Building capacity to help Africa trade better

SADC can create a prosperous environment for citizens and especially the youth, says ECA’s Songwe


SADC can create a prosperous environment for citizens and especially the youth, says ECA’s Songwe

SADC can create a prosperous environment for citizens and especially the youth, says ECA’s Songwe
Photo credit: UN

Africa cannot afford to leave its development agenda to the whims of unpredictable factors that are beyond its control, UN Economic Commission for Africa (ECA) Executive Secretary, Vera Songwe, said Saturday at the 37th Southern African Development Community (SADC) Heads of State and Government Summit in Pretoria.

Speaking on leveraging the private sector to create regional and global value chains, Ms Songwe said, “SADC is a continental leader on many fronts, however recent macro-economic challenges indicate the need for more focus on key priorities such as regional integration, infrastructure and domestic resources mobilization in order to provide a more prosperous environment for its citizens and especially the youth.”

She encouraged SADC leaders to build on their comparative advantages and move rapidly to begin implementation of the SADC Industrialization Strategy and Roadmap (2015-2063) supported by the ECA.

Ms. Songwe said with world growth prospects remaining modest at 3.5 percent for this year, and trade and investment opportunities contracting both in the developed and developing countries, Africa must continually look for homegrown and creative solutions to its problems.

Global growth is projected to rise to 2.9 percent in 2018 into 2019 as the overall outlook remains uncertain, especially as growth fundamentals remain weak and commodity prices are expected to continue being sluggish. Growth in Africa has slowed down to 3.2 percent this year; and is expected to rise only slightly to 3.8 percent in 2018 with Foreign Direct Investment (FDI) also on the decline.

“We have had sustained 6 percent growth in the past and the SADC region led the way and I believe you can do it again. The question is are you ready to confront the important structural issues needed to get you back on track?” Ms Songwe asked.

Overall growth in the region declined to 1.4% in 2016, compared to 2.3% in 2015. During this period, low revenues from commodity exports and depreciating currencies inflated fiscal deficits and public debts.

“Without exception, the entire region has in recent years suffered budget shortfalls as many countries strived to meet their commitments on social and capital spending. This is particularly true for Botswana, Swaziland, Zambia and Zimbabwe where we have seen the worsening of dwindling budget surpluses as a percentage of the GDP, while ratios of government external debt to GDP also climbed,” Ms. Songwe said.

SADC’s overall government debt has risen from 42 percent of GDP in 2014 to 46.8 percent of GDP in 2015.

“Adding on to the challenging economic terrain the extractive sector has seen huge lay-offs of employees and job losses. The latest data further show that total investment, by both public and private sectors, has slowed significantly as governments’ resource envelop shrinks and business confidence dwindles in some SADC member States,” said the ECA Chief.

She congratulated the SADC leaders for their firm commitment and the strides made towards regional integration. “SADC is also home to some of the most liberal African economies, some of which have already achieved up to 100% in the Tripartite Free Trade Area (TFTA) negotiations,“ she said.

The region is well ahead of the pack, she indicated, adding the SADC Free Trade Agreement (FTA) is fully functional with levels of ambition exceeding that of the Continental Free Trade Area (CFTA) itself in areas such as value addition, agro-processing and pharmaceuticals amongst others.

The SADC market, boasts of a population size of about 327 million and total GDP of USD 600 billion (2016). “We should learn from the NAFTA negotiations on the continent and ensure that agreements in the area of trade in services and ICT are well addressed in the CFTA negotiations, and the SADC region with South Africa must take the lead on this.” She urged.

“The goal of finalizing the CFTA discussions by 2018 as set by the African Union is doable if we commit to it. There will be challenges no doubt including with the international community but we look to South Africa in the context of the global debates and the G20 to represent the uniquely Africa view on the subject.”

“SADC’s experience illustrates that many challenges to regional integration can be overcome, and that the region is well positioned to take the leadership on the CFTA process. As ECA, we look forward to working with you on this signature issue,” said Ms. Songwe.

“But if we are to unleash the full potential of this well-endowed region to emerge as a true power bloc capable of driving Africa’s overall integration agenda, there is still much work ahead of us. SADC can do it for everyone else in the region.”

While infrastructure remains a bottle neck for growth in the region, she noted that the experience of the region in attracting and leveraging private sector financing is an opportunity to build on.

In the area of energy for instance,South Africa, Mozmbique, and Zambia and many other countries have had successful Public Private Partnerships and urged the member states to build on these experiences to accelerate infrastructure development.

“With 190 million people in the SADC region without electricity, accelerated growth and regional integration will remain constrained,” she argued, stressing that a full implementation of SADC’s infrastructure vision as captured by the Regional Infrastructure Development Master Plan (RIDMP), would go a long way to solving infrastructure bottlenecks. Further, the services sector and the blue economy were also emerging as key sectors for anchoring development in the region.

Ms. Songwe urged the region to put in place measures ‘that will attract the private sector into the broadband supply and value creation chain (operators, infrastructure service providers, communications service providers, e‐transactions suppliers and consumers) as direct inputs to economic growth.’

“Regional integration may become easier as countries achieve similar levels of broadband penetration, making regional trade, information exchange and services cheaper and more accessible and also mobility of people,” she said and noted that this would need to backed by efforts to mobilize domestic resources across the SADC region.

Robust policies that enhance domestic revenue mobilization; include diaspora remittances; private equity as well as Institutional investments, such as pension funds, life insurance and mutual funds. Furthermore, SADC countries can increase the efficiency of public spending, and boost growth and economic diversification.

Public-private-partnerships, she said, must be scaled up to reduce the dependency on external financing such as dwindling FDI. Policies put in place must also encourage intra-regional investments and the creation of platforms for the implementation of regional investments.

“In this regard, I note happily that progress is well underway to operationalize the SADC Development Fund. ECA is ready to help structure and mobilize it. This is especially important as the financing gap for development and transformation remains large. In the same vein, it is important to clamp down on Illicit Financial Flows bleeding the continent of an estimated US $80 billion per annum,” said Ms. Songwe.

In line with the AU reform agenda, she added, “We need a stronger and more self-financed AU to help accelerate our continental integration agenda. SADC can help with this.”

On the question of gender, she commended SADC for closely monitoring this agenda and scoring progress in women’s representation in parliament, cabinet, ambassadorial positions as well as the judiciary. “Progress made, particularly in the area of the judiciary is significant and important for the economic empowerment of women, particularly as the region looks to agro-processing and pharmaceuticals as key areas of focus,” she said.

“Overcoming the remaining bottlenecks, some of which I have attempted to identify in my remarks, will go a long way in consolidating the gains already achieved, and to unleash the full potential of the SADC region as a firm economic cooperation platform more than capable of making its contribution in driving Africa’s overall integration and economic agenda,” said the ECA Chief.

“ECA offers to deepen its collaboration with SADC and stands ready to provide technical and advisory support to help the region tackle the challenges face by the region,” she said.

“Clearly, our ability to push forward the noble objectives of promoting industrialization and development of regional value-chains for economic transformation in the SADC region and Africa as a whole is not an insurmountable task. It is achievable if undertaken with much more enhanced private sector involvement, whose capacity we must fully leverage.”

Quoting the late South African President Nelson, Mandela, Ms. Songwe, who started by consoling the victims of Sierra Leone’s deadly floods, said no single person can liberate a country.

“You can only liberate a country if you act as a collective. The same is true for the continent. We can only liberate the Union if we act as a collective and SADC can and must lead.

Ms Songwe was accompanied by Mzwanele Mfunwa from the ECA’s Southern African Office.


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