{"id":94280,"date":"2017-06-08T02:47:40","date_gmt":"2017-06-08T00:47:40","guid":{"rendered":"http:\/\/www.myza.co.za\/southern-africa-has-an-integration-plan-but-its-short-of-sector-specifics-the-conversation\/"},"modified":"2017-06-08T02:47:40","modified_gmt":"2017-06-08T00:47:40","slug":"southern-africa-has-an-integration-plan-but-its-short-of-sector-specifics-the-conversation","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/southern-africa-has-an-integration-plan-but-its-short-of-sector-specifics-the-conversation\/","title":{"rendered":"Southern Africa has an integration plan: but it’s short of sector specifics | The Conversation"},"content":{"rendered":"

Southern Africa has an integration plan: but it’s short of sector specifics<\/a>: <\/p>\n

The southern African region can benefit from beneficiating produce like sugar.<\/span> REUTERS\/Mujahid Safodien<\/span><\/span><\/figcaption><\/figure>\n

The Southern African Development Community (SADC) has placed industrialisation at the centre of its regional integrated development plan and a roadmap has been drawn up to guide the plan. But implementation has been poor and not a lot of headway has been made to integrate the economies of the region. <\/p>\n

Recent studies on value chains in the region highlight high transport costs and continued use of non-tariff barriers in some countries as some of the main reasons for poor progress.<\/p>\n

These studies suggest that the region needs a coherent sector-specific approach to support the development of regional value chains. That should be supported by efforts to reduce trade barriers. In addition, the impact on industrialisation that large multinationals have had should be considered.<\/p>\n

The idea of a roadmap was a wise move but more is needed to give it practical focus. We assessed the extent to which it takes into account the findings of various studies and whether it incorporates plans to overcome the identified challenges. Although the strategy has identified key sectors to lead the process, it fails to set out what should happen in specific sectors to support regional linkages. Its also blind to the role of large multinationals which are distorting regional markets.<\/p>\n

Beneficiation is the key<\/h2>\n

The industrialisation strategy stresses the urgent need for the region to make use of its abundant and diverse resources \u2013 particularly in agriculture and mining. It\u2019s key aim is to foster industrialisation through beneficiation \u2013 a process of transforming primary raw materials into a more value added finished product \u2013 and value addition.<\/p>\n

This approach is informed by two big challenges related to trade. First, is that intra-regional trade is low. In 2014 intra-SADC trade was 19% of total trade, compared with 70% in Asia-Pacific Economic Cooperation (APEC) and 64% in the European Union. <\/p>\n

Compounding this is the fact that trade between countries is dominated by low value products from the agricultural and mineral sectors. Most have been through none, or very little processing. This means that a lot of value added products, which can be produced in the region, mineral fuel, are imported. <\/p>\n

There are plenty of opportunities to improve the situation. For example, South Africa and Zambia are large net exporters of sugar. Yet, both \u2013 as well as others in the region \u2013 import most confectionery products, a substantial category of processed food. Products like biscuits, sweets and beverages could add enormous value if they could be produced within the region.<\/p>\n

But only a regional approach to promoting value addition will work. It must focus on building productive capacity of industries, developing infrastructure and promoting technology. <\/p>\n

Supply isn\u2019t keeping up with demand<\/h2>\n

The agro processing sector is given a prime spot in SADC\u2019s industrialisation strategy. This makes sense because food processing has characterised the early industrialisation stages of many emerging economies. <\/p>\n

It also makes sense because rapid urbanisation is driving increased demand for processed food. Africa\u2019s urban population nearly doubled from 1995 to 2015 and the trend is expected to continue. This has driven up demand for processed foods and confectionery products. But supply isn\u2019t meeting demand. This can be seen from the fact that the region has trade deficits in processed food in sectors like poultry and sugar confectionery products. <\/p>\n

For the strategy to work, constraints such as development financing, transport and poor border logistics need to be addressed. <\/p>\n

Reducing transport costs and border delays have been identified as one of the biggest impediments to developing regional value chains. Transport costs are so high that it\u2019s cheaper to import animal feed and sugar from South America than from the region. It\u2019s been estimated that lower transport costs improve the cost competitiveness of regional producers by 10%. <\/p>\n

Lacking detail<\/h2>\n

The region has done well on the big picture (macroeconomic, infrastructure and investment) policies. But there\u2019s been little attention to identifying specific value chains within the agro processing and mineral beneficiation sectors. <\/p>\n

The strategy entrenches this problem. Although it points to the need for national industrial policy coordination, it doesn\u2019t address some of the challenges facing specific regional value chains. Non-tariff barriers are an obvious one. Some examples include Botswana banning chicken imports and its requirement that at least 30% of local maize and soya must be sourced locally first. Measures such as these have hampered a regional poultry value chain developing. <\/p>\n

When it comes to confectionery, recent research shows how the sugar-to-confectionery value chain has been affected by Zambia\u2019s ban on sugar imports from neighbouring countries which has led to high prices of sugar in the domestic market.<\/p>\n

Removing barriers would also lead to better outcomes for the region because some countries produce very little of some produce, while being abundant in others. For example, Botswana doesn\u2019t produce enough maize and soya, while Zambia produces a lot.<\/p>\n

Policy coherence and coordination at the sector level is needed to remove these barriers. <\/p>\n

Greater attention also needs to be given to the role of large firms, particularity multinationals. For example, the sugar industry is dominated by Illovo and Tongaat-Hulett. Because of their dominance they can unilaterally set prices. This has led to higher domestic prices compared with international prices.<\/p>\n

The domination by large firms can be addressed by ensuring competition between players in the region. This would require co-ordination between competition authorities to address any potential cross border cartels.<\/p>\n

In addition, industrial policies would need to be structured in a way that supports the development of regional value chains for mutual benefit of different countries.<\/p>\n

It\u2019s clear that SADC\u2019s industrial development strategy has gaps. Among these are concrete action plans for specific sectors and the need for collective action by different member countries. Given that it\u2019s relatively more industrialised, South Africa has a key role to play. But it must just guard against acting like a big brother. <\/p>\n

Tatenda Zengeni and Maria Nkhonjera who are researchers at the Centre for Competition, Regulation and Economic Development contributed to this article.<\/em><\/p>\n

\"The <\/p>\n

CCRED receives funding from various organisations including government departments for research on regional value chains. <\/span><\/em><\/p>\n

Source:<\/strong> The Conversation \u2013 Articles (AFRICA)<\/a><\/small>
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Southern Africa has an integration plan: but it’s short of sector specifics: The southern African region can benefit from beneficiating produce like sugar. REUTERS\/Mujahid Safodien The Southern African Development Community (SADC) has placed industrialisation at the centre of its regional integrated development plan and a roadmap has been drawn up to guide the plan. But […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[4584],"tags":[428,8890,9119,3821,2474,7578,3759,7407,20356],"class_list":{"0":"post-94280","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-africa-news-2","7":"tag-africa","8":"tag-conversation","9":"tag-integration","10":"tag-its","11":"tag-plan","12":"tag-sector","13":"tag-short","14":"tag-southern","15":"tag-specifics","16":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/94280","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=94280"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/94280\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=94280"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=94280"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=94280"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}