Africa-Press – Cape verde. It was recently announced that the Eurasian Economic Commission (EEC) – the executive body of the Eurasian Economic Union (EAEU) – and South Africa are planning to establish a Eurasian industrial zone in the African country. Sputnik has asked two scholars to deliver their views on the potential of the project.
The establishment a Eurasian industrial zone in South Africa, if effectively planned, could contribute to addressing key issues facing the country’s economic development, says Prof. Alexis Habiyaremye, Senior Researcher with DSI/NRF, South African Research Chair in Industrial Development, University of Johannesburg, in an interview with Sputnik.
According to Bamidele Adekunle, adjunct professor at the Canadian University of Guelph, who also teaches at the Ted Rogers School of Management at Ryerson University, the main benefits of an industrial zone, which is a type of a special economic zone (SEZ), include specialized suppliers (meaning that inputs are cheaper and readily available, and expertise is enhanced), market pooling (providing availability of highly specialized skills, lower risk of unemployment, reduction of labor shortages) and knowledge spillover (providing research and development, reverse engineering, informal exchange of information and ideas, and benchmarking).
As for crucial fields of partnership between the EAEU and South Africa, Habiyaremye highlights the importance of agricultural cooperation against the backdrop of the global food crisis.
According to him, the establishment of a Eurasian industrial zone could facilitate the ability of not just South Africa but also its neighboring countries in Southern Africa to access the output (if for example the industrial park includes fertilizer production) at advantageous costs, and lead to more reliable supply chains.
Africa has been hit particularly hard by the global food crisis – especially in the regions where the rising food prices are coupled by natural disasters and/or conflict.
At the joint press-conference with his with his South African counterpart Naledi Pandor in January, Russian Foreign Minister Sergey Lavrov said that contrary to accusations by Western officials, the world food crisis was not caused by Russia’s special military operation in Ukraine and had begun prior to it, according to UN data.
The minister highlighted Russia’s efforts to help poorer nations enhance food security during the crisis – the initiatives include the Black Sea “grain deal” and free supply of fertilizer. The Western states, Lavrov noted, seem unwilling to support these efforts, as most of the grain exported under the deal does not reach those most in need and fertilizer export is advancing too slowly.
Talking about other possible domains of cooperation between South Africa and the EAEU, Habiyaremye listed strategic high-tech industries, in which both countries have complementary technological capabilities as well as the energy generation technologies to help tackle the power production crisis.
The energy crisis is a primary matter of concern for the South African government and citizens. Since 2007, the country has been struggling with recurring power shortages that have led to rounds of controlled rolling blackouts.
Recently, the country’s President Cyril Ramaphosa declared that a national state of disaster could be declared because of the energy crisis.
In his turn, Adekunle notes that EAEU-South-African collaboration could be strengthened in the areas of marketing of natural gas, alternative energy, and the development of electric vehicles. He also describes possible special approaches to partnership in the agricultural sphere.
Habiyaremye notes that depending on the size of the industrial zone and the kind of technology it brings, the Southern African Development Community (SADC) member states could be the secondary beneficiaries with the primary ones obviously being the investors and the host country.
According to Adekunle, as a result of the successful utilization of the industrial zone, South Africa and its neighbors will enjoy a reduction of the average cost of production, the concentration of firms in the selected location (which otherwise would not exist), as well as an increase in exports, while the EAEU will benefit from cheaper products produced by the industrial zones as well as an opportunity for the union members to export inputs and machinery required for production at the industrial zone.
According to him, the former colonial powers and traditional geopolitical rivals of the EAEU would be expected to criticize the project because they “still see the continent as a source of raw materials that does not need industrialization.”
As Adekunle notes, the relations between the EAEU and Africa are still at their early stages – and there is hope for a better future. According to him, this collaboration will only be achieved if the EAEU ensures that it has appropriate macroeconomic policies, political stability and the harmonization of processes and procedures.
Earlier, Michail Miasnikovich, the Head of the Eurasian Economic Commission Panel, mentioned that the EAEU and African Union have significant potential to boost trade and develop other integration trends.
The treaty establishing the Eurasian Economic Union was signed by the leaders of Belarus, Kazakhstan, and Russia in 2014; later treaties securing the accession of Armenia and Kyrgyzstan came into force in 2015. The union provides for common policies aimed at the development of its integrated single market and aims at further integration and the establishment of a single currency.
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