Spreading the gains? Prospects and policies for the development of regional value chains in Southern Africa
Regional integration is making steady progress in Africa and a key objective is to improve the prospects for industrialization by expanding the regional market. This paper draws on a combination of trade data analysis and industry case studies to better understand the links and synergies between regional value chains and regional integration. The trade data and case studies of three diverse sectors (apparel, food retailing, and automotive) demonstrate the expansion and diversity of regional trade and regional value chains in Southern Africa. This diverse composition of regional exports is suggestive of an opportunity to further enhance industrial development through intra-regional trade. The long-term sustainability of Southern African regionalism depends on the recognition of the importance of regional industrial policy that takes account of the dynamics driving global and regional value chains and facilitates regional linkages across all these sectors.
Anthony Black, Lawrence Edwards, Ruth Gorven, and Willard Mapulanga
Agro-processing, value chains, and regional integration in Southern Africa
Regional integration in Africa is underway but ongoing progress requires that the gains are widely spread. South Africa’s huge regional trade surplus in manufactured goods is already leading to protectionist pressures in neighbouring countries. Agro-processing is a large sector, which is widely regarded as having significant potential, but the export performance of the region has been quite poor if South Africa is excluded. Intra-regional trade is dominated by South Africa’s exports to the region. The share of processed goods in agricultural trade has increased but only modestly. Regional value chains are failing to include the small economies of Southern Africa. Constraints include tariff and non-tariff barriers, weak infrastructure, demanding quality standards as well as weakly developed local suppliers. Policies to promote the development of suppliers outside of South Africa are required along with more generic measures such as improvements in the regulatory and investment environment, and better infrastructure.
Review of the Impact of the China Restraint Agreement on the Clothing and Textile Industry in South Africa
Following China’s accession to the WTO in 2001, cheap Chinese garments have flooded clothing markets worldwide bringing to fruition the prophecy of Chinese hegemony in a liberalised global clothing market (Kaplinsky 2005; Nordas 2004; and Kaplinsky et al 2006). South Africa’s domestic market has, unexceptionally, also been adversely affected by rising Chinese imports evidenced by i) a falling relative contribution of apparel to total manufacturing output and ii) persistent job loss in the sector (Kaplan 2003; Barnes 2004). China has significantly increased its footprint in the South African clothing market over the past decade.
The disruptive entry of China into the global economy, with its thirst for minerals and energy and its prowess in manufacturing, has had a major impact on the terms of trade. India’s impending entry is likely to exacerbate this shift in relative prices. This shift in relative prices poses both challenges and opportunities for SSA, including constraining the prospects of the manufacturing sector.The Making the Most of Commodities Programme (MMCP) addresses the opportunities opened for SSA minerals and energy producing economies. Its primary focus is on how to enhance these economic and social opportunities arising from the exploitation of primary commodities.
A Sectoral Analysis of Skills Gaps and Shortages in the Clothing and Textile Industry in South Africa
The SA clothing and textiles industries have undergone difficult restructuring over the past ten years due to the combined impact of domestic and international factors. The negative impact of this transformation is manifest in the declining contribution of the sector to total manufacturing output, its falling export share and significant contraction in sector employment. This outcome might have been different had this process of restructuring been pre-empted and accompanied by a concerted effort to up-skill remaining workers and promote innovation in the sector. This could have enabled the sector to pursue a skills-led competitiveness strategy and assist a move toward higher-cost, high quality items. Paradoxically, underinvestment in both human and physical capital in the South African clothing and textiles sector has deepened the crisis precipitated by globalisation and currency weakness and the sector has been incapable of dealing with rising import penetration. Government policy designed to address the effects of liberalisation on the sector has largely been regressive and reinforces the perception of global trade as a threat rather than opportunity.