While the Southern African Development Community (SADC) is committed to Trade Liberalisation throughout its economic area, it also recognises that free trade alone cannot address all of the financial challenges that face the region. In addition to trade barriers, the region has historically experienced low economic growth, high unemployment, and a lack of capacity to compete effectively in a global marketplace.
In an effort to promote stronger economic integration and in turn improve the livelihoods of people throughout the region, SADC strives to increase the productivity of the industries of Southern Africa, allowing them to compete internationally. These efforts have a long history; in 1999, SADC launched the Declaration on Productivity, which set out mandates and strategies for boosting the regional industrial output, whilst also considering sustainable development and the inclusion of Member State citizens. The efforts of SADC to boost productivity and competitiveness are on-going.
The Declaration on Productivity
The Declaration on Productivity acknowledges that low levels of productivity in the region can be traced to a lack of common vision about productivity and a lack of information about how to improve productivity and competitiveness. SADC believes that efficient, inclusive economic systems, fair distribution of profits, and policies that integrate SADC with the Common Market for Eastern and Southern Africa (COMESA) and the East African Community (EAC) are the best options for raising the profile of industries from the region and enabling them to compete on the global stage. To accomplish its goals, the Declaration on Productivity suggests the following strategies:
- Create fiscal, trade, and labour policies that ensure access to economic assets and income-generating activities for the majority of the labour force;
- Enhance the capacity of human resources and available technological solutions; and
- Strengthen links – vertically and horizontally – among large, medium, and small-scale businesses.
- Establish an institutional framework for dispute resolution
- Promote participation in labour relations, in turn establishing a mechanism to share gains from improved productivity
- Strengthen capacity of businesses to improve their operations and to interact effectively with other businesses; and
- Develop a framework for implementing the Declaration by:
- Helping establish national productivity organisations in all Member States by 2001, ensuring key stakeholders are involved;
- Establishing a mechanism for cooperating and sharing information with other parties; and
- Monitoring productivity through collecting statistics on growth and setting benchmarks for improvement.
The SADC Member States of South Africa, Mauritius, and Seychelles have already made significant gains toward international competitiveness, placing highest in the region on 2012-2013’s World Economic Forum Global Competitiveness Report. Other Member States are also improving. The World Bank’s 2012 Doing Business Report for the SADC region cites that the Democratic Republic of Congo has reduced the time required to complete company registration and obtain a national identification number. Likewise, Madagascar has eliminated the minimum capital requirement for starting a new business and South Africa has implemented a new company law, which removed the requirement to reserve a company name and simplified incorporation documents.
Despite good progress, the 2012 Doing Business Report shows that business procedures remain uneven throughout the region. While it takes only six days to start a new business in Mauritius, it takes up to 90 days in Zimbabwe. Likewise, the cost to start a new business (as a percentage of income) is 0.3 % in South Africa, but 551.4 % in Democratic Republic in Congo. It takes just 16 days to register property in Botswana, but 184 days in Angola. These variations harm the competitiveness of the region as a whole. For this reason, SADC is dedicated to working with its Member States to reduce these barriers, thereby increasing the economic productivity of the region.
Strategic Plan to Increase Productivity and Competitiveness
In addition to the Declaration on Productivity, SADC activities are also driven strategic plans such as the Regional Indicative Strategic Development Plan that aims to increase the productivity and competitiveness of industries in the SADC region.
The Regional Indicative Strategic Development Plan notes that fixing supply-side problems is essential to improve productivity in the region and to ease the impact the Free Trade Area has on less-developed Member States that rely on tariffs. The Regional Indicative Strategic Development Plan also recommends Member States focus on promoting entrepreneurship, especially among women; and on expanding technology as a means to improving productivity in the industry, mining, tourism, and agriculture sectors.
Infrastructure issues also directly impact the effectiveness of industry, especially as most of the population of the SADC region live in rural areas. The Regional Indicative Strategic Development Plan advises Member States to liberalise road, air, sea, and rail transport to foster an integrated network of infrastructure that links rural communities with markets.
In order to monitor gains in productivity, SADC launched an annual Competitiveness and Business Climate Survey in 2003. These surveys are followed by a Biennial Business Forum, in which participating delegates are able to discuss plans to increase productivity and competitiveness of the region at large.