PUBLISHED ON November 23rd, 2023

Southern Africa Deeper Economic Ties to Unlock Growth

The 16 members of the Southern African Development Community (SADC) are exploring ways to further integrate their diverse economies and strengthen regional value chains.

With a combined population of nearly 270 million people and $700 billion in GDP, the SADC bloc represents enormous potential for increased growth and development if member states can enhance economic cooperation and trade.

By removing barriers to cross-border commerce, SADC aims to give regional firms access to wider markets, promote competition, facilitate investment flows, and develop joint manufacturing capacities. The current landscape is fragmented, with intra-SADC exports accounting for only 22% of total trade as of 2020. Deeper integration promises to unlock new industrial growth poles while expanding opportunities for resource-linked and agricultural exports within the bloc.

Key initiatives aim to reduce tariffs and streamline cross-border trading procedures. The SADC Free Trade Area, enacted in 2008, eliminated tariffs on 85% of goods traded within the bloc. Further progress on the remaining 15% of sensitive items and reducing non-tariff barriers will help companies benefit from regional market access. The Regional Indicative Strategic Development Plan 2020-30 targets lifting intra-regional trade to 40% of total trade by 2030.

Harmonizing regulatory standards and product requirements across SADC members can also make trading simpler for regional firms. Streamlining cumbersome border procedures, documentation and customs clearance processes through digitalization and one-stop border posts can bring down transaction costs.

Ambitious proposals like the SADC Customs Union aim to eliminate duties on imports from outside the region. A unified approach to external tariffs would boost bargaining power in trade negotiations and support the emergence of regional value chains. The proposed SADC Regional Development Fund would finance major cross-border infrastructure projects in transport, power transmission, ICT, and water management.

Upgrading hard infrastructure links and digital connectivity can break down national silos and integrate the SADC market. But variable geometry – where member states implement integration at different speeds based on capacity – may be needed. A balanced approach is required to ensure adjustment costs do not disproportionately fall on less developed members.

Realizing a more integrated SADC economy also requires tackling skills gaps, regulatory harmonization, equitable benefit sharing, and national policy alignment across countries with diverse economic profiles. Additionally, governments must balance regional commitments with domestic priorities. Careful sequencing of reforms, public-private dialogues, and impact monitoring can help achieve integration goals.

With good execution and political will, a more unified Southern African economic bloc can expand regional production capacities, develop new competitive advantages in manufacturing and services, increase bargaining power on the global stage, and provide needed jobs and opportunities for the region’s growing youth population.

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