by Kizito Sikuka in Mbabane, Swaziland – SANF 16 no. 35
Southern Africa has the capacity to achieve deeper integration if sustainable financing models are put in place to implement regional programmes, projects and activities.
Incoming chairperson of the Southern African Development Community (SADC) Council of Ministers, Prince Hlangusemphi said this on 26 August ahead of the SADC Heads of State and Government Summit set for 30-31 August in Mbabane, the Kingdom of Swaziland.
“One important issue which continues to plague us as a regional organization is the capacity constraints such as lack of financial and other resources to implement our programmes,” said Hlangusemphi, who is also the Swazi Economic Planning and Development Minister.
“It is for this reason that we need to find sustainable financing solutions for investment in the regional activities, programmes and projects.”
He said it is critical for member states to operationalize the proposed SADC Regional Development Fund to ensure that the region is able to take full charge of its integration agenda, which currently depends on external support.
It is estimated that only nine percent of regional projects are presently funded by SADC member states while the balance of 91 percent comes from International Cooperating Partners (ICPs). This situation has compromised the ownership and sustainability of regional programmes.
According to a document released at the 33rd SADC Summit held in Lilongwe, Malawi in August 2013, a lot of groundwork had been made with regards to the establishment of the fund.
At the time there were suggestions that member states should take up 51 percent of the shares in the facility, against 37 percent for the private sector and 12 percent for ICPs.
It was also proposed that the fund will have seed capital of US$1.2 billion, with member states expected to contribute US$612 million while the private sector would take up US$444 million of the share capital and US$144 million was to come from ICPs.
Under the proposal, subscription to shares would be made over five years in equal instalments. The first subscription would be due within the first year of the Fund coming into force.
Any shares not subscribed to by the end of the fifth year would be reallocated to other member states on the basis of ability to pay.
The proposal was to have the first 25 percent of the shares divided equally among member states and members will be obliged to contribute. The remaining 26 percent would be allocated based on economic ability.
In addition to the creation of the SADC Regional Development Fund, the region is also in the process of engaging consultants to develop a SADC Resource Mobilisation Framework (Alternative Sources of Funding SADC Regional Programmes).
The framework will explore seven different but co-related alternative sources of funding to determine how fiscal space could be created to enable SADC member states to finance regional programmes, projects and activities.
The possible sources include how to curb Illicit Financial Flows (IFFs); the creation of a regional lottery system; harnessing the resources from a proposed philanthropy network and database of private sector companies; development of a sharing formula for import and export levies; introduction of regional transport and tourism levies.
For example, the assignment on curbing IFFs and creation of fiscal space to enable SADC fund its regional programmes will analyse illicit cross-border financial flows as a measure to prevent leakages from the region.
It is estimated that Africa lost more than US$1.8 trillion to IFFs between 1970 and 2008 alone, and continues to lose resources valued at up to US$150 billion annually through IFFs or “illicit capital flight”, mainly through tax evasion, mispricing of goods and services by multinational companies, according to a recent study commissioned by the African Union.
This, therefore, means that resources that are intended to develop Africa are being used elsewhere to improve the economies of other countries in Europe, Asia and the United States.
Hlangusemphi said until southern Africa is able to fund its own programmes, the push towards regional integration could be elusive.
“The drive for resource mobilization should be pushed at all costs and the SADC Resources Mobilization Strategy we adopted in 2012 must continue to be implemented,” he said.
He said as Swaziland takes over the chair of the regional organization, the country is ready to steer programmes meant to ensure self-sufficiency, hence the theme for the 36th SADC Summit is “Resource Mobilisation for Investment in Sustainable Energy Infrastructure for an Inclusive SADC Industrialisation for the Prosperity of the Region.”
Outgoing SADC Council of Ministers chair, Kenneth Matambo concurred, saying overdependence on outside support has affected the implementation of various regional projects.
He said it was important to seek alternative sources of financing to ensure success of regional strategies, including the recently adopted Revised Regional Indicative Strategic Development Plan (RISDP) and SADC Industrialization Strategy and Roadmap.
The SADC Industrialization Strategy and Roadmap 2015-2063 aims at accelerating the growing momentum towards strengthening the comparative and competitive advantages of the economies of the region, and is anchored on three pillars, industrialization, competitiveness and regional integration.
The Revised RISDP is a five-year plan that guides the implementation of all SADC programmes from 2015 until 2020, and focus on four priority areas: Industrial development and market integration; Infrastructure in support of regional integration; Peace and Security cooperation as a prerequisite for regional integration; as well as Special programmes of regional dimension.
The SADC Council of Ministers is one of the preparatory meetings that precede the SADC Heads of State and Government Summit.
At the summit, King Mswati III of Swaziland will assume the rotating SADC chair from President Seretse Khama Ian Khama of Botswana. sardc.net
