This study provides an overview and analysis of the structure, key functions and characteristics of the forestry value chain operating in and among South Africa, Mozambique and Tanzania in order to identify market opportunities and the interventions required to support the growth of the regional value chain. The research focuses on three value chains – forestry to timber; forestry to pulp and paper; and forestry to furniture.

It focuses on three countries – South Africa, Mozambique and Tanzania. The latter two were selected on the basis of their current level of forestry output, together with their contiguous location. An evidence-based approach has been adopted for this study, based on the compilation of industry data from existing and new sources. The value chain analysis is focused on answering the following questions: how is the value chain organised? How does it function? Who are the main actors? What are the key institutions and forms of coordination? How well is the chain performing in coordination, competitiveness and intra-regional trade? Where are the opportunities to (1) relocate parts of the chain among the countries, and (2) to enhance existing intra-regional activities?

This report makes nine key recommendations, all of which aim to strengthen the capacity of the Southern African Development Community (SADC) Technical Infrastructure to achieve its core mandates, while promoting regional value chain development. 

The paper begins with a broad contextual overview of the Southern African Development Community’s (SADC’s) transport and logistics performance in terms of the Logistics Performance Index and tracks the performance of individual member states in the decade from 2007. Two interesting findings emerge. First that the better performing SADC member states have been improving their logistics performance over time while the worst performing states have seen their performance decrease and deteriorate since 2007. The second interesting (and controversial) finding is that improved logistics service and operations is viewed as more important than additional investments in infrastructure in the region.

The paper then identifies the cross-cutting logistics issues collated from a literature review, a small sample of interviews with logistics firms operating in the region, completed value chain reports from the Regional Value Chain Project (see www.competition.org.za/regional-value-chains), SADC documentation, and finally the tradebarriers.org website, a Tripartite Community – comprising Common Market for Eastern and Southern Africa (COMESA), the East African Community (ECA) and SADC and Member States – initiative to report, monitor and eliminate NTB complaints.

A key finding of the paper is that from an economic perspective it is the standing time of trucks stationary at border posts which is the most powerful explanatory variable of SADC’s high transport costs and low logistics competitiveness. The research suggests that standing time is largely due to border post management issues rather than the commonly assumes infrastructure constraints.

This paper argues that the dramatic changes in the trade architecture of the world during the first decade of the new millennium have created both opportunities and challenges for Africa’s development. African countries need to develop proactive strategies to harness these new changes and use them to advance the integration of the African continent.

The paper looks at the main elements of the changes in the global trade architecture in the first decade of the new millennium. It then explains how these changes impacted on the Doha Development Round. The shift to mega-regionals and mega-bilaterals by the major developed country players and the implications of these developments for Africa’s trade with the world are also briefly discussed. The paper then sets out the changes in the trade policies of the EU and the US on Africa in the new millennium and the implications of these policies for Africa’s economic development. The paper also discusses the role of China in the trade and economic development of Africa and looks at the unfolding regional integration strategy of African countries. 

See Commonwealth Trade Hope Topics Series Issue 131 The changing global trade architecture: Implications for Sub-Saharan Africa's development

Faizel Ismail is Adjunct Professor in the School of Economics, University of Cape Town and a TIPS Research Fellow

Session 5: International lessons

Session 5: International lessons

Session 4: Market integration and trade

Paper to follow

Session 4: Market integration and trade

Session 4: Market integration and trade

Session 3: Regional manufacturing and industrial policy 2

Session 2: Regional integration and SADC

This paper investigates the extent of trade integration of Sub-Saharan African countries in the global economy as well as within the region. Four key concepts are used to assess integration: 1) trade openness, 2) the centrality in the global and regional trade network, 3) gravity model estimates, and 4) global value chain (GVC) integration. We find that the region's trade openness has increased strongly since the mid-1990s, reflecting a growing partnership with emerging markets, particularly China, and budding intraregional trade. However, the region's trade flows have barely kept up with the rapid expansion of global trade. The trade centrality of the economies in the region remains relatively low, and has not increased much over the last 20 years. It remains lower than the one observed in other comparable emerging and developing economies. Likewise, the region still has some way to go to better integrate in global value chains - a feature associated with higher income growth overtime in regions such as South East Asia and Eastern Europe. Some countries are showing progress, albeit from low starting points, with the EAC and SACU particular bright spots. A better insertion into the global economy would help foster structural transformation, export diversification, and the possibility to absorb technology and skills from abroad. 

Session 1: Regional manufacturing and industrial policy 1

Session 6: A regional approach to energy resources

Session 8: Agricultural value chains in the region

This paper expands a case study by Emet Consulting for the South African Institute of International Affairs (SAIIA) in 2014. The case study (Regulatory Constraints to the Development of a Fuel Ethanol Market in SADC) was a component of a project funded by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), through its ProSPECT project, investigating the most significant constraints to doing business in the SADC region. Through the project GIZ and SAIIA aimed to provide concrete examples of constraints to doing business in the region, as well as potential solutions. The overall objective of the research was to reduce these business constraints by facilitating a dialogue in the SADC region on their removal, thereby allowing the private sector to take advantage of the opportunities offered by regional integration.

Session 7: Minerals value chains: Upstream and beneficiation

This paper presents key trends in the global value chain for mining capital equipment. It includes a section on the background of the South African and Zambian mining inputs clusters. It maps the regional value chain for mining capital equipment and presents the research findings in terms of firm entry, upgrading processes and regional inter-firm linkages, and looks at policy constraints at national and regional level.

Session 7: Minerals value chains: Upstream and beneficiation

Copper, as Zambia's economic mainstay, is a mineral whose value chain stretches beyond the country's Copperbelt Province and the recently acclaimed “New Copperbelt” Northwestern Province. The Copperbelt Province as the mining hub has several industries benefiting from both upward and downward linkages in the Sub-Saharan African market and other regions globally. Despite the challenges associated with mining and mining economies being real, Zambia needs to learn from countries within the Southern African region such as South Africa and those in other continents such as Chile in order to have a formidable escape strategy from the “natural resource-curse phenomenon”. With such a strategy, stronger industrial linkages at home as well as improved contribution to regional industrialization are possible. Ultimately, this can strengthen economic growth and usher the country into a stage where beneficiation from the mines go beyond the local value chain debate but the entire nation as people see the tangible fruits of economic growth positively impacting human development indicators. The reality in the economic indicators would then truly reflect the reality on the ground among ordinary Zambians as is the case in Chile. 

Session 10: Agricultural value chains in the region

This paper examines the reasons for the growth in the poultry industry in Malawi in the past 10 years. 

Session 9: A regional collabroation: Different approaches

There is long-standing, wide consensus on the need for greater economic connectedness in Africa. Despite the rhetoric and apparent policy consensus, implementation of related commitments lags seriously. The lack of progress towards the free movement between national markets of goods, services, people and capital is frequently blamed on a combination of lack of political will and lack of capacity. Yet, it is necessary to better understand what these twin deficiencies actually entail. This paper takes a politicaleconomy approach to regional integration to try and understand progress on regional economic integration.

Session 9: A regional collabroation: Different approaches

This paper reports on the results of an investigation into the contribution of cooperative management of water resources to regional integration in SADC. The study found that, while a few bilateral projects had contributed to economic development, there was little evidence of a systemic contribution to formal integration. An evaluation of the opportunities and constraints suggests that more effective intersectoral coordination at national level to make better use of resources to stimulate industrial development is the first priority. A more general conclusion is that a functional approach to integration that seeks and supports practical opportunities for mutually beneficial cooperation is more likely to succeed than a focus on generic regional institution building.