by Munetsi Madakufamba – SANF 04 no 76
This article is part of our special daily coverage of SADC regional issues at the SADC Summit currently taking place in Grand Baie, Mauritius
GRAND BAIE, 15 August – The majority of Southern African Development Community (SADC) economies have continued with their trend of positive economic growth albeit at levels that are insufficient to progressively reduce poverty.
Figures released by the SADC Trade, Industry, Finance and Investment Directorate ahead of the Summit of Heads of State and Government, which convenes on 16-17 August in the island state of Mauritius, show that the region’s average gross domestic product (GDP) grew by 2.2 percent in 2003. This figure is a significant decline from the 3.2 percent recorded in the previous year.
Angola, which has just come out of a devastating civil war, achieved a GDP growth rate of 17 percent in 2003. Botswana (6.7), Malawi (6.5), Mozambique (7) and Tanzania (5.5) were among the top performers. The rest achieved growth rates below five percent with Zimbabwe, which is enjoying an encouraging economic upturn this year, recording a negative growth rate.
At current growth rates, most SADC countries will not be able to achieve the Millennium Development Goal (MDG) of halving poverty by 2015. The internationally agreed minimum economic growth target necessary for developing countries to achieve the poverty MDG is for them to grow their economies by at least seven percent per annum.
“The majority of our people in the region subsist on below internationally acceptable poverty lines,” said Jakaya Kikwete, Tanzanian Minister of Foreign Affairs and International Cooperation when he was handing over the SADC Council of Ministers chair to his Mauritian counterpart, Jaya Krishna Cuttaree.
Kikwete said that in some SADC member states, “hunger, malnutrition and lack of access to basic social services such as education, health, clean water and basic housing still affect large proportions of our population”.
Poverty, which stands at 40 percent in SADC, is also fertile ground for the spread of major communicable diseases such as HIV and AIDS, tuberculosis and malaria, which have severely derailed development efforts in the region.
Fudzai Pamacheche, head of the SADC economic directorate said the other big challenge is for SADC member states to keep inflation within single digit levels. He said recent food shortages in some parts of the region had had a knock on effect on the consumer price index in 2003, “particularly for Lesotho, Swaziland and Namibia, which had achieved single digit inflation rates in the last few years”. However, seven countries recorded single digit rates of inflation during the same year.
On trade, Pamacheche said a significant increase in intra-regional trade has been achieved since 2000 when the SADC Trade Protocol came into effect. Intra-regional trade is estimated at 25 percent of all international trade and is expected to rise to 35 percent by 2008, according to targets set out in SADC’s economic blueprint, the Regional Indicative Strategic Development Plan (RISDP).
“Major increases in trade have occurred in the textiles and clothing, and sugar sectors,” said Pamacheche, adding that special trade arrangements for these sectors have opened up opportunities for the region.
While the trade protocol is meant to facilitate the exchange of goods and services in the region by reducing and ultimately removing tariffs, a number of barriers still remain.
“There is outstanding work on the harmonisation of sanitary and phytosanitary measures, which are critical for trade in agricultural products,” said the SADC economist, explaining progress on the implementation of the SADC Trade Protocol.
He added that: “while there has been significant progress on trade in goods, trade in services remains behind schedule mainly due to lack of capacity. In dealing with trade in services, we have to be mindful of the obligations that member states have undertaken at the World Trade Organisation (WTO) level as well as the current Doha Development Round negotiations.”
SADC countries, along with other developing nations, are facing stiff resistance from wealthy nations who are reluctant to reduce, let alone remove, subsidies on agricultural products, which render farmers in the south less competitive.
For SADC countries, two major avenues are available to pursue the trade talks: the WTO framework, and the African, Caribbean, Pacific (ACP) negotiations with the European Union (EU). Negotiations for a regional economic partnership agreement between SADC and the EU were launched in Namibia last month.
The creation of a harmonised industrial and investment growth environment is yet another challenge for SADC. Most southern African countries are producers and exporters of primary products with a small industrial base that relies heavily on imported machinery and equipment. South Africa is the region’s most industrialised economy while Mauritius and Zimbabwe have a significant manufacturing base.
Pamacheche said SADC is carrying out a review of sub-industrial sectors to identify value chains and opportunities that may be available to the region for industrial growth and investment. A similar review is also being done in the mining sector to improve mineral beneficiation and diversification.
Also underway is a regional assessment of the extent of cross border trade, an informal sector that has steadily grown over the last few years, but remains largely ignored. It is now increasingly accepted that cross-border trade, in which women are the main players, has the potential to transform the lives of many social groups in the region.
Cognisant of the numerous economic challenges that the region faces, and the need to achieve acceptable macroeconomic convergence, SADC plans to establish a surveillance mechanism that will monitor the performance of member states and ensure that they stay within agreed targets as outlined by the 15-year RISDP. (SARDC)
