SADC's cost of trade is 'too high to be competitive'

Africa is experiencing strong economic growth due mainly to intracontinental trade with Asia. SA's distance to most major world markets means that the SADC region should represent a significant opportunity for many local companies.

However, Kumalo told the African Renaissance Conference in Durban yesterday that African countries still conducted only 10% of their total trade with each other, while average transport costs in Africa averaged 40% of total costs, compared with only 12% in the developed world.

"Strong growth on the continent has opened up major opportunities for South African firms and industries, which have contributed to development by investing in telecommunications, banking, mining, construction and retail," said Rural Development and Land Reform Minister Gugile Nkwinti.

He said while the SADC region faced significant challenges such as infrastructure, trade barriers and governance issues, intra-regional trade was expected to increase from 7% of trade to 25% by 2030.

Trade on the increase

SA's trade with regional neighbours was expected to increase to 30% of its total trade by 2030, from 15% now, and in terms of employment, increased exports to the SADC alone could generate almost 60 000 additional jobs by 2015 and about 150 000 jobs by 2020.

"Our proposals centre on a strategy for improving logistics...," said Nkwinti.

The proposals included measures to cut obstacles to trade and travel, an integrated system in a number of countries to improve port efficiency, an integrated road and rail system across the continent, measures to expand regional investment and trade, while integrated supply chains and industrial corridors, particularly in mining and agro-processing, were envisaged, said Nkwinti.

Transport Minister Sbu Ndebele said the existence of a number of transport corridors on the continent at various stages of development was an indication that Africa was now a "united entity".

Ndebele said a new foundation, the Connecting Africa: Access and Mobility Foundation, would be launched soon through a public/private partnership that would develop the transport infrastructure knowledge base and implement transport advocacy programmes.

Clear vision needed

Ndebele said private sector funding in the transport sector remained weak and African governments and the African Union's Regional Economic Communities remained the primary funders of transport infrastructure in Africa.

Participation in the rail concession system in Africa by the private sector had largely been driven by businesses wanting to control distribution systems, or benefit from managing large investment programmes, rather than earning direct returns on their investments in rail, Ndebele said.

"We need a clear vision, a five-to10-year plan that seeks to institutionalise the regional transport infrastructure planning, development, management, maintenance, operation and promotion," he said.

Remigious Makumbe, the SADC director of infrastructure and services, said a "master plan" for infrastructure for the SADC was expected to be completed in June this year and it had identified 154 transport projects that needed to be implemented.

Source: Business Day via I-Net Bridge