WORLD BANK RECOMMENDATIONS ON REGIONAL INTEGRATION AND BUILDING OF VALUE CHAINS IN LINE WITH SA GOVERNMENT POLICY

WORLD BANK RECOMMENDATIONS ON REGIONAL INTEGRATION AND BUILDING OF VALUE CHAINS IN LINE WITH SA GOVERNMENT POLICY

By BRIAN KAJENGO

World Bank recommendations that South Africa should deepen regional integration and build regional value chains broadly aligned to South African government policy and work programmes.

 The Chief Director of Policy and Research in the Department of Trade and Industry (the dti), Dr Brendan Vickers said this. Dr Vickers was speaking at the South African Economic Update report-back on export competitiveness presented by the World Bank at the dti.

The World Bank report focussed on South Africa’s export competitiveness and examined the performance of 20 000 companies that were involved in exports between the year 2001 to 2012.

 According to the report, sub-Saharan Africa had surpassed Europe as the biggest export destination for non-mineral export from South Africa in the past decade.

“For South Africa to achieve export growth it needed to take advantage of three opportunities of increased competitiveness, lower trade and input cost, and also greater regional achievement.” Vickers said.

Vickers indicated that the update provided a useful overview of recent economic developments in South Africa.

“The recommendation related to deepening regional integration in Africa is fully recognised and being addressed in the Southern African Development Community (SADC), the Southern African Customs Union (SACU) and now under the Tripartite Free Trade Area (FTA). Negotiations on trade in services in SADC are beginning to gain traction and there is work underway to address Non-Tariff Barriers and trade facilitation,” he said.

Vickers added that work is also underway to begin building regional value chains.

“The argument that South Africa is overly protected against imports is hard to sustain as South Africa’s trade weighted average tariff is 7.4%, while 54% of tariffs are set at zero. We are extremely open to many of our largest imports partners from the European Union (EU), the European Free Trade Area and SADC countries,” he emphasised.

He said there are already 2000 firms from the EU that are plying their trade in South Africa, 600 from the United States and many others.

Vickers explained that South Africa’s economic history demonstrates that the country’s relative success in exports of medium level technology goods has not been a result of import liberalisation but of prior and ongoing industrial policy.

“In assessing South Africa’s export performance, we also need to consider demand conditions in our export markets,” he said.