The just-ended SADC summit made commitments to regional economic integration. This means progressive efforts in harmonising regulations and progressively removing barriers to trade. Given the potential of regional economic integration to the strategic interests of South Africa, one hopes that the current political dispensation will be alert to the opportunities this presents to the country. Since taking over as president, Cyril Ramaphosa has set his main agenda as that of developing and growing the economy. The main thrust of his government is hinged on rooting out corruption, building an effective and efficient bureaucracy and championing increased domestic and international investment. If this trajectory works, South Africa is poised for economic growth with its attendant social welfare gains – addressing unemployment, increasing living standards and reducing social and economic inequities.
But this cannot be sustainable unless equal attention is given to assist our neighbours in developing their trade infrastructure, expanding trade links and opening new markets in SADC (minus SA), with its GDP of US$300-billion, with a population of 230 million – the majority of them young. In most southern African countries, as is the case with much of Africa, there is hardly any industry to speak of except primary extractive industries such as low-cost mining and agriculture. Poor planning, challenges in ease of doing business and corruption have limited investment. Most infrastructure is beyond repair after suffering years of neglect, including roads, rail and airports.
In most of our region’s countries, and depending on the route we take, SA is staring at both economic opportunity and social and political threats. Considering that South Africa is the only real industrialised country in the region, it needs no mention of whom trade will favour. Our industries can supply the goods the region consumes and our services sector can leach on the unmet demand of neighbouring economies. Even better, our medium enterprises are largely dependent on domestic markets whose demographics and level of income is relatively similar to that of the other countries in the region.
It is fair to propose that they are to benefit more from our expansion in the region. The challenge there is in accessing these markets efficiently and at low costs, for our exports to be competitive. Within SADC a conversation has started on trade facilitation which, if correctly implemented, will reduce trade barriers and promote efficiency at borders. However, this cannot compensate for the biggest challenge to trade facing the region: lack of roads, rail and airports to move goods. With many SADC countries inhibited from investing in their trade infrastructure due to both lack of means and interest, it is left to the biggest beneficiary of trade to take the lead.
South Africa has to invest aggressively in the trade transport corridors so that it can link its manufacturing and production centres with the regional markets. Accessing markets in Zimbabwe’s US$30-billion economy requires refurbishing a 500km road from Musina to Harare. A further 400km would connect South Africa directly to Lusaka – reducing time and costs for our exporting businesses and transportation companies.
A rail refurbishment would favour bulk goods and even cheaper market entry pricing. Investing in such infrastructure is not only good neighbourliness, but good foreign policy. The Chinese have realised this and this has resulted in increased trade levels with the region and Africa, albeit in favour of China. In the past decade, the Chinese have expanded investments in ports, rail and roads that has led to their goods being in easy reach of targeted markets.
In our case, if we don’t play smart and realise that this region is our lowest-hanging fruit in relation to trade, we risk being displaced and having to compete with countries further afield for markets where we are already at a geographical and political advantage. The ANC-led government and its president should start considering placing SADC at the heart of the country’s industrial project. Failure to do so, the billions we seek in investment will be just that