Trade and Industry, South Africa, at the opening of the UNIDO Sub-regional
office in Pretoria
19 April 2006
CONVERTING TRADE DIVIDE INTO TRADE DIVIDEND: THE ROLE OF THE UNITED NATIONS
INDUSTRIAL DEVELOPMENT ORGANISATION IN SUB-SAHARAN AFRICA
Your Excellency Dr Kandeh Yumkella, Director-General of UNIDO,
Your Excellencies, Ministers from SADC,
Your Excellencies Ambassadors and Heads of UN funds, programmes and
agencies,
Distinguished Guests,
Senior officials,
Friends
I feel very honoured to be part of this important occasion of opening the
sub-regional offices of the United Nations Industrial Development Organisation
(UNIDO), a United Nations (UN) specialist agency that in fulfilling its mandate
of industrial development has targeted Africa and in particular the sub-Saharan
Africa, the poorest region in the world, as the focus area in its support and
promotion of industrial development for the next 10 to 15 years.
First and foremost, as we celebrate the inauguration of the new Sub-regional
office of UNIDO in South Africa, we would like to reiterate our full commitment
to multilateralism, and, in this context, to the pre-eminent role of the United
Nations system in global economic integration.
In addition, the appointment of a veritable son of Africa as the first ever
black Director-General of UNIDO, Dr Kandeh Yumkella, marks the new dawn in the
history of the organisation. It is an honour to have an African leading an
organisation of strategic importance such as UNIDO at this time, especially
given the transformation agenda that was introduced by the Secretary-General,
Dr Kofi Anan.
Dr Kandeh Yumkella leads the organisation at a time when region is faced by
a number of challenges as research has shown, fundamental changes have occurred
in the global industrial setting with greater emphasis on such issues as
internationalisation of production, productivity and competitiveness,
technology upgrading, industrial capability building, global value chains,
Information and Communication Technologies (ICTs), and stricter global norms
and standards for industry. This more complex industrial setting has increased
the risk of marginalisation, especially for countries with weak productive
capacities such as those within the Southern African Development Community
(SADC).
Economic stagnation in Sub-Saharan Africa is of major concern as Millennium
Development Goals can only be advanced by expanding productive capacities for
employment goals and embracing the marginalised countries and groups in the
mainstream development process through greater equality of opportunity.
I have no doubt in my mind that industrial development and trade constitute
key sources of sustainable economic growth, which is the main force in poverty
reduction. I believe that productive employment is the cornerstone of
development and poverty reduction. In this context South-South co-operation
that is being championed by UNIDO is the best model for SADC. In our view, the
promotion of South-South co-operation would not be a substitute to North-South
co-operation but rather would be a deliberate intervention by 'developmental
states' of the South to integrate themselves into the global economic
system.
Even though the South-South strategy is beginning to show some benefits, as
the new global trade map shows an increasing world market share of South-South
and South-North trade, it has become clear to us that, this process has mainly
been driven by East Asia, led by China, involving triangular manufacturing
production networks, especially in high technology industries such as
electronics. East Asia dominates South-South trade both in terms of
intra-regional and interregional manufacturing trade. Of great concern is the
weak performance of Sub-Saharan Africa, which has not only lost market share in
the North in resource-based and low technology industries, but also in
South-South manufacturing trade during 1995-2003.
Even though a significant number of countries in the region have vast
minerals and agricultural resources, the availability of these resources has
not translated into employment creation and reduction in poverty levels. This
can partly be explained by the fact that industrial development in sub-Saharan
Africa has lagged behind the rest of the world, including other developing
economies and has now become the least developed region in the world. The
sub-Saharan countries have relied mostly on agriculture and on export of raw
materials with very little value-add. This reliance has meant that economic
growth over the years has been less than satisfactory.
The economic globalisation that we have experienced in the past two decades
has not translated into a considerable share of the world economy for the
Sub-Saharan economies. Instead, the poverty and per capita income gap between
developed and other developing countries has widened. Research has shown that
between 1981 and 2000, the percentage of people living in absolute poverty
worldwide decreased from 400/0 to 21 % whilst in Sub-Saharan Africa the number
increased from 420/0 to 470/0, a situation that has resulted in the region
being the only one in the world where per capita income has decreased over the
last quarter of the century.
Economies that have grown fastest are those that have diversified and
reduced reliance on low-value, low technology products. Growing global income,
technological advance and the splitting up of production chains across
countries, has meant that high technology products have shown the fastest
growth in manufactured exports, with medium technology products retaining a
high but steady share and low technology and resource-based products declining
in world trade, overall.
A review of industrial development trends presented in the UNIDO Industrial
Development Report of 2004 shows that whilst the share of world's developing
countries of global manufactured value added (MVA) has increased from 140/0 to
240/0 between 1980 and 2000, that of the sub-Saharan Africa decreased from 1 %
to 0.80/0 after peaking at 3%) in 1985. The Industrial Development Report also
shows that not only has the sub-Saharan Africa's share of MVA decreased but
their economies have been in decline with per capita income significantly
lowering compared to that of a quarter century ago.
UNIDO with its resources and experience worldwide is uniquely placed to help
and support developing countries of the region to address challenges of
regional disparities, poverty and underdevelopment. We have no doubt that UNIDO
would assist us in preparing ourselves as a major economic player in global
trade and industrial development, not as passive recipient of aid. Converting
trade divide into trade dividend should be the focus of our strategy.
Strengthening the industrial supply response to trade liberalisation should
be based on building the required capacity to trade and enhancing industrial
capabilities for productivity growth, inter alia using capabilities within the
region to address issues of the region. This requires firstly a strengthening
of the supply capacity for exporting competitive industrial products and
secondly complying with a variety of technical standards and norms related to
technical barriers to trade (TBT) , supported by essential institutional
support services. In a broader context the combination of various industrial
growth paths may be considered for reducing poverty.
Instead of the 'free trade for all' that has emerged in the global economic
system, ours should be an export-led growth strategy that is combined with a
basic needs strategy and a balanced growth strategy that is based on
productivity growth, as well as an export-oriented, people centred
industrialisation.
South Africa has chosen a triad development strategy of employment-led
growth; and an export diversification strategy. Such strategies would need to
be supplemented by improved conditions for financing South-South trade,
especially with and within Sub-Saharan Africa.
The success or otherwise of current trade liberalisation negotiations hinges
firstly on progress in integrating sub-regional trade policies and on the scope
for reducing industrial tariff escalation and tariff peaks as well as relaxing
Trade Related Intellectual Property Rights (TRIPS) within the region. This will
enable us to facilitate higher degrees of industrial processing with the
region.
The increasing trade liberalisation and the need to reduce the income gap
means that the region can no longer rely only on imported products and services
but must develop its own comparative advantages. The ability to achieve this is
constrained by the lack of knowledge and capacity to develop products that meet
the technical, regulatory and other standards that conform to the requirements
of the markets they are intended for.
I mentioned in my address to the UNIDO General Conference, held in Austria
in November 2005 that a key to sustained growth lies in establishing the
necessary physical and institutional infrastructure to satisfy the technical
requirements of the Multilateral Trading System. The Cleaner Production centres
that are promoted by UNIDO are clear mechanisms for achieving this objective.
It is therefore necessary that through the support of UNIDO and other
international organisations, we create the institutional framework that will
enable us to acquire the necessary knowledge and adapt that to suit our own
unique circumstances.
An important element for long-term sustainable industrial development is the
ability to acquire, analyse and use knowledge including technological
developments. We are therefore pleased that UNIDO has committed to the
provision of information, skills and technology and to sharing and exchanging
this information. We believe that the opening of the sub-regional office to
service the technical and information requirements of South Africa, Lesotho,
Namibia, Botswana, Angola, Malawi, Zambia, Mozambique and Swaziland will
greatly assist the efforts of these countries in accelerating industrial
development.
We are very pleased that UNIDO, as part of its mandate of supporting and
promoting industrial development of developing countries and countries in
transition, has committed to make Sub-Saharan Africa as the focus area over the
next 10 to 15 years. This commitment has further been demonstrated by the
decision to open a sub-regional office in South Africa, which will enable it
decentralise its decision making processes, to better understand the issues at
regional level and to enhance its ability to meet promptly and flexibly the
needs of developing countries as stated in article 17 of the constitution of
UNIDO. In its long-term vision, UNIDO has also committed to assist developing
countries in three key important areas:
Supporting industrial development efforts through the creation and
development of production capacities in the non-farm sectors including support
in technology transfers, meeting financial requirements and international
market access should be key areas of focus for the regional office. Supporting
in trade capacity building through supporting efforts aimed at addressing
barriers to international trade including conformity to technical requirements
and other supply-side capabilities. In addition, supporting activities aimed at
environmental sustainability will help us achieve our international
commitments, in particular the Millennium Development Goals and our commitments
made at both the World Summit on Sustainable Development and the Kyoto
Protocol.
By establishing an office in South Africa, UNIDO has achieved one of its
organisational goals of decentralisation of functions and activities so that
decisions can be taken at a country and regional level. This also fulfils the
commitment made at the Southern Africa sub-regional symposium on productive
capacity and competitiveness held in Zimbabwe in October 2004 to strengthen the
UNIDO partnership with the SADC.
Together with UNIDO, we will need to change development dynamics towards the
MDGs with emphasis on new strategies, institutional mechanisms and modalities.
A dynamic and competitive industrial sector can make a major contribution to
poverty reduction while a stagnant industry sector is unlikely to embrace the
poor in the mainstream development process.
We will need to jointly incorporate new approaches Sub-Saharan African
industrial development agenda, through greater co-operation with lead countries
such as China, India, Brazil, South Africa and others especially in the East
Asian region. Intensified South-South co-operation for poverty reduction would
need to be considered at various levels, namely:
* Increasing productive capacities to enhance trade, technology and
investment flows among developing countries: Enhancing drivers of productivity
and competitiveness through capability building; upgrading technology, learning
and innovation; strengthening linkages between industry, trade, technology, FDI
and employment; improving industrial supply response to trade liberalisation;
encouraging South-South investment; promoting intra-industry trade; enhancing
South based transnational co-operations (TNCs); and promoting inter-regional
trade and regional integration.
* Developing joint action to address discriminatory elements of global trade
reform: Assessing industrial implications of the Doha Round of trade
negotiations; promoting trade liberalisation within the South; promote
relaxation of Trade Related Intellectual Property Rights (TRIPS); harmonising
regulatory measures; and addressing special needs of Sub-Saharan Africa and
LOCs.
* Formulating a joint response to poverty reduction: Enhancing co-operation
in preparing Poverty Reduction Strategy Papers (PRSP) at the national level;
promoting rural and urban industrial activities linked to micro, small and
medium enterprises, both livelihood and growth enterprises; fostering
public-private partnerships; promoting renewable energy; and commercialising
R&O findings for poverty reduction.
* Exchange of experience and institutional networking: Enhancing networking
among South institutions and experts; strengthening small, medium and micro
enterprises (SMMEs) through enterprise-to-enterprise co-operation; exchanging
experience on industrial strategies, policies, institutional framework,
technologies, ICTs and studies and research.
UNIDO can playa catalytic role in building productive capacities for poverty
reduction through South-South co-operation in partnership with relevant
agencies within the UN system as well as national and regional institutions.
Working together, the UN system can make a difference.
Currently, South Africa is developing a strategy aimed at accelerating
industrial development in its own regions, in consultation with a number of
structures including New Partnership for Africaâs Development (NEPAD), as well
as UNIDO. Further to this, is the identification of a number of regional
industrial development support measures that enhances comparative advantage and
growth potential that has been identified. Work in progress is continuing in
identifying constraints and actions that need to be taken to develop this
further. As we continue in our collective efforts with provinces and our
municipalities, we are also conscious of the fact that the individual regions
may have unique circumstances and therefore our varied strategies would need to
be refined and further customised to suit the different conditions that are
pertinent to respective regions.
We are therefore proud to join hands with UNIDO as an able partner in our
collective commitment to realise a just and equitable economic order in the
world. In this regard, we look forward to increased co-operation in the
alignment of strategies at both the national and the multilateral levels with
regional initiatives such as NEPAD and the mobilisation of funds to support
these goals.
The South African Government is committed to working with our neighbours in
addressing the economic and social challenges in the region, and has set itself
a target of achieving the 6% GDP growth rate by 2009. This requires that we not
only identify joint opportunities and potential growth areas but that we must
also deal with the structural constraints that hinder regional economic
development. We all know that there are a number of initiatives underway that
deal with these.
In conclusion, I would like to thank the UN and its agencies in their
efforts aimed at poverty reduction and addressing underdevelopment in Africa.
In particular, I would like to thank UNIDO, specifically the Director-General,
Dr Yumkella for seeing it fit to establish this sub-regional office in order to
better address our needs as the Sub-Saharan Africa. We are confident that this
office will get the support of all the sub-regional economies.
Also, let me thank all the officials who have worked relentlessly in making
sure that this event is indeed a success.
I thank you.
Issued by: Department of Trade and Industry
19 April 2006
