THE need to stimulate regional industrial cooperation is gaining urgency in the context of two main factors – the need to seize opportunities provided under the African Continental Free Trade Area (AfCFTA) and the evident disruption of supply chains due to the outbreak of Covid-19.
African economies at large, and the Common Market for Eastern and Southern Africa (Comesa), in particular, are already experiencing negative impacts of the pandemic on wider scale.
Covid-19 has strained supply chains and is weakening demand levels from traditional trading partners, as evidenced by marked decline in trade volumes.
Official data from Comesa, for instance, shows that total exports value within the 21-member bloc declined by 11 percent from US$10,9 billion in 2019 to US$9,7 billion in 2020.
This is despite the existence of the Comesa Free Trade Area (FTA), among other agreed trade facilitation measures meant to enhance intra-regional trade, which are yet to be fully embraced by all member states.
Comesa total exports value to the world similarly decreased by 27 percent from US$123,4 billion in 2019 to US$90,3 billion in 2020.
By comparison, Intra-Africa trade stands at less than 20 percent compared to approximately 60 percent in Europe and 40 percent in North America, according to the African Union (AU).
The above statistics point to a widening cleavage between low intra-regional trade and higher trade volumes with the rest of the world, which exposes the region’s reliance on primary commodity exports and importation of finished high-value products from other regions.
This makes a strong case for diversifying the region’s economy through scaling up collaboration towards industrialization within Comesa and the rest of Africa, as one of key post-Covid-19 economic recovery strategies.
As one of Africa’s largest trading groups, Comesa should set the pace in modelling joint industrialisation cooperation among its member states through tapping into opportunities availed by strategic value chain synergies.
This would stimulate exportation of finished goods and consumption of the “made in Africa” products.
In this regard, the process to establish a Common Agro-Industrial Park under the joint industrialisation cooperation programme between Zambia and Zimbabwe is highly commendable.
Under this model, co-operation between the two countries is set to deepen regional integration and lead to the development of other regional value chains, Zimbabwe’s Minister of Industry and Commerce, Dr Sekai Nzenza, has said.
Following the signing of a Memorandum of Understanding early this year, a technical working group involving officials from both countries has been set up to drive the implementation process.
The initiative is set to increase the share of agriculture in total Gross Domestic Product, provide food security and improve lives in the region by creating additional jobs and stimulating development of micro-small to medium-size businesses (MSMEs), said the minister.
The two states have comparative advantages in agriculture, which is the economic anchor.
“The agro-industrial park will utilise agricultural resources in both countries to create employment, anchor investment and economic growth across the borders as well as foster linkages with other economic sectors across the two countries,” said Dr Nzenza.
“Specific industries that are slated to be part of the agro-industrial park include agro-processing, textiles and garments, leather and leather products, agro-chemicals, agri-inputs, agri-infrastructure, storage and agricultural engineering.”
Hopes are high that as value chains develop, other allied industries will also emerge. This, said the minister, will facilitate incorporation of MSMEs, who have become dominant economic players, in exploiting opportunities along the various value chains.
Industrial cooperation modelling of this nature offers a unique opportunity for Comesa to promote inclusive growth and accelerate the achievement of the post-pandemic recovery, the global 2030 Agenda for sustainable development and Agenda 2063 of the African Union.
Comesa assistant secretary general, Dr Kipyego Cheluget, has said this joint industrialisation effort holds the best promise towards achieving desired regional economic integration.
“In Comesa we take this programme seriously as it will set pace towards achieving the aspirations of the region as we regard it as a flagship project,” he said.
With the coming in of AfCFTA, which became effective in January this year, more attention should be given to such joint industrialisation projects, which present potential to boost African incomes by billions of dollars in the next decade.
The same view is strongly emphasized in the United Nations Conference on Trade and Development (UNCTAD) 2021 report, which implores Africa to pursue inclusive economic transformation in which regional cooperation through effective implementation of the AfCFTA must take centre stage.
“The AfCFTA can help address challenges emanating from excessive reliance in Africa on supply of primary commodities and goods embodying limited value added to world markets,” said UNCTAD.
The Zimbabwe/Zambia joint project, thus, is part of a grand scheme of things under Comesa to achieve economies of scale by co-operating in the field of industrialization.
Collaboration of this nature is at the heart of the Comesa Treaty, which in Article 99, emphasizes the need for member states to cooperate in industrial development to realise self-sustained and balanced growth, improved industry competitiveness and expanding intra-regional trade in manufactured goods.
The project also dovetails with the Comesa Industrialisation Strategy (2017-2026), which has identified development of these sectors as a top priority.
Given the interconnected nature of Southern Africa’s agriculture ecosystem, the proposed joint agro-industrial park should inspire development of similar models among sister republics, says economist, Mr Anele Ndlovu.
This would go a long way in deepening broader regional industrialisation thereby creating more value for local farmers and downstream agro-processing industries, he added.
Leather industry researcher and academic, Mr Jacob Nyathi, who is also assistant secretary for the Zimbabwe Leather Development Council concurred saying the pilot agro-industrial park model is good for the entire regional economy.
“Zimbabwe is one of the leading leather producers and together with Zambia have capacity to supply large quantities of leather to the entire region,” he said.
Joint industrialisation modelling is also critical in facilitating sharing of critical information and skills needed to improve the agriculture and leather industry in the whole region, added Mr Nyathi.
Local farmer, Mr Winston Babbage, said the proposed agro-industrial park would promote inclusive participation of key producers, including farmers, in the regional economy.
Apart from unlocking the wider farming sector gains, he said Zambia and Zimbabwe would be able to leverage available infrastructure to bring about economic transformation.
“Zambia and Zimbabwe have a good connection such as the railway line to connect the two countries and this will be utilised by the agro-industrial park,” he said.
“This will also promote small-scale farmers in both countries as large-scale producers depend on them. ”
Comesa should, therefore, push for speedy implementation of this joint industrialisation project whose success should inspire piloting of other industrialisation cooperation models covering sectors like mineral beneficiation, tourism and pharmaceuticals.
Such projects not only speak to the need to boost intra-regional trading of manufactured goods but will go a long way in bringing about the desired structural transformation of Comesa economies and those of the rest of Africa.
This is where the biggest challenge lies for Africa, said Mr Wamkele Mene, Secretary General of the AfCFTA secretariat during the Intra-Africa Trade Fair held in Durban, South Africa, in November.
He called on the African private sector, MSMEs and young entrepreneurs to play ball, saying despite the odds the European Union walked through the same journey.
“We as Africans will have to roll up our sleeves, work hard, and ensure that we overcome the challenges,” he said.
Citing Asian Tigers’ path to industrial transformation and economic prosperity, Arkebe Oqubay (March 2020), says Africa must forge ahead in discovering its own industrialisation model, based on its own conditions and contexts, which must be backed by adequate technological capacity.
Successful regional industrialisation modelling also demands that Comesa and wider Africa take swift action in tackling prevalent non-tariff barriers (NTB), general infrastructure gap and high cost of doing business, which continue to retard desired growth, academic, Mr Sibangilizwe Mukwena, said.
Increased cooperation in overcoming these challenges is, thus, a must for all member countries if the region is to accrue wider benefits offered through AfCFTA.
This, coupled with enhanced pooling of resources to ensure economies of scale, should in the long-run enable the continent to compete favourably on the wider global market.