Member countries of the Southern Africa Development Community (SADC) engaged in a number of bilateral trade liberalisation agreements and initiatives from as way back as the 1950s, the main objective being to increase bilateral trade flows through deeper opening and access of regional markets. Southern African countries saw these ‘country to country' trade agreements coupled with the adoption, by the SADC region, of a ‘Protocol on Trade' (TP) in 1996, and its implementation from 2000, was viewed as a coherent trade policy strategy to promote regional economic growth and help reduce poverty. Bilateral trade flows have been analysed on sensitive products textiles and apparel, cereals and vehicles between SADC countries that have signed bilateral trade agreements between themselves and implemented the SADC TP which led to the adoption of a SADC Free Trade Area in 2008. Analysis focused on sensitive products because preferential bilateral trade agreements seem to be more generous (offer better concessions) on these products as compared to commitments member states undertook at the wider regional level under the SADC TP. Trade creation on wheat and sugar products dominates trade diversion even though the percentage increase in trade in these products is small. Moreover, there is no conclusive evidence that bilateral trade agreements increased bilateral trade flows beyond the market access opportunities provided by the SADC TP except only for textile products from Malawi into South Africa. SADC countries need to do more to implement commitments in their bilateral trade agreements to realise the real market access benefits of trade liberalisation. 

Business Day - 25 October 2016 by Neva Makgetla

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TIPS in partnership with the South African Research Chair in Industrial Development, based at the University of Johannesburg, and in association with the Green Economy Coalition (GEC), hosting the 2017 Annual Forum from 13 to14 June, 2017. Supported by the European Union and the Department of Trade and Industry.

The theme of the Forum was Industrialisation and Sustainable Growth.

Download a copy of the summary report of the Forum: TIPS Forum 2017 Industrialisation and Sustainable Growth - Summary Report. 

Call for papers

Those wishing to contribute papers are invited to submit their title and abstracts of up to 500 words to Baba-Tamana Gqubule at TIPS via email to: dialogue@tips.org.za.

To be considered, abstracts should be submitted by 3 February 2017. 

For more information on how make a submission and information about the focus of the topics read TIPS Annual Forum 2017 Call For Papers.

Aim of conference

The conference aims to deepen the understanding of the opportunities and challenges of moving to a sustainable, notably low-carbon, industrial development path.

Context for conference

In South Africa, the need to respond to sustainability challenges and seek opportunities in the transition to sustainable economic development can be traced back to the 1996 Constitution and the 1998 National Environmental Management Act (NEMA). Sustainability issues, primarily climate change, have since been progressively integrated into policy. The 2011 National Strategy  for Sustainable Development (NSSD), the 2011 National Climate Change Response White Paper, Chapter 5 within the National Development Plan (NDP) and the Industrial Policy Action Plan (IPAP) outline the need to restructure the economy to promote industrialisation and move towards a low-carbon and pro-employment development path.

Developing strategic and coherent sustainable growth strategies that consider the linkages between sustainability, notably climate change, and industrialisation requires significant further research and analysis. Moving towards a sustainable economy requires reflecting on the country’s path dependency in terms of economic structure and energy mix, and the existence of high-carbon emitting and energy-intensive industry.

Tackling sustainability challenges in South Africa requires, among other things, increased use of alternative energy sources, improved resource efficiencies, new technologies to reduce carbon emissions and environmental damage, and new socio-economic thinking. A sustainable future depends on financing these measures (including incentives), procurement procedures, localising technologies, and carbon offset processes. Taxes and penalties imposed on industry and users are also crucial considerations.

Understanding the challenges, trade-offs and pathways associated with implementing industrial policies aligned to sustainable development goals is needed. Furthermore, sustainability policies need to consider their interaction with socio-economic challenges to ensure that the impact of climate change and other environmental issues does not perpetuate and exacerbate inequitable outcomes.  Furthermore, local industries, primarily the agriculture sector and the associated agro-processing industry, stand to be severely affected by climate change, with ripple effects on food security, jobs and industrial capacity. 

The 2017 Forum will also explore reconciling environmental and socio-economic imperatives within the Southern African context.

BUILDING A VALUE CHAIN FOR THE AUTOMOTIVE INDUSTRY IN AFRICA

The Nigerian Market for automobiles is substantial and can readily sustain an automobile industry. In 2012, the country imported about $4 billion worth of automobiles of which about two thirds were pre-owned. Estimated annualdemand for vehicles is over half a million made up of 100,000 new and 400,000 used. As at 2012, the population of the middle class was 38 million and growing, assuring a sustained market for the automotive industry. Opportunities exist for South African automotive Original Equipment Manufacturers (OEMs) to participate in this market and achieve economies of scale. Alec Erwin will share findings from a recently completed research project. 

PRESENTER: Alec Erwin,  Ubu Holdings

Alec Erwin was previously Minister of Public Enterprises (2004-2008), Minister of Trade and Industry (1996 -2004) and Deputy Minister of Finance (1994-1996). He has also been President of the United Nations Conference on Trade and Development (1996-2000). Alec was previously General Secretary of the Federation of South African Trade Unions (1979-1983) and the Education Officer for the Congress of South African Trade Unions (1986-1988). He was a member of the African National Congress National Executive from 1994 to 2007. Alec has an Honours degree in Economics from the University of Natal where he was a lecturer in the Economics Department. He has an Honorary Doctorate from the University of KwaZulu-Natal and is currently an Honorary Professor at the University of the Western Cape. He previously sat on the Honorary International Investment Council of President Jonathan in Nigeria and on the Togo Presidential Investment Advisory Council and is presently on the Board of Togo Invest. 

PROMOTING LOCAL MANUFACTURING IN SOUTH AFRICA'S MOTORCYCLE INDUSTRY: THE CHALLENGES AND OPPORTUNITIES

The South African motorcycle industry is a small market in global terms and the registration figures of motorcycles in the country on an annual basis have been in progressive decline. There is currently no local manufacturing of motorcycles in South Africa and no policy in place to develop the industry. The industry is entirely reliant on imports and will require significant support to contribute to the country’s manufacturing value-addition. Is there scope to develop this industry and expand into the export market?

PRESENTER: Sithembiso Mtanga, TIPS

Sithembiso Mtanga is a senior researcher at Trade and Industrial Policy Strategies (TIPS).  He joined TIPS in 2007 and completed a Master’s Degree in Economic Policy in 2012.

Business Day - 11 October 2016 by Neva Makgetla

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Neva Makgetla is TIPS senior economist

The Conversation - 3 October 2016 by Faizel Ismail

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

Ten years is a very short time in the global economy, and by all accounts a decade is all that is left of the African Growth and Opportunity Act (AGOA). While the United States’ unilateral preferential access programme for Africa has been reauthorized three times since it began in 2000, it looks very unlikely to be extended beyond 2025.

This article looks at options and present three immediate interventions could prove useful.

Read online: Making the best of AGOA through export-promotion policies.

Business Day - 27 September 2016 by Neva Makgetla

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Business Day - 13 September 2016 by Neva Makgetla

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Main bulletin: The Real Economy Bulletin - Second Quarter 2016

In this edition:

Quarterly GDP growth: South Africa’s GDP grew by 0,8% in the second quarter of 2016, in a marked recovery from the 0,3% contraction in the first quarter of the year.  Mining and manufacturing made the largest sectoral contributions to growth. Mining grew (quarter on quarter) by 2,8%, while manufacturing grew by 2,0%. Agriculture continued to decline as the drought persisted, utilities fell by 0,4% and construction remained unchanged. Read more.

Employment: Despite the relatively rapid growth in GDP in the second quarter of 2016, according to the official data employment in the economy as a whole fell by 130 000, or around 0,8% in the second quarter of 2016 compared to the first quarter, and around 0,7% when compared to the previous year. Read more. 

Trends in trade: The second quarter of 2016 saw a strong uptick in exports combined with falling imports, mostly due to the falling price of petrol. The resulting improvement in the balance of trade boosted GDP growth. While both manufacturing and mining exports fell in dollar terms, they expanded in constant rand, with manufacturing exports rising by 8.6% and mining by 5.1%. Agricultural exports also performed exceptionally during the quarter, but that partly reflects seasonal factors. Read more.

Investment and profitability: A decline in investment, particularly by the state, was the biggest drag on GDP growth in the second quarter of 2016. Profitability across the economy declined in the first quarter of 2016 compared to the first quarter of 2015, with worsening losses in mining. In contrast, manufacturing and construction enjoyed a higher profit rate for the quarter compared to the previous year. Read more.

Behind the trends: Exports were the main driver of the surge in growth in the GDP in the second quarter of 2016, largely thanks to the auto industry. Critical for export growth was the persistence of relatively competitive exchange rates as well as some recovery in the U.S. and Europe in the past year.  While welcome, these developments emerged in the context of fairly gloomy prospects for growth in the medium term. Read more.

Growth in the BRICS: Divergent developments in the BRICS in the past five years illustrate the extraordinary impact of the slowdown in Chinese growth on middle-income economies. They also show how this kind of sharply slower growth can play out in greater political contestation and uncertainty. Read more.

Growth in the SADC: The rest of Africa now represents around 30% of South Africa’s export market, up slightly from 2010. The bulk of South African exports to the rest of the continent go to Namibia, Botswana, Mozambique, Zambia and Zimbabwe. Because the region is growing rapidly compared to most other regions, despite the end of the commodity boom, it represents a significant opportunity. Read more.

Briefing note - Impact of the drought: Despite the relatively strong growth in the rest of the economy in the past quarter, agriculture posted its sixth consecutive quarter of economic decline.Stats SA reported that, in seasonally adjusted terms, agriculture contracted by almost 15% from R78 billion in the fourth quarter of 2014 to R66 billion in the second quarter of 2016. Read the briefing note online: Impacts of the drought.