SADC industrial strategy faces crossroads
Industrialisation review, progress, gaps and geopolitics present sobering assessment
TEBOHO KHATEBE MOLEFI and
MOTSAMAI MOKOTJO
MASERU – A comprehensive review of the Southern African Development Community’s (SADC) Industrialisation Strategy and Roadmap (SISR) 2015-2063, released in February, presents a sobering assessment of the region’s structural transformation journey.
While the strategy has succeeded in establishing a shared long-term vision, the report finds that implementation has been uneven, fragmented, and significantly slower than envisaged, with manufacturing value added (MVA) remaining stagnant at around 12 percent of GDP – far below the target of 30 percent by 2030.
The review, mandated by the 43rd SADC Summit of Heads of State and Government held in Luanda, Angola, in August 2023, evaluates the first decade of implementation. It comes at a critical juncture as the bloc confronts a rapidly shifting global economic landscape, marked by intensifying geopolitical rivalries, the operationalization of the African Continental Free Trade Area (AfCFTA) and growing competition for influence from Western powers, China and emerging economies within the BRICS bloc.
For member states like Lesotho – a small, landlocked country with an MVA share of 19.4 percent of GDP, one of the highest in the region, driven largely by its textile and apparel sector – the findings offer both validation and a stark warning. The report underscores that without a decisive shift from aspirational planning to delivery-oriented, investment-driven execution, the region risks falling further behind in the global race for industrial competitiveness.
Mandate for change
The 2023 Luanda Summit directed the SADC Secretariat to improve reporting on implementation, harmonize reporting with the Regional Indicative Strategic Development Plan (RISDP) 2020-2030, and undertake a thorough review of the SISR. The resulting document, titled “A study report on the review of the SADC Industrialisation Strategy and Roadmap (SISR) 2015-2063: Implementation status, achievements, challenges and emerging priorities,” serves as the foundation for the strategy’s next phase covering 2026 to 2063.
The review’s findings are unequivocal. Between 2015 and 2063, the share of manufactured goods in total exports from the SADC region rose only marginally from approximately 26 percent to 29 percent. The proportion of medium- and high-technology products in MVA inched up from 27 percent to just 29 percent.
Most concerning, SADC’s share of global manufacturing exports declined from 0.8 percent to 0.7 percent, signalling a gradual erosion of competitiveness.
“These trends suggest that deep structural transformation, technological upgrading, and export diversification have not yet materialized at the scale required to meet the Strategy’s ambitions,” the report states.
Intra-regional trade in manufactured goods improved modestly from about 19 percent to 22 percent of total intra-SADC trade, reflecting some progress in market integration. However, this remains well below potential, highlighting a persistent dependence on primary commodities and limited participation in higher value-added segments of global and regional value chains.
Lesotho: A microcosm of regional potential and peril
For Lesotho, the report’s detailed breakdown offers a mixed picture. The country’s MVA share of 19.4 percent places it among the region’s industrial leaders, second only to eSwatini. This performance is largely attributed to its textile and apparel manufacturing sector, which has been a significant employer, particularly for women.
However, Lesotho is also listed among the countries that experienced deindustrialization between 2015 and 2022, underscoring the fragility of its industrial base.
The review highlights that many member states, including Lesotho, continue to face structural and operational constraints: infrastructure gaps in energy and transport, limited access to finance, and a lack of harmonized policies. The report notes that “many Member States remain focused on national projects rather than leveraging regional economies of scale, limiting the potential benefits of regional industrialisation.”
For a country like Lesotho, which is heavily reliant on its textile exports to the United States under the African Growth and Opportunity Act (AGOA), the geopolitical dimension is critical. The review’s discussion of emerging priorities explicitly references the need for SADC to leverage global value chain shifts.
With AGOA’s future uncertain and the United States increasingly focused on supply chain diversification, Lesotho’s industrial strategy must pivot to integrate more deeply into regional and continental markets.
The competitiveness conundrum
The review’s assessment of Pillar II – Enhancing Competitiveness – identifies persistent weaknesses that directly impact member states’ ability to attract investment and integrate into global value chains. While the number of SADC member states ranked in the top 100 of the World Economic Forum’s Global Competitiveness Index increased from five in 2019 to 12 in 2023, the report notes that “the productivity gap between Member States remains high.”
On innovation, the Global Innovation Index (GII) 2025 rankings place Lesotho at 132 out of 133 economies, with the report describing its system as an “early-stage innovation system.” This is contrasted with Mauritius (53), South Africa (61) and Seychelles (75).
The report emphasizes that “innovation systems are highly uneven, with only a few countries demonstrating relatively mature research, development, and commercialisation capabilities.”
Investment in research and development (R&D) remains critically low across the region. No SADC member state meets the AU benchmark of 1.5 percent of GDP spent on R&D. Namibia leads with 0.73 percent, followed by South Africa at 0.62 percent. Lesotho’s data is not provided, reflecting the report’s broader finding that “inadequate data and monitoring systems” hinder accurate tracking of competitiveness improvements.
AfCFTA, Western powers and the BRICS factor
The review’s chapter on emerging priorities is notably anchored in the opportunities arising from the AfCFTA, which has expanded SADC’s potential market to over 1.3 billion people. The report argues that the revised SISR must “prioritize sectors where SADC can achieve a comparative and competitive advantage, including agro-processing, automotive assembly, textiles, and mineral-based manufacturing.”
This continental opportunity is set against a backdrop of intensifying geopolitical competition. The United States, through AGOA, has long been a key market for Lesotho’s textiles and for South Africa’s automotive and agricultural exports.
However, with Washington signalling a shift toward a more transactional trade policy focused on strategic supply chains and domestic manufacturing, the predictability of AGOA’s renewal beyond 2025 is a major source of uncertainty.
The European Union, meanwhile, is deepening its engagement through Economic Partnership Agreements (EPAs) and the Global Gateway initiative, which aims to mobilize €300 billion for infrastructure projects. The review notes that the SADC region has received an average of US$804 million annually in climate finance, primarily from bilateral sources and multilateral development banks, many of which are headquartered in Europe.
This presents an opportunity for member states to align industrial projects with the EU’s green transition agenda.
The BRICS bloc, now expanded to include Ethiopia, Egypt, Iran, Saudi Arabia and the United Arab Emirates, represents a shifting economic landscape. South Africa, as the only SADC member in BRICS, acts as a gateway.
The review’s recommendation to “strategic partnerships with private sector and development agencies” implicitly recognizes the need to engage with this multipolar economic architecture. The BRICS New Development Bank, with its focus on infrastructure and sustainable development, could offer an alternative source of financing for the regional industrial projects the report identifies as critical.
Green industrialisation and critical minerals
One of the most significant emerging priorities in the review is the emphasis on green industrialisation and critical minerals. The report notes that “the share of coal in installed capacity declined from 74 percent in 2014 to about 59 percent in 2024/25, while renewables now account for roughly 8 percent of total capacity.”
However, it also cautions that the region faces a “generation capacity shortfall of 502 MW” and a much larger deficit of over 4 200 MW among interconnected member states.
The review identifies nine viable investment nodes in the battery, copper products, and mining inputs sectors, with 20 potential projects across nine countries worth an estimated US$2.3 billion.
For countries like the Democratic Republic of Congo and Zambia, which are central to the global battery supply chain, this represents a critical opportunity to move beyond raw material exports. However, the report warns that “inadequate workforce in the areas of mining and industrial project preparation” and “limited financial resources” constrain implementation.
This is where the geopolitical competition for critical minerals becomes most acute. The United States, through its Inflation Reduction Act, and the European Union, through its Critical Raw Materials Act, are both seeking to secure supply chains for energy transition minerals. SADC member states, endowed with cobalt, copper, lithium, and manganese, are at the centre of this global competition.
The revised SISR’s success will depend on whether the region can use this leverage to attract investment in downstream processing and manufacturing, rather than continuing to export unprocessed minerals.
Informal sector and digital transformation
The review’s attention to the informal sector and digital transformation reflects an understanding that industrialisation in the 21st century cannot follow the linear path taken by East Asian economies. The report notes that “informality in SADC is shaped by country-specific institutional and economic conditions, implying that uniform policy responses are unlikely to be effective.”
It recommends that “digitalisation, including digital registration, payments, taxation, and compliance systems, offers a critical lever to improve transparency, lower entry costs into the formal sector, and progressively integrate informal economic activities into the mainstream economy.”
The SADC Digital Transformation Strategy, adopted in October 2022, is meant to operationalize the digital pillars of the industrialisation strategy. However, the review notes that “the strategy lacked an implementation plan; as a result, it has not been monitored or evaluated.” This gap between policy and execution is a recurring theme across the report.
Institutional weakness and the way forward
Perhaps the most critical finding of the review is that the SISR’s institutional and governance architecture, “while conceptually sound, has not been fully operationalised.” National focal points often lack authority and resources, regional coordination is episodic, and private sector engagement remains largely consultative rather than structured around co-investment.
The review recommends a fundamental shift from “strategy articulation to implementation discipline.” It calls for the next phase (2026-2063) to be structured around fewer, clearer, and more bankable priorities, explicitly linked to AfCFTA market opportunities.
It proposes a variable-geometry approach, recognizing that member states are at different stages of industrial development, and emphasizes the need to strengthen monitoring, evaluation, and reporting systems.
For Lesotho, the recommendations are clear.
The country must leverage its existing manufacturing base in textiles to integrate into the broader SADC and AfCFTA value chains. It must address the skills gap by participating in regional initiatives like the SADC University of Transformation, which the review notes is operationalizing a “CARE Hypermarket Model” for academic exchange using block-chain technology.
And it must actively engage in the geopolitical realignment, positioning itself not as a passive recipient of AGOA preferences but as a competitive manufacturing hub that can serve multiple markets.
The SADC Industrialisation Strategy and Roadmap 2015-2063 was designed as a generational framework. The review, mandated by the 2023 Luanda Summit, makes clear that the first decade did not deliver the promised results.
The region’s share of global manufacturing exports fell, industrial upgrading stalled, and the gap between ambition and execution widened.
Yet the report is not a requiem. It identifies tangible achievements: the harmonization of over 100 regional standards, the operationalization of transport corridors and one-stop border posts, and the emergence of value chains in agro-processing and pharmaceuticals. It points to a set of emerging priorities – green industrialisation, digital transformation, and the integration of SMEs – that could reposition SADC for the next decade.
But success will depend on whether member states, individually and collectively, can navigate the intensifying geopolitical competition. The United States, the European Union, China, and the BRICS bloc are all seeking to shape the region’s economic trajectory.
The revised SISR offers a framework to ensure that SADC member states – from Lesotho to the DRC – are the architects of their own industrial future, rather than merely the suppliers of raw materials for others’ green transitions.
As the report concludes, the 2026–2063 period “must be treated not as a continuation of the past decade, but as a decisive phase of industrial acceleration, institutional strengthening, and competitive repositioning within Africa and the global economy.”
