Regional trade is a key stimulus for local economic growth, Deputy President Kgalema Motlanthe said yesterday.
“We in South Africa are not resting on our laurels, being fully aware that African growth has to be driven forward,” he told delegates at the Ernst and Young Strategic Growth Forum in Cape Town.
“On its part, South Africa clearly understands its growth and development can only happen in the context of an economically flourishing African continent.”
A free-trade agreement with the Southern African Development Community (SADC) in 2008 had been the first building block for open regional trade.
The second achievement had been a tripartite agreement between the SADC, the East African Community and the Common Market for Eastern and Southern Africa.
“It is our ambition that by June 2014 these 26 countries, with a combined population of nearly 600 million people and a total gross domestic product of approximately $1 trillion (R7.47 trillion), will be united in a single free trade area.”
Motlanthe said removing trade tariffs alone was not a solution. He identified three non-trade tariff barriers which needed to be remedied.
The first was to improve operation of borders.
There were unnecessary delays due to different certification systems, a lack of co-ordination between various countries’ officials, and weak border infrastructure.
The second was poor infrastructure within countries.
“Road, rail or power facilities are sometimes substandard, slowing down transport and, worse still, making it cheaper for coastal countries to import items from far across the oceans than purchase them from their neighbours.”
The third was a lack of industrial diversification among countries.
Motlanthe said many African neighbours produced largely similar products with little reason to trade with each other.
He envisioned a regional value chain where each country mastered a stage in the production process to create a final product.
Governments would not achieve a regionally integrated economy on their own.
Motlanthe said it would require the participation of intellectuals, trade union leaders and business.
“It probably takes the private sector to get there – its probably easier for the private sector to lead the way on regional industrial policies at first, with the support of governments.” – Sapa