Chapter 3: The State of Industrialisation and Economic Diversification Within SADC: Prospects for Enhanced Regional Trade

Industrialisation and regional integration are critical for fostering growth, stability and development in Africa. The African Continental Free Trade Area (AfCFTA) seeks to integrate the continent into regional and global value chains. It also aims to promote both horizontal and vertical diversification through value addition. At the regional level, the Southern African Development Community (SADC) Industrialisation Strategy and Roadmap (2015–2063) serves as a driving force behind the industrialisation agenda. Its primary objectives are to enhance value addition in manufacturing and increase exports. This is achieved through a focus on industrialisation, improved competitiveness and deeper regional integration, all aimed at fostering structural transformation. Despite these efforts and opportunities, many of the Southern African countries have failed to reach the desired outcome due to several developmental challenges. This chapter assesses the role of industrialisation on international trade in the Southern Africa region. The chapter uses mixed-method analysis to offer insights into the Industrial Policy Agenda in Southern Africa. It evaluates the state of industrialisation and the production structure within the SADC. Additionally, it examines the sophistication of products and exports, as well as the broader industrialisation efforts in Southern Africa. Finally, the chapter also critically analyses how industrialisation could enhance economic diversification and regional trade in Africa. The study recommends that member states need to develop and implement robust industrial policies that encourage investment in technology, innovation and skills development that match the industrial needs for improved productivity and competitiveness in the manufacturing sector. SADC countries need to prioritise investments in infrastructure, including transportation, energy and digital connectivity.