By Blessing V. Bonga
THE major stumbling block hampering the Southern African Development Community (SADC) region’s quest to industrialise includes, among many other factors, the lack of affordable, long-term financing, and limited fiscal space to address gaps in economic enablers, coupled with long term decline in Official Development Assistance flows (ODAs), Zimbabwe’s Treasury chief has said.
Addressing delegates in Harare on Monday at the first ever SADC Investment Conference running within the 7th Annual SADC Industrialisation Week which runs until the 2nd of August, Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube expressed the critical need for industrialisation and innovation as key ingredients to help unleash dynamic and competitive economic forces within the region for employment generation.
“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 ODA flows.
“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 and primary products to processed high value goods and services.
“Industrialisation and innovation help to unleash dynamic and competitive economic forces that generate employment and income opportunities within the SADC region as a whole,” he said.
Professor Ncube added that the difficulties that the developing countries, especially the SADC region, are currently facing are centred on mounting public debt thereby restraining their ability to invest in core industries and infrastructure.
Currently, majority of SADC countries remain heavily dependent on primary industries and continue to seriously rely on South Africa as their major trading partner, as that country is among the emerging market and developing economies. This therefore renders majority of SADC countries lagging far behind in terms of industrialisation, with the exception of South Africa.
According to the International Monetary Fund (IMF) Regional Economic Outlook for April 2024, SADC regional economic growth averaged 2,2% in 2023.
As a region, SADC accounts for an average 28% of Africa’s Gross Domestic Product (GDP), 26% of Africa’s total population, while the regional bloc attracted 30% of total Foreign Direct Investment inflows into Africa over the last decade.
The Finance chief also said that within the SADC region, most balance sheets have been severely weakened and the average public debt in the region stands at around 59,2% of GDP, with some countries at high risk of debt distress, spending more on servicing external public debt than investing in programmes and projects that transform livelihoods.
A continued rise in geopolitical tensions and climate change impacts have also affected all member States, resulting in reduced productivity, high levels of unemployment, and high poverty levels, with estimates suggesting that 132 million people in the SADC region were acutely food insecure two years ago.
The Investment Conference served as a prelude to the 44th Ordinary SADC Summit of Heads of State and Government which shall be running under the theme: “Promoting Innovation to unlock opportunities for sustained economic growth and development towards an Industrialised SADC.” The summit will see President Emmerson Dambudzo Mnangagwa of Zimbabwe assuming Chairmanship of the regional bloc, taking over from Angola’s President, Joao Lourenco.