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Sadc regional integration will benefit Zimbabwe

12 Jan 2022 at 23:13hrs | Views
THE Southern African Development Community's (Sadc) regional indicative strategic development plan (RISDP) 2020–30 of October 2020 is a framework for the implementation of Sadc's regional integration agenda for the next 10 years.

The RISDP seeks to promote regional value chains and increase value-addition in select priority sectors. In the long-term, the objective is to increase the region's manufacturing capacity, competitiveness, and capacity to trade and hence, achieve sustainable economic transformation.

It is anchored on three pillars these are : (1) industrial development and market integration, (2) infrastructural development in support of regional integration, and (3) social and human capital development.

The RISDP articulates the importance of infrastructural development as an enabler for increased trade, regional integration and co-operation and ultimately industrial transformation which is driven by new technologies.

Regional economic integration aims to create larger, more attractive markets, link landlocked countries to international markets and support intra-African trade. It will help create sustained growth - creating jobs and transitioning to inclusive growth within Africa whose expanding middle class is estimated at 355 million and whose youth population is projected to be the largest in the world by 2040.

The RISDP 2020-30 pillar II on infrastructural development in support of regional integration aims to promote an interconnected, integrated and quality seamless infrastructure and networks, including cross-border infrastructure which will be pivotal in facilitating the flawless movement of people, goods, services and knowledge.

A key element of the corridor transport and logistics infrastructural programme is the development of one-stop border posts as a means to reduce transaction costs for crossing a border.

There are a number of  border infrastructural development projects which have been implemented or are ongoing within the southern Africa region, some of these being: the development and/or upgrade of one-stop border posts and transit highways which include the upgrade of Beitbridge Border Post between Zimbabwe and South Africa, the upgrading of the Beitbridge-Harare-Chirundu transit highway, establishment of one-stop border posts at Chirundu Border Post between Zambia and Zimbabwe, Nakonde-Tunduma border between Tanzania and Zambia and the Kazungula border between Botswana and Zambia where a road/rail bridge was commissioned in May 2021.

Regional integration is key in order to facilitate intra-regional and intra-continental trade and infrastructural development plays a key part is accelerating it.

Added to this must be the removal of non-tariff barriers (NTBs) to make it easier and less costly for countries to trade with each other.

Intra-regional trade is considered as a key accelerator for internally driven industrialisation of regional economies with spill-over effects into infrastructure and technology upgrades which in turn can lead to more investment, increased competitiveness and increased global trade. It is estimated, for example, that if Africa were to increase its global trade by a mere 1% this would generate close to US$70 billion additional income per annum for the continent, three times the development assistance that Africa receives from the whole world.

There are two relevant regional economic communities (RECs) in southern Africa and these are the Southern African Development Community (Sadc) and Common Market for Eastern and Southern Africa (Comesa).

The Sadc consists of 16 members 13 of which are in the free trade area (Sadc FTA). According to the 2020 Africa Trade report, in 2019 Sadc FTA trade was 23% of its total world trade and 81% of its Africa trade.  Intra-Sadc FTA exports amounted to US$29,8 billion. In terms of imports and exports South Africa was its biggest trading partner accounting for 45% of total trade, Namibia (10%) at second followed by Botswana and Mozambique (9%), Zimbabwe (8%) and Zambia (6%).

South Africa was the largest intra-Sadc FTA exporter accounting for 66% of exports followed by Zimbabwe at 9%. On intra-Sadc FTA imports South Africa was the largest importer accounting for 23%, Botswana 15%, Mozambique 14% Namibia 13% Zambia and Zimbabwe were at 9%.

From the above it is clear that South Africa remains the dominant economy within the region and the continent. Easy access to the South African markets, therefore, makes Zimbabwe border infrastructural development a key enabler for the rest of Africa.

We then have Comesa which was established in 1994 and includes 22 member States stretching from Libya to Zimbabwe with a total population of 600 million and a GDP of US$769 billion and its members make up 50% of the African Continental Free Trade Area (AfCFTA). Its objectives are to promote intra-regional trade and regional integration and it is the largest regional economic organisation in Africa.

Since 2000 intra-Comesa trade has grown at an average of 7% per annum and 98% of its non-tariff barriers have been resolved. Intra-Comesa exports grew from US$1,5 billion in 2000 to US$10,9 billion in 2019 declining slightly in 2020 to US$9,7 billion due to COVID-19 pandemic. However, export trade is considered very low mainly because of export similarities among member States and there are efforts to drive industrialisation and manufacturing to differentiate and diversify intra-trade.

In order to accelerate infrastructural development within the region Comesa has established US$325 million regional infrastructure finance facility project running from July 2020 to September 2025. In 2021 Comesa launched a Euro 6,8 million project to upgrade cross-border infrastructure on border points between Zambia, Malawi, Zimbabwe and Tanzania.

The targeted border is Chirundu in order to upgrade infrastructure and also improve border management capabilities through new systems in an effort to reduce costs.

Increased regional trade will no doubt have spill-over positive effects on intra-Africa trade particularly on the AfCFTA which consists of 55 African countries with a combined population of more than 1,2 billion and a combined gross domestic product of more than US$2,5 trillion with a potential to lift 30 million people out of extreme poverty and 68 million people from moderate poverty. AfCFTA seeks to accelerate market integration and create a massive market for African business and trigger infrastructural development and technology transfers at regional level.

This is simply because Africa contributes a mere 3% to global trade and has GDP, but has 16,7% of global population. Intra-Africa trade (IAT) is estimated at a mere (US$147 billion) 15% of total trade (Europe 60%, Asia 57%, USA 40%).

For Africa to develop, it must trade more with itself and globally, it must produce more and it must build trade - supporting infrastructure.

There should be no doubt that critical to accelerated intra-Africa and global trade is infrastructural development, especially at borders in order to create a single market for goods, services, facilitated by easy movement of persons and goods in order to deepen the economic integration of the African continent which currently has the second highest trading costs in the world due to non-tariff barriers.

Regional integration and infrastructural development are, therefore, a precursor to the achievement of AfCFTA objectives and this will boost incomes, employment, investment and industrialisation and reduce poverty on the African continent. It will also boost Africa's share of global trade.

Due to its geographical positioning and its importance as a transit route for the North-South corridor, Zimbabwe's borders and infrastructural development projects are critical for the success of the regional integration agenda and subsequently AfCFTA.

As a country we have to do more to invest in the upgrade of our infrastructure as this will not only benefit our economy but the region and ultimately contributing to increased intra-Africa trade.

Vince Musewe is an economist. He writes here in his personal capacity.

Source - NewsDay Zimbabwe
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