Policy Spotlight: Costed Action Plan for Industrialisation in SADC
The SADC heads of state and government recently held the Extra-ordinary Summit. The Summit took place in Swaziland’s Lozitha Royal Palace from 6 to 18 March 2017. The summit approved the Costed Action Plan for the SADC Industrialisation Strategy and Roadmap 2015-2063[45]. By approving the action plan, the summit has underscored the importance of high-impact investment, effective monitoring and reporting of regional development, and the role of the private sector in the implementation of the SADC Regional Industrialisation Strategy and Roadmap[46]. The plan’s approval provides an apt opportunity to evaluate the financial implications, potential benefit to the region, and challenges to be countered during implementation.The action plan is an elaboration on the roadmap’s long-term perspectives, and seeks to further articulate and align the roadmap to national, regional, and continental priorities and development plans. The roadmap includes a number of initiatives which encourage development of regional productive capacity, such as reduced non-tariff barriers to trade, and establishing an economic base to underpin deeper regional integration. Overall, the roadmap emphasises the importance of technological and economic transformation of the SADC region through industrialisation, modernisation, skills development, science and technology, financial strengthening and deepening regional integration[47]. As such, the Costed Action Plan is necessary to bring the roadmap from strategic phase to implementation value.
For its first 15 years, the action plan looks at a budget of around USD 112.0 million, focusing on activities to be executed at regional level. Activities to benefit from this budget include industrialisation and market integration, and infrastructure development[48]. This is expected to improve regional infrastructure, in order to create an environment of opportunities and improved living standards for the population. While there are no objections to these goals, a clear outline on how the budget will be developed and spent in the first 15 years is required. The region has set itself a target to contribute at least 54.0% of its budget through some innovative fundraising mechanism in order to reduce reliance on foreign donors.
How the USD 112.0 million budget will be raised, and from where, are questions still to be addressed. The main domestic sources of finance identified so far includes tax revenues, capital markets, SADC development funds, remittances, institutional savings – including pension funds, and intra-regional foreign direct investment[49]. However, exploring these potential sources will require deep financial sector reforms, innovative mechanisms and effective frameworks to maximise and sustain the high level of resources necessary for industrialisation. Externally, sources of finance to complement domestic resources include donor aid, development finance, and foreign direct investment. These sources of funding and finance are largely contingent upon further policy and political interventions by member states. Moreover – with the exception of South Africa, which has a well-developed domestic capital market – this means the implementation of the action plan is heavily reliant on external finance, given the limited domestic resource mobilisation capacity of governments in the region. Hence the currently approved version of the Costed Action Plan is really more of “a plan to make a plan about implementation of the Roadmap” rather than a concrete action plan.
The “plan to make a plan” scenario is concerning, with the region facing criticism for slow policy implementation and adjustment in times of crisis. Additionally, some SADC member states are struggling to implement domestic policies to establish a conducive environment for external investment. Therefore, it is unlikely that the action plan will reach its financial potential, create an attractive regional investment environment, or be a significant success. However, its intentions can be commended as a display of political willingness to implement regional policies.
The SADC Summit requested member states to determine their national coordination costs, which needed to be incorporated in the Costed Action Plan[50]. The SADC Secretariat was therefore directed to support member states who may need assistance in determining national indicative public coordination costs for the Costed Action Plan. For this, member states need to be encouraged to prioritise the process, as delays can result from member states delaying the adjustment of their policies and fiscal operations to suit the plan. The process of incorporating the SADC Regional Industrialisation Strategy and Roadmap into national development plans, and articulating the roadmap through national budgets and medium-term expenditure frameworks needs to take priority.
By Trevor Mbedzi
[45] SADC 2017. Extra Ordinary Summit of the Heads of State and Government of SADC held at Lozitha, Royal Palace, in the Kingdom of Swaziland, on the Southern African Development Community Website, viewed on 24 March 2017, from http://www.sadc.int/.
[46] SADC 2017. Extra Ordinary Summit of the Heads of State and Government of SADC held at Lozitha, Royal Palace, in the Kingdom of Swaziland, ibid
[47] SADC 2015. SADC Industrialization Strategy and Roadmap: 2015-2063, Southern African Development Community: Gaborone. Available At: http://www.sadc.int/ [Last Accessed: 11 April 2017].
[48] TSM 2017. SADC Nears Industrialisation, on The Sunday Mail Website, viewed on 18 May 2017, from https://www.sundaymail.co.zw/.
[49] SADC 2015. SADC Industrialization Strategy and Roadmap: 2015-2063, ibid.
[50] SADC 2017. Post-Council Media Briefing by His Royal Highness Prince Hlangusmephi, Southern African Development Community: Gaborone, Available At: http://www.sadc.int/ [Last Accessed: 19 May 2017].
The June 2017 issue focuses on slow economic growth in major economies and its impact on the SADC region – What are the drivers and key role players in the SADC growth story? what is their foreign policy approach regional versus national? how do they influence African government and the regional economy? what is their developmental impact? what is the outlook given the currently slow economy growth? how will this impact African economies and the region? The PESA Regional Integration Monitor, June 2017 examines these questions.
