by Joseph Ngwawi – SANF 06 No 71
The annual summit of the Southern African Development Community (SADC) ended in Lesotho with an undertaking to improve the investment climate and a call for serious introspection by countries as a Free Trade Area target fast approaches.
Leaders of the 14-member economic and political bloc approved the SADC Protocol on Finance and Investment, which aims to harmonise financial and investment policies of member states and ensure that changes in policies in one country do not affect other countries.
The protocol is an important stepping stone for a region whose target is to become a free trade area by 2008 and a customs union two years later.
It was signed by seven of the member states – Democratic Republic of Congo, Lesotho, Madagascar, Mauritius, Mozambique, South Africa and the United Republic of Tanzania. Other SADC member states – Angola, Botswana, Malawi, Namibia, Swaziland, Zambia and Zimbabwe – require approvals of their parliaments or the concurrency of their Attorney General before signing protocols.
Key elements of the protocol include the creation of a favourable investment climate within SADC; attainment of macroeconomic stability and convergence; cooperation in taxation matters; and coordination and cooperation on exchange control policies.
The protocol provides for the setting up of a peer review panel, which will act as a regional macroeconomic monitoring and surveillance body. The panel will comprise the ministers of finance from member states as well as all governors of central banks from the region.
According to a communiqué issued at the end of the summit, the leaders were highly critical of the slow pace at which member states are implementing regional decisions.
There are wide disparities in terms of progress at individual country level towards meeting some of the macroeconomic targets already set. Some countries, including Zimbabwe, are lagging behind with regards attaining agreed economic targets on inflation and fiscal deficits.
Another landmark decision was the setting up of a taskforce of ministers to recommend action by member states on the issue of multiple membership of regional economic communities (RECs), human resources requirements of the SADC Secretariat and progress towards the formation of the customs union.
The taskforce, comprising ministers of finance, economic development, planning, trade and industry, is expected to present its recommendations during an extraordinary summit scheduled for Maseru, Lesotho, at the end of October. The actual date of the summit will be announced later.
Difficulties caused by overlapping membership of RECs have delayed progress towards meeting regional integration targets.
The bulk of SADC member countries belong to more than one REC, all of which have the creation of a customs union as targets. World Trade Organisation rules, however, require that a member country should not belong to more than one customs union.
This means that member states will be required to make serious decisions before the end of this year by renouncing their membership of some of the RECs.
The summit mandated the secretariat to accelerate the process leading to the establishment of the SADC Regional Development Fund, which will finance development projects based on mobilisation of member states’ own resources such as insurance and pension funds as well as other regional funding sources.
Current SADC funding is such that about 61 percent of the region’s programmes and projects are financed by international cooperating partners while the remainder comes from member state contributions.
It was agreed at the summit to improve this scenario and have the bulk of the funding for projects coming from regional sources.
The leaders also noted with concern the high rate of mortality among women and children and resolved to keep programmes to combat and mitigate the spread of HIV and AIDS high on the regional agenda. It was agreed to increase such programmes within the context of the Maseru Declaration on Combating HIV and AIDS of 2004.
Lesotho pledged US$100,000 towards the Regional AIDS Fund, becoming the second country after South Africa to do so.
With respect to the membership of Seychelles, the southern African leaders resolved to engage in further consultations over the country’s application for re-admission into SADC.
Seychelles has applied to rejoin SADC after it pulled out of the regional bloc in 2004, citing financial constraints.
Its readmission has been stalled by concerns about how much the country must pay before coming back. SADC had initially written off arrears amounting to US$2.6 million previously accumulated by Seychelles before it pulled out.
The SADC Secretariat has been mandated to assist the Seychelles explore ways of meeting its financial obligations.
The summit also endorsed the process of drafting the SADC Gender Protocol and directed the secretariat to ensure that thorough consultations with member states are undertaken.
