Regardless of barriers to trade between African countries, Department of Trade and Industry (DTI) African integration and industrial development chief director Nigel Gwynne-Evans believes there is currently a sense of far greater optimism among heads of State that these issues can be overcome.
Speaking at a presentation hosted by the Johannesburg Chamber of Commerce and Industry and Tutwa Consulting Group, on Thursday, he noted that this would lead to greater will to tackle the many issues across the African continent, including border post delays, regional infrastructure and intercontinental communication and trade.
Gwynne-Evans further explained that while trade agreements, such as the African Continental Free Trade Area, are to the good of promoting and facilitating intra-African trade, as well as contributing to the industrial development of the continent, there still seems to be a sense that there has not been enough progress on the industrialisation front.
Progress has been held back by factors such as weak strategic and bureaucratic capacity within member States, lack of investment in skills and infrastructure and the many obstacles that confront business in the region.
Not least are the barriers that exist at border posts with the region being among the worst in the world for inter-regional logistics.
This has not been helped by the past capacity weaknesses in the Southern African Development Community (SADC) Secretariat and lack of political will to resolve some of the major challenges such as border post issues.
“There is a lot of red tape across the SADC-region and the wheels can grind very slowly. All of this needs to be opened up and modernised as per the ambitions of the Africa Union’s Agenda 2063,” he explained.
Agenda 2063 is a strategic framework for the socioeconomic transformation of the African continent over the next 50 years. It builds on, and seeks to accelerate, the implementation of past and existing continental initiatives for growth and sustainable development.
In terms of regional integration, Gwynne-Evans indicated that many of the key constraints would need to be addressed to ensure that the regional integration plans open up the industrialisation ambitions that are anticipated.
The expectation is that by opening up the regional market, it would allow companies to specialise and achieve the production volumes that would allow them to create the anticipated economies of scale that come with integration.
This, in turn, will allow them to, over time, become competitive not just at a regional level but be able to feed into international value-chains.
“This is not without its sensitivities with an often-expressed concern by SADC members that with South Africa’s hegemonic position in the SADC region, by opening up borders, South Africa’s manufacturing strength is going to continue to erode the productive platforms of many of our neighbours,” he said.
Gwynne-Evans noted that this had led to the implementation of non-tariff barriers in Zimbabwe, Botswana and Zambia, which are trying to protect their own markets.
From an industrial policy perspective, a fresh approach to industrial policy is required which involves a far closer alignment with the needs of industry.
“Getting to know the industry in a very real sense is really looking at the concept of an active industrial policy. There is a need for government to be strongly aligned to industry needs, which requires far closer communication between government and the private sector in order to understand the nuances of each industry and develop appropriate strategies,” Gwynne-Evans explained.
The perspective is supported by Business Unity South Africa trade policy manager Mbini Kutta, who highlighted the importance of private sector stakeholders engaging government on trade policy development.
“Trade is a huge contributor to economic development and requires a balanced and coherent approach. This is not possible without business’ input on threats to the industrial development and proposed solutions by the private sector,” she said at the event.
The private sector, Kutta added, can get involved by providing input for South African’s trade negotiation positions, as well as through technical dialogue which could, in turn, lead to new market access opportunities for South African business and the economy.
While many fear competition, business should also focus on the offensive side of trade negotiations, Kutta stated, noting that the social dialogue inspires greater transparency and accountability with all stakeholders.