Displaying items by tag: Regional value chains

The demand for electricity in the Southern African Development Community (SADC) region is anticipated to double from 280 terawatt hours (TWh) in 2010 to 570 TWh by 2030. By extension, the region will require significant amounts of electrical equipment, which includes items that are used for generation, conversion, transmission, supply, control, and utilisation of electric energy. The SADC region is a net importer of electrical equipment, although South Africa supplies some of the equipment, including cables and structural steel products to the region, and Zambia produces copper wire on a large scale. If more local requirements for electrical equipment were produced in the region, it would stimulate investment, innovation, manufacturing, and job creation both directly and indirectly.

This regional value chain report examines whether SADC countries can move up the value chain and produce more inputs. It considers opportunities for further value addition in three Southern African countries – South Africa, Zambia, and Zimbabwe.

Regional value chains have gained increasing popularity in promoting sustained market opportunities, job creation, and sustainable development among countries. With the enactment of the African Continental Free Trade Area (AfCFTA) agreement, access to larger economic markets will mean larger economies of scale, development of specialised capabilities, increase in productivity, as well as increased obligational relationships among Southern African Development Community (SADC) countries through regional industrial value chains. This research investigates how South Africa can promote regional value chains in SADC by importing more from its fellow SADC countries.

The analysis investigates the export potential from SADC countries, using the Revealed Trade Advantage (RTA), the Revealed Import Advantage (RMA) and the Revealed Comparative Advantage (RCA) indexes. These indexes will establish which sustained export opportunities (products) are available for SADC countries to export to South Africa, and these opportunities are detailed for each country. The analysis then looks at the regional perspective of these export opportunities from SADC countries, as most lie within the Clothing, Textiles, Footwear and Leather industry. Last, the analysis discusses the existing barriers to trade for SADC countries. The intention is to promote sustained export opportunities with South Africa importing more from SADC countries. The results from this paper can be a starting point for policymakers to think about strategies to enhance utilisation of sustained export opportunities for SADC countries into South Africa.

Bilateral or regional trade agreements (RTAs) are essentially preferential in nature and a deviation from the World Trade Organization principle of most-favoured-nation or non-discrimination, as they are intended to benefit signatory countries. However, the agreement could be abused by competitive third-countries that use a member country of the RTA (that has a low external tariff) as a springboard to penetrate the entire regional preferential market. Such a scenario could undermine the industries of other countries within the RTA. To avoid such a scenario, free trade agreements or RTAs use rules of origin (RoO) to determine the national origin of the product and to establish the thresholds for local content or value-added before the product is re-exported.

This Discussion Paper outlines the different types of RoO, provides a brief overview of the approaches to RoO adopted by Africa's Regional Economic Communities, and explores the mainstream academic literature on RoO in the automotive, textiles and apparel sectors. Following this, it highlights current trends in the cotton, textile and apparel production and regional value chains in Africa, arguing that the AfCFTA should adopt a developmental regionalism approach to its RoO negotiations in the cotton, textiles and apparel RVC. In this context, some recommendations for policymakers and negotiators are also provided.

UNU WIDER Research Brief

This policy brief, Unlocking a regional plastics value chain between Mozambique and South Africa, forms part of the project: Southern Africa – Towards Inclusive Economic Development (SA-TIED)

Plastics are universal and integrated into different sectors of the economy. Industrial policy requires countries to look at moving up the value chain and producing progressively more sophisticated products to contribute to improved economic development. The input materials that are used for industrial development need to be priced appropriately to unlock all the opportunities along the value chain.

Available online at: https://www.wider.unu.edu/node/238231

The PDF: https://www.wider.unu.edu/sites/default/files/Publications/Research-brief/Image/SA-TIED-RB2020-14-unlocking-regional-plastics-value-chain.pdf

This brief is based on WIDER Working Paper 148/2020 Future-proofing the plastics value chain in Southern Africa, by Liako Mofo.

WIDER Working Paper 2020/148

This working paper, Future-proofing the plastics value chain in Southern Africa, forms part of the project: Southern Africa – Towards Inclusive Economic Development (SA-TIED)

Abstract

Plastics are ubiquitous across the region and play an important role in multiple industries. Most plastic products are based on a value chain that is grounded in petroleum refining, posing an environmental challenge. Plastic manufacturing in South Africa suffers from the high cost of polymers as inputs. Mozambique is endowed with large natural gas deposits.  

This research assesses the potential for the sustainable development of a plastics value chain in Southern Africa, with the aim of future-proofing the industry against changes in the petroleum space while bolstering growth in plastics manufacture and fostering a more equitable regional distribution of plastics activities. This study found that there is strong regional value chain potential between South Africa and Mozambique, with Mozambique producing natural gas feedstock and South Africa providing labour, capital, and technology. South African plastic manufacturers could also benefit from better input prices derived from better priced natural gas from Mozambique.

Download Working Paper: https://www.wider.unu.edu/sites/default/files/Publications/Working-paper/PDF/wp2020-148.pdf

A Policy Brief based on the working Paper is also available: Unlocking a regional plastics value chain between Mozambique and South Africa

TIPS acknowledges the support of the SA-TIED programme for this working paper, with special thanks to UNU-WIDER and the South African Department of Trade and Industry.

The Southern African Development Community (SADC) member states have placed industrial development at the core of the region’s integrated development agenda. This report by Trade & Industrial Policy Strategies (TIPS) and the Zambia Institute for Policy Analysis & Research (ZIPAR) is part of a programme that seeks to identify existing and potential opportunities to further the development of specific value chains among and across SADC member states.

The paper explores and assesses regional competitiveness and opportunities in the electrotechnical industry for both South Africa and Zambia. It offers an in-depth assessment of the structure and status of the electrotechnical value chain in these countries by presenting production and consumption patterns, input suppliers and producers, export markets for products from the sectors, as well as the import patterns in relevant subsectors. This research looks at these themes for the purpose of informing cross-cutting country policy initiatives based on a shared understanding of industrial development challenges at a regional level.

Greater regional integration would support economic diversification and industrialisation in Southern Africa by expanding markets for consumers and capital goods as well as drawing together capacities from different of countries. It would, however, require a greater degree of specialisation between nations to permit economies of scale. In this context, the concept of regional value chains proves useful in identifying opportunities for more integrated industrialisation. On the one hand, it underscores the potential for enhancing economic integration based on improved specialisation and competitiveness in the partner economies; on the other, it provides a framework for systematic analysis of factors that prevent investment and growth.

This working paper outlines the evolution of the value-chain concept as a way to understand opportunities for industrialisation. Using the value chain framework in the regional context shifts the focus away from global demand and partnerships to local and regional markets and relationships. It underscores the importance of managing the difficult trade-offs involved in deepening the regional division of labour. The second section of the paper describes the Southern African economy, which was unusually unequal and dependent on commodity exports. It also reviews existing trade in continental SADC. It evaluates the effects of freight transport as a cross-cutting constraint. A case study of copper manufacturing illustrates the utility of value chains to guide analysis. This section points to key blockages to diversification, notably the difficulty of improving coordination between national policies and challenges around reshaping the division of labour to promote regional industrialisation without excessive costs to South African producers.  

This Working Paper is a draft for a chapter in a book: Fortunato, P. ed. (Forthcoming). Productive  Transformation and Regional Value Chains in Southern Africa. UN: New York and Geneva

This research report aims to identify opportunities to develop the regional value chain in agricultural inputs, and the opportunities within that value chain for regional trade. It also aims to detail policy initiatives to be undertaken by the South African Department of Trade and Industry to capitalise on those opportunities in order to promote regional integration and growth and development supported by expanding regional value chains.The study covers the following countries: South Africa, Mozambique, Tanzania and Zambia. The research aims to answer the following questions:

• What is the current profile of the agricultural inputs sector in each country?
• What are the key factors driving demand for different categories of agricultural inputs across the four countries?
• What are the main factors that constrain demand for agricultural inputs in each country, and in aggregate across the region?
• What is the current structure of the regional value chain in these inputs? How is it organised?
• How well is the chain functioning?
• What and where are the opportunities to improve the functioning of the regional value chain?
• What does this analysis imply for the dti’s regional development policy?

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.