by Virginia Kapembeza
Positive developments during 1995 have created more awareness within SADC of the need for regional cooperation and integration as a more effective means of attracting investment. A few days before the imminent Southern African Development Community (SADC) Annual Consultative Conference on 1-2 February – called a Trade and Investment Forum — the Community is working to capture more investment opportunities with added emphasis on regional rather than national interests.
The region is taking advantage of the prevailing peace dividend, with Angola’s faltering but holding peace process remaining a hurdle for regional political stability. The relative political stability in southern Africa has paved the way for the region to hold itself up as a good destination for both local and foreign investment.
Tanzania’s first multi-party elections in October, although fraught with problems, signalled another victory for democracy — a trend that has created a suitable political, social and economic environment.
Participants to the Forum, to be held in Johannesburg, South Africa, will include the governments, International Cooperating Partners (ICPs), financial sector and business community from within and outside the region.
Previous meetings only involved regional governments, donors and ICPs. As part of the forum programme, a SADC Trade Exhibition Fair will be organised on 3-4 February.
A Harare-based regional magazine, commends the inclusion of other stakeholders but cautions that governments should be prepared and effectively articulate the advantages competition from other regions.
The magazine urges the forum to not only exchange views and experiences as has been done in the past but to grab and retain the interest of potential investors by promoting the region’s comparative advantages, skills, resources and markets.
SADC member states and the ICPs have been working on the rehabilitation and upgrading of the region’s infrastructure to create a conducive environment for development. Some support has already been pledged by the US government and a Memorandum of Understanding on technical cooperation was signed with SADC in December last year.
Under the agreement, there would be a joint analysis of a free trade area both within the region and globally. Other issues to be tackled will be the exploration of an expanded customs union and the
There will also be support for electronic dissemination of information for the SADC Secretariat on regional trade, investment and finance especially, including stakeholders in moves greater economic integration.
Since 1992, efforts have geared toward regional integration and the appropriate strategies for its realization, with emphasis being placed on the need to involve fully “the enterprise sector as the primary engine for growth and development”.
The objective of the Forum will thus be to examine and discuss trade and investment opportunities in the SADC region and the challenges and prospects such opportunities present to SADC, its member states and the ICPs.
The SADC Executive Secretary… Dr Kaire Mbuende, says although a favourable environment has been created for political cooperation in the region, prolonged international financial support is not guaranteed.
Briefing journalists and diplomats in Harare in November last year, Mbuende said the region now has to look more at mobilising internal resources for development and to ensure broader participation of non-state institutions.
The newly created Sector on Finance and Investment coordinated by South Africa is tasked with mobilising resources and the coordination and harmonisation of macro-economic policies, fiscal policies to attract investment and trade.
“SADC is trying to create a framework so that the unilateral trade liberalisation that is being undertaken by a number of member states through Economic Structural Adjustment Programmes and cross-border investments are brought into a multilateral framework where the element of reciprocity would be important,” said Mbuende.
Among the priorities for economic development for SADC are less state-centred development, greater attraction of investment and increased participation by other stakeholders hence the latter’s inclusion in the forthcoming forum.
Regional organizations have also been formed including the Regional Tourism Organisation for Southern Africa (RETOSA).
Protocols are also being prepared on various sectors of the Community including the pending Trade Protocol and the proposed Southern African Power Pool Protocol. The SADC Trade Protocol, seeks to harmonize all bilateral agreements currently not equitable and distortive to regional trade.
The Power Pool protocol is expected to harness the resources of regional utilities to enhance energy transfers within southern Africa.
Mmegi, a Botswana-based weekly paper, reports that current trade negotiations between South Africa and the EU could pose serious implications for other SADC countries.
Although South Africa has agreed to consult SADC on the negotiations, there is still some concern. far as “As we are concerned, that agreement will have serious implications in the region. It is not only South African industries that will be exposed to competition from EU products but the whole region.” says Mbuende.
There are also several trade blocs at play in southern Africa and these include: Southern African Customs Union (SACU), Cross Border Initiatives (CBI), Structural Adjustment Programmes (SAPs) and COMESA. These would need to be harmonised to be more effective and to avoid duplication and competition for resources.
High on the agenda on harmonisation efforts is the SADC/COMESA issue. The 1995 SADC Summit meeting decided that a joint SADC/COMESA summit on the future of the two organizations should be held.
A joint Committee of Ministers, five each from SADC and COMESA, assisted by five senior officials from the two organizations, were chosen to draw up terms of reference and recommendations for the Chairmen of the two sides.
It was also agreed that the geographical area covered by Comesa be split into COMESA North and COMESA South, whereby the latter will comprise the current SADC member states.
Botswana and South Africa have shown their preference for SADC as a vehicle that is likely to become an economic co-operation success story in the establishment of a common market. The Southern African Customs Union (SACU) and its relationship with the other SADC states is yet another matter for discussion. Presently comprising of South Africa, Botswana, Lesotho, Namibia and Swaziland (BLNS), analysts have recommended that SACU be transformed into a regional common market for all SADC countries.
At last year’s consultative conference in Lilongwe, it was proposed that non-SACU members like Angola, Malawi, Mozambique, Tanzania, Zambia and Zimbabwe should join the union. Towards this move, there has been a trade agreement between SACU and Zambia where the latter has access to the market in the SACU countries.
As part of the harmonising efforts, a Finance and Investment Committee comprising of regional Finance Ministers and Governors of Central Banks, is looking at monetary policies and exploring the formation of a common monetary area.
President Robert Mugabe of Zimbabwe says SADC member states would benefit if they open their borders to free regional trade as soon as possible.
Naming SADC as the preferred way forward for regional economic integration over COMESA, Mugabe says progress would be determined by how fast trade barriers are abolished.
South Africa, Botswana, Lesotho, Namibia and Swaziland already have a common trading value under SACU. The currencies of Malawi, Zimbabwe and Mauritius are fairly stable and Mozambique seems well placed to stabilise its currency with the prevailing peace.
Analysts say the challenge therefore, remains as that of bringing the monetary policies of Angola, Zambia and Tanzania closer or in line with other countries in the region.
The main comparative advantage that SADC has in international markets is its amount of natural resources.
The main weaknesses are inadequate human resource skills and capital to compete globally. The biggest challenge facing the region therefore is to create better macro-economic policies which are sensitive to all economic sectors especially the region’s economic mainstay, agriculture and also industry.
Economic analysts believe that regional cooperation. could catalyze economic growth in the long term while economic integration might play an important role in attracting much-needed foreign direct investment to the region.
A major stumbling block facing integration are the gross inequalities within most of the countries. In South Africa, wealth is concentrated in the hands of a few while the majority grapple with poverty. This is also reflective of the rest of the countries in the region to varying degrees.
Levels of development within the SADC countries are also very different and this has a negative impact on the economic integration. In Mozambique and Angola, there is obvious need for imports as their capacity for manufacturing is limited.
In Zimbabwe and South Africa, there is urgent need to rationalise highly diversified industrial structures.
Analysts urge any harmonisation to take cognisance of the different needs of the countries. The need for governments to implement more imaginative policies to facilitate growth and development has also been highlighted with the channelling of more resources to sectors like tourism which are not as prone to fluctuations.
The present investment pattern is not very reassuring. The Vice President of Botswana who is also Minister of Finance and Development Planning, Festus Mogae, says public investment has fallen in many countries under pressure of fiscal austerity measures. “Domestic private investment has not recovered, despite all the liberalisation and investment incentives,” added Mogae, noting that the inflow of foreign direct investment into Africa has not been of any significance so far.
As participants convene in Johannesburg at the end of January, more heed should perhaps be taken of Mogae’s words that the basic requirement for investment to occur “is the sense of irreversibility of the core principles of economic and political management such as respect for freedom of enterprise and contract, democracy, accountability and transparency”.
That SADC is heeding some of the advice rendered from various quarters is reflected by the decision to include other non-state actors in its initiatives in response to the call to “move the government out of the business of doing business, but into the business of regulation”. (SARDC)
