Effective Economic Policies: Africa’s Challenge

Published on 19th August 2014

The SADC region recorded an average real GDP growth of 4.9  per  cent  in  2013,  which  was  0.1  percentage  point  above  the  2012 average  of  4.8  per  cent.  The inflation rate in 2013 stood at an average of 7.1 per cent.   The Region also recorded national savings of 17.7 per cent of GDP in 2013, implying that foreign savings finance significant proportion of the Investment in the region. With  regard  to  investment,  the  region recorded  27.7  per  cent  of  GDP  in  2013  which  was  a  0.4  percent improvement  over  2012  level.  Global  competitiveness  Index  2013-14 indicate  that  SADC  region  is  making  progress  in  improving  the  business environment and competitiveness in general.

It is worrisome to note that the impressive growth story of Africa in the last decade  has  not  translated  into  economic  diversification,  commensurate jobs  or  faster  social  development.  Our  economies  continue  to  be characterized  by  high  dependence  on  agricultural,  mineral  and  other natural  resource-based  commodity  production  and  exports,  with  too  little value addition and limited forward and backward linkages to other sectors of  the  economy.  The key challenge for SADC countries is how to design and implement effective policies to promote industrialization and economic transformation.  The  objective  of  enhancing  productive  and  industrial competitiveness  is  to  achieve  the  development  of  a  competitive  and diversified  regional  industrial  base  that  optimally  utilizes  local  resources through comprehensive value addition. The challenge of industrialization of the  SADC  region  is  to  transform  from    a  small  undiversified  and  low technology manufacturing sector to   a more diversified and medium to high technology levels of manufacturing for domestic consumption, consumption in the region through intra-SADC trade and export to global markets.  In the context of SADC, this can be achieved through collective focus on building the  industrial  capacity  necessary  to  produce  higher  value  goods  for  trade internally, within the SADC region and globally.  

Despite some gains in manufacturing over the last decade, the continent is yet to reverse the de-industrialization that has defined its structural change in recent decades. In  1980–2010,  its  share  of  manufacturing  in  aggregate output declined from more than 12 per cent to around 11 per cent, in stark contract  with  the  experience  of  East  Asia  where  it remained  at  more  than 31  per  cent  with  labour  intensive  industries  inducing  high  and  sustained growth that helped lift hundreds of millions of citizens out of poverty.  The results  of  statistical  analysis  show  that  although  during  the  period  1995–2005  African  countries  caught  up  with  East  Asian  countries  in  terms  of economic  growth  rate,  the  gap  between  Africa and  East  Asia  has  been widening.

The regional  value  chain  approach  to industrialization  was adopted  in  the SADC  Industrial  Development  Policy  Framework  and  work  programme  in 2012. Key intervention areas for the policy include: development of sector specific  strategies  for  regional  value  chain  development;  promoting industrial  upgrading  through  innovation,  technology  transfer  and  research and  development;  improving  standards,  technical  regulations  and  quality infrastructure;  developing  and  upgrading  skills  for  industrialization; developing  a  mechanism  for  industrial  financing;  improving  provision  of infrastructure  for  industrial  development  and  promotion  of  local  cross border  and  foreign  direct  investment. 

The identified  key  priorities  in  the  revised  Regional  Indicative  Strategic Development Plan (RISDP), therefore present an opportunity for unlocking our  potentials  to the  fullest,  and  more  so  the  Theme for this  year,  namely “SADC  Strategy  for  Economic  Transformation:  Leveraging  the Region’s Diverse Resources for Sustainable Economic and Social Development through Beneficiation and Value Addition”, presents  us with an opportunity to utilize our diverse resources for the prosperity of our region  and  our  citizens. 

An old age African proverb says: “A leader takes people where they want to go.  A great leader takes people where they do not necessarily want to go, but ought to go.” Being our great leaders, this is possible, and this is what will make SADC a giant among giants. 

By H.E. Dr Stergomena Lawrence Tax 
The SADC Executive Secretary.

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