Effective economic policies: Africa’s challenge


Effective economic policies: Africa’s challenge

Effective economic policies: Africa’s challenge
SADC Executive Secretary Stergomena Lawrence Tax speaks during the 34th Summit of the Southern African Development Community (SADC) Heads of States and Government in Victoria Falls, north Zimbabwe, Aug. 17, 2014. Photo credit: Xinhua | Wang Bo

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. 

Dr Stergomena Lawrence Tax is the SADC Executive Secretary. She made this presentation at the 34th SADC summit held recently in Zimbabwe.