1

PROMOTION STRATEGY FOR SMEs, POLICY FRAMEWORK FOR ENABLING ENVIRONMENT

SADC EXPERIENCEVOLOLONIAINA RALIVAO ALISOA

2

INTRODUCTION SADC is composed of 15 countries at various

levels of industrial development. Among the Member States with a total of more than 250 million inhabitants, there are large differences in size, economic development, trade patterns and factor endowments

SADC comprises least developed countries, developing countries and one Newly Industrialized Country (NIC), South Africa, which accounts for over two-thirds of the region’s economy.

Despite a relatively small market size, SADC region can still reap significant gains from regional integration , provided supply side constraints are adequately addressed.

3

INTRODUCTION The structure of SADC countries output is

typical for a developing region where large shares of GDP originate from primary sectors

Most countries in the region are characterized by the predominance of small industrial units, which mostly produce for the national and regional markets

The industrial base of the SADC region is characterized by a significant number of small and medium enterprises (SMEs) operating in the informal sector.

4

INTRODUCTION The small and medium-sized

manufacturing enterprises play an increasingly important role in employment and wealth creation through value-addition and diversification of exports

5

The SADC industrial Challenge• Trade Protocol ratified in 2001 with the purpose of increasing intra-

regional trade through liberalization of industrial trade flows

Regional Indicative Strategic Development Plan (RISDP) was developed in 2003 with the goal to ‘Diversify the industrial structure and exports with more emphasis on value addition across all sectors by 2015 with the following specific targets

1. Diversify (increase of non traditional exports) and sustain export growth rates by at least 5 percent annually;

2. Increase in intra-regional trade to at least 35 percent by 2008;3. Increase manufacturing sector percentage share of GDP to 25

percent by 2015.

FTA established in 2008

6

The SADC Industrial Challenge In spite of implementation of the Trade Protocol

for the past 8 years and the eventual establishment of FTA , intra SADC trade declined from almost 11% of all trade in 2000 to around 9% in 2008 against the 35 % RISDP target. This appears to suggest that market opening alone is not sufficient to ensure sustainable regional industrial sector growth

7

Industrial Performance in the SADC Region

Macroeconomic Highlights of the Region On average, SADC as a region recorded growth rate of 3.5 % in 2003, 5.9% in 2006 and 6% in 2007

Manufacturing Sector Performance in the Region

• Manufacturing Sector Share in Total GDP (South Africa and Mauritius have sizeable manufacturing sectors , at 24% and 23% of GDP) . The SADC countries are at varied levels of development in terms of MVA

• Value of SADC Manufactured Exports ( EU is the first client of SADC )

8

Industrial Performance in the SADC Region

• Diversification Level of Exports ( after six years of implementation of the Trade Protocol, the structure of the ten products is mostly the same, with the top 5 in the same order)

• Intra SADC Trade ( SA exported to all MS, Swaziland had the highest share of exports destined for SADC in both periods, Tanzania’s export increased from 5’8 % in 2000 to 18.9% in 2006)

9

COMMON CHALLENGES FACED BY INDUSTRIES IN SADC

• Standards and Quality: • Reliance on Low Tech Commodity exports • Technological and Productive Capacities:• High Costs of Doing Business• Institutions and regulations: • Private Sector Size and Capacity • Human capital and skills • Access to financial resources • Environment and Climate change

10

INITIATIVES IN SUPPORT OF INDUSTRIAL DEVELOPMENT

National Policies on Industry The Southern African Coordination Community (SADCC)

created in 1980 prioritized regional cooperation in industrialization as a major tool for development and eradication of poverty

The Transformation of SADCC into the Southern African Development Community ( SADC) in 1992 The context of trade liberalisation and globalization process and the joining of Namibia, South Africa and Mauritius as members of SADC and its transformation from Conference to Community, dictated the need for a new policy on Industry

Draft SADC Industrial Development Policy developed and presented to the Ministers of Trade and Industry meeting in 2001

11

INITIATIVES IN SUPPORT OF INDUSTRIAL DEVELOPMENT

2003 : Adoption of RISDP 2004 : 9 SADC priority sectors identified based on the

following criteria: Ability to increase value added Comparative advantage Job Creation Foreign Exchange generation Ability to promote regional integration sector specific analysis, including value chain

analysis was undertaken with a view to producing sector specific strategies.

12

INITIATIVES IN SUPPORT OF INDUSTRIAL DEVELOPMENT

2006 Strategies for the 9 priority sector developed1. Agro food processing2. Fisheries3. Forestry4. Textiles and Garments5. Leather and Leather Products6. Processing of Mineral (metallic and non-metallic)

products7. Pharmaceuticals and Chemicals 8. Machinery and Equipment9. Services

13

INITIATIVES IN SUPPORT OF INDUSTRIAL DEVELOPMENT

2009 Draft SADC IP updated taking into account RISDP, the strategies of the 9 sectors, the financial crises…the experience of the Tiger economies, the others RECs…, the National Policies

14

DRAFT SADC IP GENERAL STRATEGIES FOR INDUSTRIAL

DEVELOPMENT 1 Regional Stability and Security 2 Macroeconomic Stability 3 Regional Market Access 4 Investment Promotion 5 Industrial Finance and Credit 6 Product Standards and Quality 7 Technology Transfer and Upgrading 8 Infrastructure

15

DRAFT SADC IP 9 Small and Medium Enterprises Promotion 10 Information Exchange 11 Industrial and Technical Skills Development 12 Environment and Sustainable Development 13 Gender Mainstreaming 14 Competition Policy and Law 15 Regional Supply Chains Promotion 16 National Policies Harmonisation

16

DRAFT SADC IP SECTOR SPECIFIC OBJECTIVES AND STRATEGIES

1 Agro-Food Processing 2 Minerals Processing 3 Leather and Leather Products 4 Forestry, Wood and Wood Products 5 Fisheries 6 Pharmaceuticals 7 Textiles and Clothing 8 Machinery and Equipment 9 Services

17

Small and Medium Enterprises Promotion

1. Foster the cross-border vertical and horizontal inter-firm linkages amongst SMEs clusters and strength such networks and alliances for regional cooperation in order to boost competitiveness and regional exports,

2. Intensify development of SMEs clusters engaged in export products

3. Facilitate enhancing of supply chain linkages between SMEs and large export oriented enterprises.

4. Create a SADC SMEs Network5. Provide special programmes to strengthen entrepreneurship

development support institutions that meet the needs of entrepreneurs with regional focus ( especially women entrepreneurs)

18

Small and Medium Enterprises Promotion

6. Develop skills development programmes to promote application of technology, technical skills acquisition and technology diffusion from the SADC region.

7. Undertake industrial upgrading and modernization programme in all SADC Member States

8. Promote the production and domestic beneficiation of alternative products where SADC may have a competitive advantage

9. Encourage partnerships , including joint ventures and subcontracting arrangements between SMEs and larger enterprises at national and regional levels and to identify opportunities in these areas

10. Identify and amend the laws and regulations as appropriate to facilitate participation of SMEs in industrial production

19

Other Industry – related Initiatives undertaken by SADC Secretariat

The performance of the industrial sector has been influenced by a number of factors such as political and civil stability to macroeconomic stability, investment climate, human capital formation, financial and capital markets, as well as product standard , among others. To this effect, SADC has endeavoured to apply synergies from regional integration through development and adoption of Protocols, Declarations and Memorandums of Understanding to improve these factors and therefore enhance the performance of the sector.

20

Other Industry – related Initiatives undertaken by SADC Secretariat

Declaration on Agriculture and Food Security Declaration on Competition Policy Declaration on HIV and AIDS Declaration on Information and Communication Technolo

gies Declaration on Productivity  Memorandum of Understanding on Cooperation in Taxati

on and Related Matters Memorandum of Understanding on Macroeconomic Con

vergence Memorandum of Understanding on SQAM

21

Other Industry – related Initiatives undertaken by SADC Secretariat

Protocol on Education and Training Protocol on Fisheries Protocol on Forestry Protocol on Health Protocol on Mining Revised Protocol on Shared Watercourses Protocol on Trade Protocol on Transport, Communications and

Meteorology Protocol on Energy Protocol on the Facilitation of Movement of Persons

22

Other Industry – related Initiatives undertaken by SADC Secretariat

Protocol on Technology Protocol Against Corruption Protocol on Politics, Defence and

Security Cooperation Protocol on Finance and Investment Protocol on Gender and Development Protocol on Gender

23

Implementation of Protocol Protocol on Trade Implementation of FTA ( Tripartite FTA) SADC, in collaboration with COMESA and

EAC, has developed an online NTB reporting and monitoring mechanism.

Substantial progress has been made in the development of various instruments to enhance customs cooperation and trade facilitation

24

Implementation of Protocol Protocol on Finance and Investment The Development Finance Institutions (DFI) in SADC countries are

coordinated at regional level under the Development Finance Institutions Sub-committee whose secretariat is the Development Finance Resource Centre (DFRC). Through SME Development as a core focal area, the DFRC gives support to SADC DFIs in their programmes to provide finance and business support services to SMEs.

Through the DFRC, SADC is in the process of establishing the SADC Project Preparation and Development Fund which is the first stage in the process of establishing the SADC Development Fund. It is envisaged that there will be a window in this fund to assist SMEs and private sector prepare industrial bankable projects as well as financing industrial development infrastructure

25

Implementation of Protocol Protocol on Technology Draft Cooperation Framework between

Industry and Sciences and Technology Centers

The SADC Standardization, Quality Assurance, Accreditation and Metrology

Industrial Upgrading and Modernization Programme (IUMP)

26

Implementation of Protocol Protocol on Transport and CommunicationSpatial Development Corridors have opened investment opportunities for both domestic and foreign private investors. SADC has developed several development corridors and SDI in the region: Maputo Development Corridor (Mozambique and South Africa), Beira Development Corridor (Zimbabwe/Mozambique), Limpopo Valley (Mozambique/Zimbabwe/South Africa), Trans-Limpopo (Zimbabwe/South Africa), Okavango Upper Zambezi International Tourism Initiative (Zimbabwe/Zambia/Botswana/Namibia/Angola) and Zambezi Valley (Zimbabwe/Mozambique/Zambia/Malawi) to mention a few with great potential

27

Key SADC Infrastructure Projects The Zimbabwe-Zambia-Botswana-Namibia Inter-connection

Project Objective: To provide an alternative route for power flows to

Namibia and relieving transmission congestion on the central transmission corridor

The North-South Corridor Project ( COMESA-EAC-SADC) Objective: To reduce the costs of doing business across borders

so as to improve competitiveness of the countries that are served by the NSC

The SADC Region Information Infrastructure ( SRII) Objective: to provide National, Regional and International

broadband connectivity for the SADC MS using terrestrial broadband optic fibre technology, wireless solutions and submarine cables

28

Key SADC Infrastructure Projects The Kunene Trans-boundary Water

Supply Project

The project is a joint water supply and sanitation project between Angola and Namibia. It involves the rehabilitation and expansion of existing water supply scheme between the 2 countries

29

LADIES AND GENTLEMEN

THANK YOU

FOR YOUR ATTENTION

30

31

32