by Maxwell Chivasa
Southern Africa offers significant opportunities for trade and investment, with the end of apartheid in South Africa, but many challenges remain.
At the recent Annual Consultative Conference of the Southern African Development Community I (SADC) in Midrand, South Africa, on 1-2 February 1996, government ministers, business sector representatives, donors, bankers and potential international investors, addressed a number of investment opportunities the region offered, existing barriers and ways to remove the latter.
The conference, whose theme was “Towards Enhanced Trade and Investment in southern Africa” examined ways to boost economic growth.
The participants were very open, warning that it is necessary not to underestimate political problems as a hindrance towards investment to this region. Furthermore, southern Africa lies at the tip of the Africa continent which puts the region farther than some of the developing countries competing for investment from Europe and North America.
The business community urged member states to remove existing economic barriers without delay or risk losing investment to of other developing countries. Some of the factors that have prevented investment are lack of efficient markets and “suffocation” of trade liberalisation.
The return of peace and stability to most SADC member states has generally made the region investor friendly, but the lack of a lasting peace accord in Angola was a matter of concern which hindered economic progress in that country. Mozambique was urged by the international community to uphold the current the peace.
Officially opening the conference, the South African President Nelson Mandela said that the region, “now characterised by stability, is on the verge of a breakthrough.” And there was need for some strategy on matters of common interest like investment.
Mandela sees the trade protocol to be signed by SADC member states later this year, as a move that will present this region as one entity to investors and donors. This will boost economies of other members states. It is estimated that the volume of trade within southern Africa will multiply by four if South Africa bought goods from member states.
The region’s infrastructure, from transport, energy, water, natural and human resources, to political stability and democracy were presenting the most favourable climate for investment now in the world, he said.
Baroness Linda Chalker, the British Minister of Overseas Development, said in the last 10 years she had seen changing politics in the region which allowed the return of peace. “The SADC region is beginning ~ team n attractive climate for investment,” she said adding that the challenge now is to have convertioie currencies and the eradication of budget deficits as the private sector should not to be crowded out by government over-borrowing.
Brian Atwood of USAID said investment in the private sector is the key to economic recovery for this region. He said recent developments in Angola, Mozambique and South Africa were encouraging and would allow investor confidence in this region.
Total France, which operates 2 400 points of oil sales throughout the world and employed 3 610 people, urged SADC countries to create favourable conditions for the foreign operator, saying threats to an investor were a drawback to the region.
A spokesman for the Nordic countries said trade and investment were important but the region needed to tap its own resources and improve intra-regional trade. Several actions were required to improve the situation. He urged the development of the small scale sector which in most cases ended up being the private sector.
Some countries in the region had a good investment climate but the corporate taxes were ridiculously high not making it worth investing in.
Bureaucratic procedures in government also discouraged investment. Procedures of investment had to be clear for an investor who did not have much time on scouting for “ground”.
“These procedures are often elaborate, you run from one department to another and eventually meet people who are prepared to help and for a fee, of course,” said a banker.
Japan sees the SADC region as an important trading partner and has distributed about US$400 million to its 11 countries, which was about 35 percent of its total aid to other developing countries.
A delegate from Switzerland said some business people were intermediaries responding to companies that want to come into the region and working with emerging markets. This presented, ADC member states with serious competition.
Portfolio investors and project finance areas had lots of investors wanting to come to Africa or this region but they would need to be assured that a legal framework is in existence; the stock exchange system; ability to disseminate information; whether there is respect for the law or does democracy get misinterpreted; repatriation of capital and importation of equipment and “red tape”; foreign ownership of companies and labour laws; and tax rates.
Responding to these concerns on behalf of SADC member states, the Tanzanian Foreign Minister, M M Kikwete, said the region is ready to concentrate on issues raised at this conference as a way of boosting economic development. He said the policies of transparency and economic liberalisation are now being practised throughout the region. “Almost all SADC countries have something to offer to potential investors,” said Kikwete.
However, some SADC member states urged South Africa to avoid flooding the markets of its neighbours with its goods. This, according to ZimTrade chief executive, Morrison Sifelani, would result in de-industrialisation in Zimbabwe, Zambia, Botswana, Mozambique and Tanzania. Sifelani appealed for fair trading practices within the region so that other member states would not experience unemployment problems as a result of de-industrialisation. Already some industries are closing down as a result of unfair trade practices. (SARDC)
