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SADC over-dependent on primary commodities

2022-08-18  Albertina Nakale

SADC over-dependent on primary commodities

Recent analysis shows that in terms of industrialisation and intra-trade, the Southern African Development Community’s (SADC) share of manufacturing value added to its gross domestic product (GDP) is still below 12% compared to the regional bloc’s target of 30% by 2030 and 40% by 2050. These targets were determined through SADC’s industrialisation strategy and roadmap. 

Most SADC member states are still dependent on agro-based and mining commodities to contribute to GDP. To address this skewed revenue generation, the 6th Annual SADC Industrialisation Week in the Democratic Republic of Congo, last week, was held under the theme; ‘Promoting Industrialisation Through Agro-Processing, Mineral Beneficiation and Regional Value Chains. Through this theme, SADC aims to promote inclusive and resilient economic growth to advance the implementation of the SADC Industrialisation Strategy and Roadmap 2015-2063 to help SADC economies to diversify away from dependence on primary commodities into high-value manufactured products.

However, agriculture still plays a major role in the economies of SADC member states, with agricultural products and agro-processed goods being key export commodities, both regionally and internationally.

During the SADC Council of Ministers meeting in the DRC on Saturday, which is a preamble to the SADC Summit, SADC executive secretary Elias Magosi said this implies the region will need to accelerate current efforts in terms of enhancing regional value chains covering priority sectors of agro-processing, mining, and pharmaceutical sectors. 

“As a region, we need to continue to improve our manufacturing capacity to take advantage of our abundant natural resources, which require beneficiation, as opposed to just shipping such materials in raw form, and in the process realising insignificant returns,” Magosi recommended. 

Meanwhile, in a bid to improve its own manufacturing capacity, Namibia is currently in phase two of the implementation of its growth at home strategy. This was the theme chosen by the trade and industrialisation ministry to reinforce the importance of accelerating economic growth, reducing income inequality, and increasing employment. 

Namibia’s growth at home strategy places greater emphasis on the significance of industrialisation by strengthening national value chains and creating more efficient linkages within the economy, improvements in the ease of doing business, and ongoing engagement of collaboration between government and the private sector. 

Growth at home further provides a roadmap for the execution of Namibia’s Industrial Policy in the context of Vision 2030, and the National Development Plan (NDP4). 

It focuses on three strategic intervention areas, namely supporting value addition, upgrading, and diversification for sustained growth; securing market access at home and abroad; and improving the investment climate and conditions. 

These interventions are aimed at supporting value addition and will stimulate the development of local industries by utilising the potential of local procurement measures and by generating synergies between local producers and large retailers.

 Another main focus under this strategic area will be creating conditions that will boost Namibian exports, as well as the capacity of Namibian firms to supply and export at a competitive level. 

The emphasis during phase two of the strategy shifted towards being a regional player, whereas phase one (2015-2020) focused on laying a strong foundation in sectors where Namibia already has a comparative advantage. These sectors included agro-processing (wood charcoal), fish-processing, steel manufacturing, automotive industry, chemical production, metal fabrication, taxidermy, Swakara wool, cosmetics, and jewellery and coloured gemstone industries. 

Nations such as the Kingdom of Eswatini have managed to extensively analyse high priority economic impact value chains to guide the development of the national strategy for the value chain development as a major step taken by government toward promoting agro-processing and industrialisation in those chains. 

Intra-SADC trade

Regarding intra-SADC trade, Magosi said it is encouraging, as reported by the latest African Union Regional Integration Report (2021), that there is an improvement in terms of SADC intra-trade to 23% up from 19% in 2021. 

According to Magosi, this improvement may be reflective of the impact of ongoing efforts to roll out various provisions of the SADC protocol on trade. 

This includes the implementation of simplified trading arrangements that have enabled an increase in informal cross-border trade, covering both agricultural and non-agricultural commodities. 

In order to promote intra-SADC trade, apart from improving the stock of manufactured goods, Magosi suggested the region would need to continue improving product quality. 

This, he said, can be achieved by implementing a number of annexes accompanying the SADC trade protocol, in particular, those dealing with technical barriers to trade and sanitary and phytosanitary measures. 

Further, he said there is also the need to deal with trade facilitation measures and the removal of tariff and non-tariff barriers to trade. 

Also, infrastructure development in support of regional integration remains a critical pillar toward realising SADC Vision 2050. 

“Our industry in the region, cannot perform optimally without the necessary supporting infrastructure, in particular, energy, water, roads, rail, and ICT. While significant progress has been registered towards facilitating the provision of quality integrated and interconnected regional infrastructure and networks that facilitate the movement of people, goods, services, and knowledge in the SADC region, there are still some significant gaps in terms of facilitative infrastructure, especially as it pertains to affordable energy availability to spur industrialisation,” Magosi observed.

The regionally installed electricity generation capacity can only supply less than 40% of requirements in urban areas, with most rural industries excluded. In addition, the cost of moving goods in the region is affected by both limited cargo capacity as well as inadequate road and rail networks within the SADC region.


2022-08-18  Albertina Nakale

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