The
38th Summit of Heads of State and Government of the Southern African
Development Community (SADC) has been scheduled address the
industrialisation strategy
of the region.
38th Summit of Heads of State and Government of the Southern African
Development Community (SADC) has been scheduled address the
industrialisation strategy
of the region.
The
forum is taking place in Namibia on 17-18 August 2018 and also to
discuss status of implementation of the SADC Industrialisation Strategy
and Roadmap, as
well as the current political situation and its effect on investment,
is expected to be addressed in Namibia.
forum is taking place in Namibia on 17-18 August 2018 and also to
discuss status of implementation of the SADC Industrialisation Strategy
and Roadmap, as
well as the current political situation and its effect on investment,
is expected to be addressed in Namibia.
Wildu
du Plessis, the head of Africa at global law firm Baker McKenzie in
Johannesburg, said there is a common theme of political uncertainty
having a detrimental
effect on investment amongst all members of the SADC region, with the
exception of the Botswana economy, which appears to be behaving
differently.
du Plessis, the head of Africa at global law firm Baker McKenzie in
Johannesburg, said there is a common theme of political uncertainty
having a detrimental
effect on investment amongst all members of the SADC region, with the
exception of the Botswana economy, which appears to be behaving
differently.
“Sometimes
this political uncertainty in Africa has been successfully addressed,
for example Kenya appears to be back on track after uncertainty
surrounded its
elections last year.
this political uncertainty in Africa has been successfully addressed,
for example Kenya appears to be back on track after uncertainty
surrounded its
elections last year.
However,
the political issues that surfaced around the recent elections in
Zimbabwe has put the country back in a cycle of uncertainty.
the political issues that surfaced around the recent elections in
Zimbabwe has put the country back in a cycle of uncertainty.
“The
same applies to South Africa, where there was positive sentiment around
the appointment of Cyril Ramaphosa as the country’s new president, but
now reality
has set in and investors are realising that Ramaphosa has to deliver on
a very tall order,” he says.
same applies to South Africa, where there was positive sentiment around
the appointment of Cyril Ramaphosa as the country’s new president, but
now reality
has set in and investors are realising that Ramaphosa has to deliver on
a very tall order,” he says.
Du
Plessis notes that with regards to the SADC Industrialisation Strategy
and Roadmap, which will be discussed at the Summit, there appears to be a
big gap between
the planning and implementation stages.
Plessis notes that with regards to the SADC Industrialisation Strategy
and Roadmap, which will be discussed at the Summit, there appears to be a
big gap between
the planning and implementation stages.
He
explains that to date, there has not been a big change in the levels of
industrialisation in the SADC region. For example, an important element
for improving
industrialisation would be to bring manufacturing back to the region,
which hasn’t happened yet,” he notes.
explains that to date, there has not been a big change in the levels of
industrialisation in the SADC region. For example, an important element
for improving
industrialisation would be to bring manufacturing back to the region,
which hasn’t happened yet,” he notes.
Positive
example of industrialisation strategy “One hopes that the Summit will
focus on the ways to move from strategy to implementation,” he says.
example of industrialisation strategy “One hopes that the Summit will
focus on the ways to move from strategy to implementation,” he says.
A
good example of an industrialization strategy that is being implemented
effectively is the Zimbabwe Government’s partnership with commercial
farmers to increase
agricultural production in the country.
good example of an industrialization strategy that is being implemented
effectively is the Zimbabwe Government’s partnership with commercial
farmers to increase
agricultural production in the country.
“This looks like it is working and that might produce a solution that could be implemented in other sectors as well,” he notes.
Kieran
Whyte, head of energy, mining and infrastructure at Baker McKenzie in
Johannesburg, explains further that there has not been enough clarity
around SADC’s
Industrialisation Strategy.
Whyte, head of energy, mining and infrastructure at Baker McKenzie in
Johannesburg, explains further that there has not been enough clarity
around SADC’s
Industrialisation Strategy.
“I am not sure everyone is up to speed with what is proposed in the plan,” he says.
“Industrialisation
will be a priority agenda item at the upcoming Summit, considering the
urgent need to foster economic growth and increase employment in the
region. Industrial growth has to take place having regard to
advancements in technology, the movement to digitisation, the
decarbonisation agenda and automation. It is also important for
countries to ensure they have the required workforce that is skilled
in the right areas, as opposed to skilled people in operations that are
unlikely to last,” he says.
will be a priority agenda item at the upcoming Summit, considering the
urgent need to foster economic growth and increase employment in the
region. Industrial growth has to take place having regard to
advancements in technology, the movement to digitisation, the
decarbonisation agenda and automation. It is also important for
countries to ensure they have the required workforce that is skilled
in the right areas, as opposed to skilled people in operations that are
unlikely to last,” he says.
Whyte
says that an example of the process involved in implementing an
industrialisation strategy is the role the Department of Trade and
Industry in South Africa
is playing a role in fostering industrialisation, especially with
regards to projects that increase youth employment and the creation of
special economic zones and industrial parks.
says that an example of the process involved in implementing an
industrialisation strategy is the role the Department of Trade and
Industry in South Africa
is playing a role in fostering industrialisation, especially with
regards to projects that increase youth employment and the creation of
special economic zones and industrial parks.
The
Black Industrialists Scheme and the commitment to localisation, which
involves the uptake of locally manufactured goods and services, are all
part of the
process to increase industrialisation in the country.
Black Industrialists Scheme and the commitment to localisation, which
involves the uptake of locally manufactured goods and services, are all
part of the
process to increase industrialisation in the country.
The
theme of this year’s SADC Summit is “Promoting Infrastructure
Development and Youth Empowerment for Sustainable Development”.
At the recent BRICS Summit in Johannesburg the importance of
industrialisation and the need for Africa to address its infrastructure
deficit, including power, was also discussed.
theme of this year’s SADC Summit is “Promoting Infrastructure
Development and Youth Empowerment for Sustainable Development”.
At the recent BRICS Summit in Johannesburg the importance of
industrialisation and the need for Africa to address its infrastructure
deficit, including power, was also discussed.
Whyte
says that developing infrastructure is vital for the improvement of
economic growth, employment opportunities and the socio-economic
conditions in the
region.
says that developing infrastructure is vital for the improvement of
economic growth, employment opportunities and the socio-economic
conditions in the
region.
An
example of a proposed power infrastructure project in Namibia, the SADC
Summit hosts, is the mooted Kudu Gas Project. The Namibian Minister of
Energy recently
referred to this project when he spoke at the African Energy Forum in
Mauritius.
example of a proposed power infrastructure project in Namibia, the SADC
Summit hosts, is the mooted Kudu Gas Project. The Namibian Minister of
Energy recently
referred to this project when he spoke at the African Energy Forum in
Mauritius.
“This
project is offshore, and they have to bring the gas onshore and find
power or industrial offtakers not only in Namibia but in neighbouring
countries as
well. As such, industrialisation will work only if there is an increase
in intra-regional trade and dependency,” he says.
project is offshore, and they have to bring the gas onshore and find
power or industrial offtakers not only in Namibia but in neighbouring
countries as
well. As such, industrialisation will work only if there is an increase
in intra-regional trade and dependency,” he says.
Whyte notes another key challenge of industrialisation is raising finance on acceptable terms.
SADC
noted when it launched the Industrialisation Strategy and Roadmap that
one of the biggest challenges to the growth of industrialisation in the
region was
inadequate funding, and that they needed to consider innovative ways of
financing industrialisation.
noted when it launched the Industrialisation Strategy and Roadmap that
one of the biggest challenges to the growth of industrialisation in the
region was
inadequate funding, and that they needed to consider innovative ways of
financing industrialisation.
Whyte
notes that investments in infrastructure in particular are often big
ticket, long term commitments with fixed locations, fixed revenue
streams and structures,
which will require substantial financial buy-in from all parties and
stakeholders.
notes that investments in infrastructure in particular are often big
ticket, long term commitments with fixed locations, fixed revenue
streams and structures,
which will require substantial financial buy-in from all parties and
stakeholders.
“Because
of market volatility, coupled with low credit ratings and a lack of
exposure to private investors, emerging markets, and Africa in
particular, require
innovative financing solutions to bridge the gap between public and
private investment. This is where the New Development Bank and other
Development Finance Institutions (DFIs) play a pivotal role.
of market volatility, coupled with low credit ratings and a lack of
exposure to private investors, emerging markets, and Africa in
particular, require
innovative financing solutions to bridge the gap between public and
private investment. This is where the New Development Bank and other
Development Finance Institutions (DFIs) play a pivotal role.
“Apart
from perceived or actual investment barriers, infrastructure projects
have to identify and mitigate multiple risks notably completion risks,
regulatory
or policy uncertainty, performance risks and revenue risks to ensure
that the project not only repays its debts, but also provides an
adequate return for investors. The overall ‘bankability’ and
multi-faceted and inter-dependency of the components of the primary
and enabling infrastructure of a project must not be underestimated
from perceived or actual investment barriers, infrastructure projects
have to identify and mitigate multiple risks notably completion risks,
regulatory
or policy uncertainty, performance risks and revenue risks to ensure
that the project not only repays its debts, but also provides an
adequate return for investors. The overall ‘bankability’ and
multi-faceted and inter-dependency of the components of the primary
and enabling infrastructure of a project must not be underestimated
“The
key role that DFIs have to play in making a project bankable include
being able to provide a broad range of financing products, the ability
to act as a
loss absorber on both greenfield as well as brownfield projects, having
developmental mandate which goes beyond pure funding, active
engagement in creating enabling environments to address regulatory and
institutional challenges, and risk mitigation.
key role that DFIs have to play in making a project bankable include
being able to provide a broad range of financing products, the ability
to act as a
loss absorber on both greenfield as well as brownfield projects, having
developmental mandate which goes beyond pure funding, active
engagement in creating enabling environments to address regulatory and
institutional challenges, and risk mitigation.
Whyte
adds that Industrialisation in the SADC has to happen but it’s going to
be challenging, especially when developing nations like China have the
ability
to mass produce products at lower production cost.
adds that Industrialisation in the SADC has to happen but it’s going to
be challenging, especially when developing nations like China have the
ability
to mass produce products at lower production cost.
“SADC
members will most likely also use the Summit’s platform to discuss the
need for cross border and regional co-operation and collaboration, as
well as the
need for regulatory certainty and certain, independent, transparent and
impartial regulation.
members will most likely also use the Summit’s platform to discuss the
need for cross border and regional co-operation and collaboration, as
well as the
need for regulatory certainty and certain, independent, transparent and
impartial regulation.
“Also
under discussion will be the need to pursue a liberalised market to
foster intra-Africa trade based on the recently signed African
Continental Free Trade
Area Agreement, the implementation of liberalised foreign exchange
markets and convertibility of currencies, the status of bi-lateral
investment treaties and security around property rights in the region.”
under discussion will be the need to pursue a liberalised market to
foster intra-Africa trade based on the recently signed African
Continental Free Trade
Area Agreement, the implementation of liberalised foreign exchange
markets and convertibility of currencies, the status of bi-lateral
investment treaties and security around property rights in the region.”
