SADC industrialists should strengthen value chains

The Southern African Development Community (SADC) member states during the Industrial Week were implored to prioritise value addition and leverage the competitive advantages they hold in order to grow their respective economies as they seek to attain the SADC Vision 2050.

Professor Mthuli Ncube, Minister of Finance, Economic Development and Investment Promotion, speaking on the opening day of the SADC Industrialisation Week, emphasised the need for the region to utilise competitive advantages in order to grow the economy of the region.

“Aligning to the SADC Vision 2050, which envisages the economic development of the region through sustainable use of natural resources and progressive industrialisation of the region, SADC should focus on the development of regional value chains under AFCFTA,” he said.

SADC identified industrial development and market integration, infrastructure development in support of regional integration and social and human capital development as they are key to the attainment of SADC vision 2050, where all stakeholders have a role to play, in particular, the private sector which is instrumental in both the development of infrastructure and the industrialisation process.

SADC member states, are experiencing high levels of unemployment ranging between 25 percent and 80 percent and high poverty levels, with estimates suggesting that 132 million people in the SADC region were acutely food insecure in 2022.

Industrialist, Memory Nyahwo, believes the SADC region must prioritise value chain development to address its severe unemployment and food insecurity issues.

“Relying on primary industries and South Africa as a major trading partner has left many countries vulnerable and under-industrialised.

“Through investing in local processing and manufacturing, SADC can capture more value from its resources, create jobs and enhance food security. This strategic shift is essential for reducing poverty and building economic resilience. Value chains not only offer diversification but also stimulate local economies, making it a crucial move for sustainable development in the region,” she said.

Additionally, the majority of SADC countries are still dependent on primary industries and rely heavily on South Africa as the major trading partner, which is among the emerging market and developing economies. Hence, excluding South Africa, the majority of SADC countries are yet to be significantly industrialised.

“The industrialisation initiative further offers an unlimited range of investment opportunities through value chain development, mineral beneficiation and downstream processing. In the mining sector, the region contributes about 55 percent of the world diamond production, while in the platinum group of metals, the region contributes about 72 percent of global output.

“In addition, the region has a wide range of minerals that support various industries, from the manufacture of catalytic convertors to computer chips. Hence, with industrialisation and value addition, the region can set the pace on production and global price developments,” Mthuli said.

The major challenges facing the region to industrialise include, the lack of affordable long-term financing, macroeconomic imbalances and limited fiscal space to address gaps in economic enablers, coupled with a long-term decline in Official Development Assistance (ODA) flows.

According to economist, Dr Prosper Chitambara, in order to overcome fiscal constraints and limited access to affordable financing, SADC must focus on value chain development.

“This approach can generate new revenue streams and reduce dependency on imports, enhancing fiscal space for governments. Investing in local industries attracts private investment and improves creditworthiness, facilitating access to better financing terms.

“Through prioritising value chains, SADC countries can address financial barriers, stimulate economic growth and support infrastructure development, thus creating a more dynamic and resilient economic environment,” he said.

In this regard, attracting FDI and intra SADC investment will enhance the productive capacities of the region, promote macroeconomic convergence, integration of financial markets, as well as build capacity to participate in continental and global value chains.

This will ensure the region transitions from exports of unprocessed natural resources primary products to processed high value goods and services.

Former Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter president, Dr Maka Mushosho, believes value chain development is vital for reducing economic vulnerability and enhancing food security in SADC.

“The region’s dependency on primary industries and raw material exports exposes it to global price fluctuations and limits industrial growth. By investing in local agro-processing and manufacturing, SADC can improve food storage, distribution, and processing, directly addressing food insecurity.

“This shift not only diversifies economic activities but also creates jobs and reduces poverty, paving the way for a more stable and prosperous economic future,” he added.-ebusinessweekly