ECA’s plan to save regional private sector
Economic Commission for Africa ( ECA) Office for Southern Africa heard this week that southern African regional economy is expected to shrink by 1.4 percent, total merchandise export by 17 percent and government revenues by five percent due to the disruption of economic activities by the COVID- 19 pandemic.
This was revealed at the ECA’s 26th meeting of the Intergovernmental Committee of Senior Officials and Experts ( ICSOE) for Southern Africa that was held under the theme ‘ Policies and Strategic Effective Private Sector Led Growth and Job Creation.’
African Union Southern Africa Regional Office ( AU- SARO) Senior Policy Officer, Myranda Lutempo said COVID- 19 has posed further challenges to an already struggling region and pushed back gains towards Agenda 2010 and Agenda 2063. In attempt to reverse the effects, the Union promotes the ratification and implementation of the African Continental Free Trade Area ( AfCFTA) and the free movement protocol as key drivers for private sector development and regional economic integration.
“The AfCFTA is a huge opportunity to boost regional trade, industrial dynamism, strengthen the regional value chains, accentuate the development of infrastructure, and promote local talents and skills,” he said, however, pointing out that the implementation of the AfCFTA agreement will expose the sub- regional private sector to a more competitive environment.
Officially opening the virtual meeting, Director of SRO- SA, Sizo Mhlanga acknowledged that while the private sector, including small, micro, and medium- sized enterprises ( SMMEs), should be in the driving seat of economic development, job creation and regional integration in Southern Africa, it has been severely affected by the negative impact of Covid- 19.
Recently, the United Nations Economic Commission for Africa ( UNECA) in collaboration with an external partner administered a survey online among businesses in Africa to take stock of how Covid- 19 was impacting businesses and the challenges they were facing.
The results for the Southern African region have recently been published and reveal that the top three challenges for businesses in the region were: drop in demand for products/ services, lack of operational cash flow and reduced opportunities to meet new customers.
The concerns seem to be more acute for businesses operating in the goods sectors than in services. Fifty- eight percent of respondents reported supply shortages as a constraint due to border closures, higher freight costs and shipment delays.
According to Mhlanga, a response strategy has been for them to switch away from international to national suppliers. He observed that the COVID- 19 crisis has also highlighted the necessity for member countries to reduce their dependence on global value- chains and external markets.
“This crisis is reminding us that more than ever our member states should redouble efforts to progress on consolidating regional integration processes, whether through COMESA, SADC, the TFTA and critically through the AfCFTA; while accelerating the building of productive capacities and the implementation of national and regional industrialisation strategies and improving on the business environment in order to unleash opportunities for the Southern African private sector both in the sub region and the rest of the continent,” Mhlanga said.
He added that building back better post- COVID- 19 will require a strengthening of the capacities of the private sector, with special attention to women- led and youth- led businesses, a prioritisation in policies for accelerating inclusive and sustainable industrialisation processes - at national and regional level – and a fast tracking of regional integration.
According to Mhlanga, the ECA Sub- regional Office for Southern Africa is currently engaged in several technical assistance projects that are aimed at supporting member states and businesses in the region to address the impacts of COVID- 19.
“We have a UN development account project whose objective is to support member states at aligning and harmonising their national industrial policies with regional industrialisation frameworks such as the SADC Industrialisation Strategy and Roadmap ( 2015- 2063),” he said.
He said the other complementary project is aimed at strengthening capacities of SMEs to address the impact of COVID- 19 with special attention to technology and innovation. The major objective of the 26th ICSOE, was for member states, private sector and civil society to discuss collectively on the post- Covid- 19 strategies that the region should put in place to recover from the pandemic and strategies to strengthen the role of the private sector in that recovery process, especially in relation to building their industrial capabilities, improving their competitiveness and their contributions to regional integration.