral sectors, thus providing very low value returns.
“This figure is very low and the declaration of intention from the Free Trade Area was not enough. We have to have the commodities which we will trade,” said SADC Acting Director of Industrial Development and Trade, Lomkhosi Mkhonta-Gama.
Mkhonta-Gama, who was speaking ahead of the 37th Ordinary Summit of SADC, underscored the need to develop regional value chains and integrate them into global value chains and increase export diversification.
According to Mkhonta-Gama, the SADC industrialisation plan seeks to address just that.
Launched in 2015, the SADC Industrialisation Strategy and Roadmap 2015 – 2063 aims to accelerate the momentum towards strengthening the comparative and competitive advantages of economies in the region. It has a long-term perspective and is aligned to national, regional, continental and international plans.
The strategy recognises that for trade liberalisation to contribute to sustainable and equitable development, and thus to poverty reduction, it must be complemented by the requisite capacities to produce, and to trade effectively and efficiently.
The primary orientation of the strategy leans towards the importance of technological and economic transformation of the SADC region through industrialisation, modernisation, skills development, science and technology, financial strengthening and deeper regional integration.
The strategy is anchored on three pillars namely industrialisation as the champion of economic and technological transformation; competitiveness as an active process to move from comparative advantage to competitive advantage and regional integration and geography as the context for industrial development and economic prosperity.
Mkhonta-Gama said through the strategy, the region is prioritising improving value chains as a way of creating attractive and competitive investment around agro-processing, minerals beneficiation and service delivery.
“We are trying to develop regional value chains, which will span over several countries per value chain. We are trying to encourage member states that instead of individually producing finished commodities, to rather expand it to other member states, which is also trade in its sense (sic).”
She appealed to the business sector to work with government to create new opportunities for cross border manufacturing.
SADC Director for Finance, Investment and Customs, Sadwick Mtonakutha, said intra-SADC trade will also be given an injection by the continental Free Trade Area (FTA).
The FTA between the SADC, Common Market for Eastern and Southern Africa (COMESA) and the East Africa countries would open up a market of US $1.3 trillion in terms of the Gross Domestic Product, while also improving movement of goods and people.
Mtonakutha said the FTA will facilitate increased export diversification, greater competitiveness and an inclusive growth and movement of goods and services across the region.
“We are also trying to develop the SADC customs union, whereby the region has one external tariff, where we would agree on common external tariffs and a common external trade policy in a bid to drive increased trade and economic development in the region.”
Other initiatives to boost trade include working towards the conclusion of the SADC/European Union economic partnership agreement.