"Industrialisation and SADC Regional Development and Integration: the Role of Parliaments"

Honourable Speakers, Baleka Mbete
Vice President of SADC Parliamentary
Forum Representatives of SADC Parliaments,
Secretary of the Parliament of South Africa, Mr Gengezi Mgidlana.
Honorable delegates,
Ladies and Gentlemen

I am pleased to welcome you to the SADC-PF.

This event provides an opportunity for SADC Parliamentary Representatives to interact on the issue of interaction and industrialisation.

The Revised Regional Indicative Strategic Development Plan 2015-2020 and the SADC Industrialisation Strategy and Roadmap 2016-2063, adopted at the Extraordinary Meeting of the SADC Summit of Heads of State and Government in Harare, Zimbabwe, in April, emphasizes industrialisation as the key priority for the region.

The SADC Industrialisation Strategy focuses on value-added industrialisation in the context of the current economic and policy conditions prevailing in SADC countries. The SADC region aims to move up the value-chain from producing and exporting basic manufactured and semi-finished goods, to producing final consumer and industrial goods.

A successful implementation of the SADC Industrialisation Strategy and Roadmap 2016 –2063 is expected to yield the following:

• Increased regional growth rate of real GDP to a minimum of 7 percent a year.
• Doubled share of manufacturing value added (MVA) in GDP to 30 percent by 2030 and to 40 percent by 2050, including the share of industry-related service.
• Increased share of medium-and-high-technology production in total MVA from less than 15 percent at present, to 30 percent by 2030 and 50 percent by 2050.
• Increased manufactured exports to at least 50 percent of total exports by 2030.
• Increased global market share of exports of intermediate products to reach the East Asian market levels of around 60 percent of total manufactured exports.
• Increased share of industrial employment to 40 percent of total employment by 2030.

One of the problems with resource-based economies has been the difficulties of expanding into manufacturing industry. Of course, having natural resources to sell abroad is hugely beneficial to a country, but it is all too easy to rely on one sector to the detriment of others. It's all too easy for a resource benefit to lock out manufacturing and to become a resource curse.

It is now well known how to avoid falling into the trap of the resource curse, but often governments are not able to do what economists and others tell them to do. It is not always possible to lower the exchange rate or to set up a stabilisation fund.

Yet there are some things that we can and should do.

One is beneficiation and another is localisation. The two processes overlap. The two processes are complicated and complex. South Africa has recently introduced policies on both. The aim of both is to promote development at home and the SADC region.

Manufacturing is the normal route to development. None of the OECD countries became high-income countries without developing a substantial manufacturing base that in turn provided for full or nearly full employment.

The 2009 UN Industrial Development report explains it like this:

“This potential for explosive growth is distinctive to manufacturing. As manufacturing activity expands, instead of running up against shortages of land or resources that inevitably constrain the growth of agriculture or the extractive industries, it benefits from economies of scale: unit costs of production fall.”

In the 1980s firms in the developed world began to relocate manufacturing to the developing world to take advantage of cheaper wage and production costs. It was in this period that China became the “low-wage workshop” of the world. China, experienced explosive industrial growth, while in many middle-income countries manufacturing stagnated and Africa has remained marginalized. Until now.

It is now our turn in SADC. Let me give you two examples.

The first example is titanium. South Africa is the second largest supplier of the mineral ore that can produce titanium metal. However, we add little value to the mineral before export. The Council for Scientific and Industrial Research (CSIR) has developed a novel process in which titanium metal can be produced from our abundant mineral resource.

These new capabilities can position South Africa as a world leader in the cost competitive production of high-grade titanium metal powder. Titanium is a sought-after metal especially in the aerospace industry where aircraft and satellites need to be lighter in weight to consume less fuel.

The second is diamonds. Botswana produces the world's most valuable diamonds. Or rather De Beers produces the diamonds in a fair partnership with Botswana. The diamonds are sent to London for sale and then on to other cities for cutting and polishing. It’s been like that for many years. Until 2011 when Botswana introduced a policy of localisation and set about establishing its own cutting and polishing industry.

Now the diamond cutting industry is by far Botswana's largest manufacturing sector. Botswana uses skilled labour together with new, capital-intensive cutting and processing techniques. It has moved up the value chain through the use of science and technology.

The SADC Industrialisation Strategy requires all member states to play a new role. South Africa is committed to the industrialisation of the region. In this regard, South Africa has adopted policies to further contribute to the region’s efforts. In particular, the National Development Plan (Vision 2030) and the Industrial Policy Action Plan are such policies for South Africa.

The National Development Plan 2030 is an overarching plan for the country and sets out a broad outline of the country’s vision 2030, from the elimination of unemployment, poverty and reducing inequality.

The Industrial Policy Action Plan (IPAP) is the country’s industrialisation plan. While IPAP is a national strategy, the importance of the region in South Africa’s industrialisation and vice versa cannot be understated.

South Africa is committed to the growth of manufacturing industry in the region.

The SADC Industrialisation Strategy requires the free movement of SADC labour. There is the unratified SADC protocol on the movement of people - one of 30 legal instruments we have signed over the last 20 years. The SADC Protocol on Facilitation of the Movement of Persons of 2005 seeks to fulfil the objectives of the SADC Treaty, which require SADC to develop policies aimed at the progressive elimination of obstacles to the free movement of capital and labour, goods and services and of the people of the region generally amongst Member States. It will facilitate visa-free entry, residence and establishment by individuals or families in territories of member states. The exact meanings of residence, permits and establishment are provided within the Protocol.

South Africa further appreciates the call for a regional Parliament. We call for a regional consensus in this regard. I sincerely hope that in this sitting of the SADC PF that this matter will be brought to fruition.

In talking about industrialisation I'm reminded of this story told about Julius Nyerere.

In 1998, a year before his death, Mwalimu Julius Nyerere met with top-level staff at the World Bank in Washington.

"Why have you failed?" the World Bank experts asked him.

Nyerere answered: "The British Empire left us a country with 85 per cent illiterates, two engineers and 12 doctors. When I left office, we had 9 per cent illiterates and thousands of engineers and doctors. I left office 13 years ago. Then our income per capita was twice what it is today; now we have one-third less children in our schools and public health and social services are in ruins. During these 13 years, Tanzania has done everything that the World Bank and the International Monetary Fund have demanded."

And Nyerere passed the question back to the World Bank experts: "Why have you failed?"

Nyerere challenged the structural adjustment programmes that the World Bank and the International Monetary Fund, the two international bodies designed to prevent developing countries from sinking into debt, imposed on them. He saw correctly the damage that these bodies inflicted on poor countries by limiting their investment in education and health and manufacturing and beneficiation in the name of controlling inflation. He challenged the IMF policies designed to help the rich world's private banks at the expense of the developing world's struggling economies by removing barriers to flows of trade and capital.

We now have a much greater understanding of why the Bank and the IMF failed.

Look at what the Greeks told the World Bank and the IMF yesterday.

The objectives that have been agreed as SADC priorities have important implications for SADC parliamentarians.

Firstly as a precursor to the formulation of the norm into SADC legislative body, parliamentarians need to establish strong links between the committees in order to begin shaping a policy agenda that will support integrated coherent implementation of our agenda of integration and industrialization.
Second, Members of parliament should focus their oversight more keenly on the executive action that is directed at advancing the SADC integration and development agenda.
Third the ambitions set out in these polices require well informed evidence based policy making. This means our members of parliament must be provided with research support and must work closely with research institutions such as Universities.

Fourth industrialization requires investment in technology and innovation. Parliaments in the region should ensure that research and innovation are adequately funded and supported. Successful industrialization draws on a small and medium sized business success which then grows into industrial sized enterprise. Specific attention to small and medium sized enterprises is vital.

Fifth and finally our plans will not succeed if we do not have open democratic parliaments that allow robust debate while building respect for diversity. Such parliaments will also address inequality and poverty and joblessness in our communities. If our parliaments adopt these minimum platform of action we will succeed.

Delegates, it is my hope that your engagement today will serve to strengthen economic partnerships in the SADC region. This can only be achieved through a more strategic, concerted approach to opportunities, such as those presented by SADC Industrialisation Strategy. I thank you.

I thank you.