Steady progress has been realized by southern Africa to develop and expand its manufacturing sector.
July 28, 2021
4 min read
SADC has huge potential to boost its manufacturing sector
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However, there is still more opportunities for the region to fully harness its manufacturing capacity and ensure that economies of Member States are diversified.
This is according to the 40 Years of SADC: Enhancing Regional Cooperation and Integration publication that was launched at the Extraordinary Summit of the Southern African Development Community (SADC) late June in Maputo, Mozambique.
The publication notes that in the past few years there has been a significant increase in terms of the share of manufacturing to total Gross Domestic Product (GDP).
GDP generally refers to the monetary value of all finished goods and services made within a country or region during a specific period.
“For example, the manufacturing sector share of GDP in the region increased from an average of 10.3 percent in 2013 to 11.9 percent in 2018, with most Member States recording growth of above five percent,” reads part of the publication.
However, there is still more work that needs to done to expand the manufacturing sector in the region as the structure of the industry, particularly agriculture and mining, which accounts for an average of over 25 percent of GDP remains largely undiversified.
“This shows that there is vast untapped manufacturing capacity if there is intensified commitment towards value addition and beneficiation in the region,” the publication said.
In his foreword to the 40 Years of SADC: Enhancing Regional Cooperation and Integration publication, SADC chairperson, President Felipe Nyusi of Mozambique concurs, adding that the region should boost its manufacturing sector through enhanced value addition and beneficiation of its natural resources as aspired in the SADC Industrialization Strategy and Roadmap (2015-2063).
The SADC Industrialization Strategy and Roadmap, which is anchored on three pillars - Enhancing Infrastructure, Strengthening Value Chains and Corridor Development - aims to accelerate the momentum towards strengthening the comparative and competitive advantages of economies of southern African countries.
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“The frontloading of industrialization in the economic integration agenda, through the SADC Industrialization Strategy and Roadmap which was adopted in 2015 in Harare, Zimbabwe is yet another example of the region’s determination to integrate its economies to claim its rightful place within the global economy,” President Nyusi said at the launch of the publication.
“Although endowed with some of the richest reserves of minerals in the world and other natural resources, the region has until recently, ironically been a net importer of processed goods because the bulk of our resources have been exported in raw form.”
In this regard, he said improving the region’s manufacturing capacity as well as value addition and beneficiation through industrialization is one of the ways that SADC can dislodge the region’s label as an exporter of unprocessed goods, as well as integrate its economies for sustainable development.
Nyusi said it is for this reason that the region adopted the SADC Industrialization Strategy and Roadmap in 2015 to ensure that southern Africa trades more with itself and ensures that resources that are intended to develop the region are not shipped in their raw form to improve the economies of other countries in Europe, Asia and the United States.
President Nyusi said value addition and beneficiation of the natural resources would ensure that the region extracts maximum value from its natural resources, thus ensuring that the “region has a greater portion of the socio-economic benefits that accrue from the resources.”
An increase in the manufacturing sector’s share of the region’s GDP has ripple effects to the economy including an increase in production, employment and foreign currency generation from export of value-added products.
For example, most Member States are estimated to be earning a lot of incomes through the export of raw and unprocessed products such as tobacco, cotton, gold and diamonds.
However, these earnings could be doubled if the products are sold in their processed form.
In fact, research shows that some of the raw or semi-processed products from the region are later sold back to some countries that exported them as finished goods, at a much higher price.
In this regard, to move towards boosting manufacturing capacity, the region needs to come up with vibrate and innovative funding facilities that support the regional manufacturing sector to acquire state of the art machinery and equipment for production.
Ensuring access and availability of reliable energy supplies as well as a strong human resources base is also critical for SADC to expand its manufacturing industry.
The 40 Years of SADC: Enhancing Regional Cooperation and Integration publication, which presents some of the achievements and milestones achieved by SADC since its formation in 1980 and its transformation from the Southern African Development Coordination Conference (SADCC) to SADC in 1992, was published by the SADC Secretariat in partnership with the Southern African Research and Documentation Centre (SARDC).
The objective of the publication is to show how far SADC has progressed as a region, with a focus on how regional integration has benefitted citizens, thus promoting greater awareness and participation by the people of the region and their institutions in the process of regional integration.