Partnering with the private sector for inclusive growth
Industrialisation in the region must involve SMMEs in global, regional and national value chains
Without a doubt, the private sector should play a leading role in creating jobs, drive the implementation of trade and industrialisation and foster regional integration in southern Africa. The private sector is key in fighting poverty and inequality. But for the private sector to drive the economic development in the SADC region, it is essential to create and maintain effective partnerships that link the private sector with governments and civil society organisations.
Partnering with the private sector can occur in various forms; it can focus on the collaboration with multinational corporations and large companies, SMMEs and the informal sector. It can be about bringing the private sector to the table, engaging with regional and national governments on policies and their implementation, and including SMMEs in the value chains of large companies — and it can be about supporting cross-border traders regarding their rights, safety and trade facilitation.
The Southern Africa Trust engages with the private sector in all of the above forms. The organisation has undertaken and supported initiatives that contribute to the reduction of poverty and inequality since the year 2005, including activities related to public policies, stakeholder engagement, human and economic development, research, training and capacity building. The organisation works together with civil society organisations, the private sector and governments across southern Africa.
“Inclusive growth is one of the key words,” says Ullrich Klins, project manager for private public partnerships in the organisation. “We aim at integrating SMMEs in the core value chain of large corporates, as we believe in a win-win situation for both.” To achieve this, the Southern Africa Trust equips companies with practical knowledge and guidance tools on how best to work with SMMEs. The tools support larger companies to buffer risks when including small and micro enterprises in the value chain, and includes an assessment of the companies’ performance and recommendation how to improve the business partnerships with SMMEs. Companies like Dairibord Zimbabwe and Schweppes Holding Africa already successfully implemented these tools.
In fact, the integration of SMMEs into a company’s value chain is far from easy. Companies may be exposed to supply shortfalls, empty shelfs and customer dissatisfaction because smallscale producers do not match the required standards of the product, and their deliveries are sometimes not accepted. Companies also might face loss of investment and frustration as smallscale suppliers might not use the equipment and input companies have provided to them, but resell it. On the other hand, small-scale farmers often feel ripped off by the large companies that purchase their goods. “We support both parties when it comes to the matchmaking,” says Klins, “and it requires a change of mindsets.”
But small-scale farmers are supported at a political level. A few months ago, together with the National Smallholder Farmers’ Association of Malawi, (Nasfam), the organisation brought farmers into the consultation processes of governments and the private sector concerning the national agriculture policies and investment plans in Malawi, Tanzania and Madagascar. “It was an eyeopener for these farmers, realising possible forms of investment that can positively affect their work in the longer term. Hence the small-scale farmers need to remain informed and involved in the consultations with governments,” Nasfam’s Beatrice Magwena points out.
When it comes to trade, smallscale traders and large companies face similar challenges, such as the slow processes at customs, including having to go through piles of paperwork. “We support the (informal) cross-border traders in raising their voices about the challenges at the border post,” says Christabel Phiri, project manager for mobilisation and engagement at the Southern Africa Trust. “About 70 of the cross-border traders are women and we are often informed about the challenges they face regarding harassment at the border posts. Safety for the traders is thus one of our key goals in our supporting the traders, but also trade must be made simpler for them, and we support the traders in engaging for a simplified trade regime at a regional level.”
For years, the private sector has emphasised the border post challenges. In this context, the Southern Africa Trust is one of the groups that supports regional integration by trying to bring the private sector, governments and civil society to the table. In particular, with regard to the SADC Industrialisation Strategy, the involvement of the private sector is key for the success of its implementation at regional and national level.
“How can you have an Industrialisation Strategy without industry being involved?” asks Klins. “A continuous dialogue between the relevant players is key to the success of development, industrialisation and growth in the region.” As a response to the business community’s requests to have more input in the Southern African regional trade and industrial policy formulation, the Southern African Business Forum (SABF) was established as a co-ordinating platform to encourage and facilitate public-private development activities within the SADC region.
Launched in August 2015 on the margins of the SADC Heads of State Summit in Botswana, the SABF has since established a secretariat that resides at the New Partnership for African Development (Nepad) Business Foundation with support from a variety of organisations, such as the European Union, the German International Co-operation, the Consumer Goods Council of South Africa, the Southern Africa Trust and individual companies. SABF is thus a regional, private sector-led platform for engaging the SADC secretariat and the member states to create an enabling business environment in the region. SABF is delivering concrete projects that are private sector-focused and working towards the development of regional inclusive value chains in the region, in particular in the field of mining, agriculture and pharmaceuticals; infrastructure, including the sectors of energy and water; and as a cross-cutting theme trade facilitation.
The reaction of governments in the southern African region have been mainly positive and the SABF has been given space to exchange with governments during the annual SADC Industrialisation Week, which this year took place in South Africa. “In establishing the SABF, the Nepad Business Foundation has created an excellent base for jointly implementing industrialisation in the SADC region,” says Klins. “Our work now focuses on involving more and more private sector representatives from the whole SADC region.”
Indeed, far more work needs to be done to mobilise individual companies and business associations to become engaged in the process of industrialising the region. The private sector in many member states of the SADC remains largely unaware of the SADC Industrialisation Strategy and Action Plan, and in many countries little to nothing is known of the SABF. Member states of SADC and also the SADC Council of Ministers have therefore called for a structure that brings in private sector representatives to discuss the implementation of industrialisation at national and regional level. Recommendations for such a formalised structure for private sector engagement are currently developed by the Southern Africa Trust, but it is still up to the private sector to breathe life into these engagement structures and take the lead in driving industrialisation in the region.
And while a first dialogue platform has been established, the best strategic way to involve SMMEs in global, regional and national value chains must be prioritised. While the SADC Action Plan on Industrialisation aims at developing a minimum of 30 value chains in the region, the integration of the SMMEs remains unclear, though it is at the core of the SADC Industrialisation Strategy.
Secondly, more focus needs to be placed on future trends, as the so-called Fourth Industrial Revolution will include significant changes of current job profiles. The dynamic development of computer and smartphone technology and robotics will result in completely new job requirements, and the engagement between governments, the private sector, academia and civil society must take this into consideration when discussing industrialisation in the SADC region. During the last annual Industrialisation Week in South Africa, the SABF emphasised this need.