‘Tax harmonization key in attracting FDIs in SADC’

29Nov 2021
Rose Mwalongo
The Guardian
‘Tax harmonization key in attracting FDIs in SADC’

FOR the Southern African Development Community (SADC) to attract foreign direct investment (FDI) and scale up intra-regional trade, it needs to harmonize tax regulatory frameworks and policies.

These were among the issues highlighted in the just-ended SADC Industrialization Week, held in the Malawian capital, Lilongwe, which brought together governments, development partners, private sector and other regulatory institutions from across the region with more than 300 million people. The five-day event was meant to promote public-private engagement to foster new opportunities for intra-African trade and investment

Among the resolutions reached at the important forum is for SADC member states to ensure they alignment tax regulatory frameworks and policies to lure FDIs in their respective countries.

The forum noted over the impact that COVID 19 has had observing that it continues to have a significant negative impact on the global and region economy with lockdowns, job losses and closure of businesses resulting to disruption of global supply chain.

Similarly, members have been called upon to address infrastructure shortcomings, mitigate trade barriers and promote regional innovation and research development to industrialize.

The Draft encourages member states to play an active role in industrialization by ensuring policy stability and coherency.

The SADC Business Council and the SADC Secretariat commits to finalize the establishment of a private sector led tax and regulatory harmonization platform to complement existing structures.

The move is meant to drive consensus on tax and regulatory harmonization initiatives and processes in the region.

SADC executive secretary, Elias Mpedi Magosi, indicated that industrialization will remain a pie in the sky without the active participation of the Private Sector. He said as long as the region remains a dumping ground of processed goods from other regions, it means other economies are developing at the expense of the SADC region.

The Executive Secretary said there is a need for the Region to move with speed towards industrialization.

He cited that the policies and strategies are in place and what remains is for the Public and Private Sector to engage and play their meaningful roles in promoting intra-regional trade.

Economic Commission for Africa (ECA) Sub-regional office for Southern Africa director, Eunice Kamwendo said that it was sad that the industrialization promise was yet to materialize in the SADC Region as the share of manufacturing value added to Southern Africa’s GDP had failed to increase significantly over the last five years.

“Productive capabilities are essential preconditions for the much-needed transformative shifts that we would like to see in our Region. This will entail focus on new and emerging sectors that will power industrialisation in the SADC Region,” she said.

Held under the theme, “Bolstering productive capacities in the face of COVID-19 pandemic for inclusive, sustainable economic and industrial transformation”, the fifth installment of the SIW brought together public-private players and captains of industry to discuss new opportunities for promotion of intra-trade and investment in the Region and beyond.

The event also promoted small pelagic fish value chains to safeguard and enhance the contribution of sustainable and healthy food systems in the SADC Region.

Speaking at the forum, Malawian President and SADC Chairperson, Lazarus Chakwera said: "SADC region will remain a dumping ground for processed goods from other regions if it does not industrialize.”

He said industrialization was a key priority for SADC economic transformation, warning “… if we do not industrialize we will continue to be a dumping ground for products from other nations”.

The central African nation leader underscored the need for SADC Member States to diversify their economies by moving from raw and unprocessed materials to value-added and manufactured products. He said value chains, which are currently at 14%, remain the Region’s low hanging fruits for the accomplishment of the industrialization agenda.