Around $30 billion of processed food is imported into Africa. Agro processing can create jobs in
the region
Sifelani Tsiko
SADC countries are set to benefit from a US$18 million industrialisation facility which was secured from the 11th European Development Fund to help countries carry out detailed value chain mapping on products which have a regional impact.
The fund also sought to support the region’s drive towards market integration in priority sectors.
Lack of funds has largely hampered the region’s industrialisation drive with economists and other players making a number of proposals for financing the industrialisation agenda widely seen as the next phase of Africa’s development and an imperative on the path towards sustained wealth creation.
Zimbabwe organised a meeting recently to popularise the Sadc Industrialisation Strategy and Roadmap at national level.
The meeting drew participants from government, the private sector, academia, research institutions and the civil society.
Industry and Commerce Deputy Minister Chiratidzo Mabuwa urged the private sector to take a leading role in the identification of key areas which could be leveraged to secure the country’s share of the industrialisation fund.
“A total of US$18 million has been secured from the 11th European Development Fund to assist in a detailed value chain mapping on products which have a regional impact and market integration in priority sectors – pushing the agenda of inseparability and mutual supportiveness of the three pillars,” she said.
“In this regard, efforts are underway to prioritise so that three value chains will be considered per member state.”
Sadc drew up the Industrialisation Strategy and Roadmap which seeks to speed up industrialisation by strengthening the comparative and competitive advantages of the economies of the region.
The strategy which covers the period 2015-2063 is anchored on three pillars — industrialisation, competitiveness and regional industrialisation.
The whole industrialisation agenda aims to help Sadc member states achieve high levels of economic growth, competitiveness, incomes and employment.
To access the funds, Sadc countries have set up committees made up of government and private sector players to identify priority areas for funding.
At regional level, three areas have been prioritised, namely — agro-processing, mining and downstream processing.
Consultants have been on a whirl-wind tour of the Sadc region to gather information on each member state’s priority value chains.
Inadequate funding for the industrialisation drive still continues to be a nightmare for the region.
Despite the challenge, multilateral financial institutions have raised hopes for the region and expressed their commitment to support Sadc’s industrialisation agenda.
“I am informed that funding from the World Bank is also available for detailed value chain mapping in the mining sector,” said Deputy Minister Mabuwa.
“It is still up to us as member states to identify areas where there are regional linkages for consideration in Sadc.”
Apart from funds secured from the 11th European Development Fund, other multilateral financing bodies such as the African Development Bank (AfDB) have also come in a big way.
Last year, the pan-African bank agreed to support the regional industrialisation agenda aimed at unlocking more opportunities and foster economic integration.
The AfDB’s “High 5” initiatives was found to be in line with the Sadc regional priorities as outlined in the Revised Regional Indicative Strategic Development Plan (RISDP) 2015-2020.
The ‘High 5s’ are priorities intended to accelerate the implementation of the bank’s 10-year strategy whose goals are to light up and power Africa, feed Africa, industrialise Africa, integrate Africa and improve the quality of life for the African people.
Economists in Africa, all agree that successful industrialisation requires financial commitment domestically, regionally and globally.
To ensure availability of long-term financing for industrial development, they say regional countries should facilitate the integration of financial markets, including the integration of the capital market to support mobilisation of funds for industrialisation.
They also say it is critical for Sadc to establish and strengthen regional industrial development banks to mobilise funds to support investment in long-term industrial development projects.
The regional industrial development fund to be established should be administered by the regional bank which could be capitalised through Sadc member states contributions as well as contributions from development partners.
Other economists say it is also necessary to explore the possibilities of establishing regional industrial bonds as a means of raising funds for industrialisation.
Some even go further and propose the setting up of a regional credit guarantee scheme and other innovative financial products to enhance SME access to credit lending by commercial banks and pressing individual governments to allocate more resources for industrialisation programmes and projects.
Another economist, in an article titled: “Use Africa’s $60bn remittances to power industrialisation,” which was published in the June 2015 New African magazine, urged African governments to create a conducive environment to harness diaspora remittances for industrialisation.
“Remittances from Africans in the diaspora are now estimated at around $60bn annually. While these help millions of Africans in their day-to-day needs, a proper harnessing of this resource could well see the continent on its next development stage — industrialisation,” wrote the analyst.
“Successful industrialisation requires ambitious entrepreneurs that are willing to take up the challenge. It is therefore important not only to have favourable regulatory and business environments, but also a stable political landscape.
“Africa’s diaspora communities sit in a very promising position, having played such a crucial role in the continent’s development, thus far.”
The analyst in the article says diaspora finance has been one of the main drivers of Africa’s surge over the past 20 years helping sustain not only families but, within many countries, trade and industry as well.
The writer quotes a report by Send Money Africa, an initiative of the World Bank-partnered African Institute for Remittances (AIR) Project that estimated that Africa received a total of $60bn in remittances in 2014. “The remittances to Africa exceed official development aid (ODA) by around 50 percent, while for most African countries the amount sent home by migrants surpasses foreign direct investment,” the writer pointed out.
The African Union now recognises the growing importance of remittances as a source of external financing, and has drawn special attention to their potential in driving Africa’s industrialisation and helping to fill its persistent infrastructure gap.
Sadc and most other countries still face numerous problems that have affected the growth of trade for them and the rest of the world.
Some of the major challenges cited by African economists include obsolete infrastructure, fragmented economic space, low production capacities, limited investment financing and high transaction costs. Lack of firm political and economic commitment has also hampered trade and industrialisation take-off.
In addition, they also say poor intra-African trade has weakened the continent’s industrialisation drive.
Improved intra-Africa trade, they say, can free the continent from its reliance on international aid and improve its resilience to macroeconomic and other external shocks.
“Industrialisation can benefit the expansion of intra-African trade by supporting a more diversified export economy,” wrote the economic analyst.
“In particular, the development of rural and food processing industries could help lift significant numbers from poverty. But, to facilitate trade in goods and services, it is essential to reduce distribution costs by improving and expanding road, rail and other communication infrastructure.” — Zimpapers Syndication