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SADC chair proposes an industrialisation fund

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Picture: Simphiwe Mbokazi/African News Agency (ANA) – DRC President Felix Tshisekedi, who is also Southern African Development Community (SADC) chairperson, has proposed a regional fund to support industrialisation in SADC member states, the writer says.

By Kizito Sikuka

Southern African Development Community (SADC) chairperson, President Felix Tshisekedi has proposed a regional fund to support industrialisation in SADC member states and ensure the sustainability of its integration agenda.

Tshisekedi, who is president of the Democratic Republic of Congo (DRC) said this in his welcome message as host of the 42nd Summit of Heads of State and Government of the Southern African Development Community (SADC) held in August.

In the official Summit publication that provides an annual review of progress, Tshisekedi said the time has come for SADC to consider setting up a dedicated fund to support its industrialisation agenda.

“We encourage our organisation to reflect on the need to set up an industrialisation fund in order to finance industrialisation projects and programmes and get out of dependence on external partners,” he said.

“In this way, we will be able to achieve a major economic and technological transformation at national and regional levels towards the deepening of regional integration as advocated by the SADC Industrialisation Strategy and Roadmap.”

He said the regional fund would complement resources from other partners including international co-operating partners and private investors, thus allowing the region to take full charge of its developmental trajectory and industrial path.

Currently, it is estimated that more than 70 percent of the SADC budget comes from international partners.

A dedicated regional industrialisation fund has the capacity to reduce this dependence on external partners.

Industrialisation is a priority for SADC, and since 2014, all SADC Summit themes have focused on action towards achieving the goals of an industrialised and competitive region.

The SADC theme for the year 2022/23, under the leadership of the DRC is promoting industrialisation through, agro-processing, mineral beneficiation, and regional value chains for inclusive and resilient economic growth.

“With this theme, we intend to enhance the many natural resources of our region and encourage local transformation in order to create decent jobs for the youth and fight against poverty,” Tshisekedi said.

Endowed with vast natural resources such as fertile soils and minerals including gold, diamonds and lithium, SADC is indeed capable of establishing a regional fund to support its own industrial growth and create jobs for its youth.

Such funding could come from initiatives such as curbing Illicit Financial Flows (IFFs); creating a regional lottery system; harnessing resources from a proposed philanthropy network; as well as introducing regional transport and tourism levies.

For example, it is estimated that Africa continues to lose resources valued at up to US$150 billion annually through IFFs or “illicit capital flight”, mainly through tax evasion, and mispricing of goods and services by multinational companies.

This means that resources that are intended to develop Africa are being used elsewhere to improve the economies of other countries in Europe, Asia and the United States.

With respect to the lottery system, it has proven to be one of the innovative financing mechanisms that have been successfully used to fund regional programmes in South East Asia, where pooled revenues are distributed equally to different countries.

The outgoing chair of SADC, President Lazarus McCarthy Chakwera of Malawi said the destiny of the region lies in its hands and all member states should work together in pooling their own resources to fund the developmental agenda. including implementing the SADC Industrialisation Strategy and Roadmap.

The SADC Industrialisation Strategy and Roadmap aims to accelerate the momentum towards strengthening the comparative and competitive advantages of economies of SADC member states.

Approved in April 2015, the strategy and roadmap is anchored on three pillars – Industrialisation; Competitiveness and Regional Integration – and seeks to ensure that SADC adds value to its natural resources before exporting.

Currently, very few SADC countries process their own raw materials, with the bulk of the value addition taking place elsewhere and benefiting others.

In this regard, an industrialised region will allow SADC to fully benefit from its vast natural resources and become a dominant force in global affairs.

Sikuka is a contributor with the South African Research and Documentation Centre (SARDC)

This article was first published on the SARDC website.