CHAPTER 7: Conclusion & Policy Recommendations
7.2 Recommendations for the SADC subregion
In view of the conclusions as well as the main body of this report on SADC, the recom-mendations that the report makes to the SADC subregion within its five main chapters are summarised below:
• Striving for inclusive growth: in order to achieve inclusive or pro-poor growth, the SADC subregion must formulate deliberate policies and take specific actions that improve the availability of social services (health, education, and water and sanitation) and ensure that poor women and men must be able to access these services and are empowered to participate in, contribute to and benefit from economic growth. They should be able to do this through gainful employment, as well as freedom of expression and enjoying their human rights and dignity. The most effective means of participating, contributing and benefiting is through decent and productive employment. Thus SADC country policies must be tailored to ensure that the pace and pattern of economic growth leads to employment opportunities, and that the poor are sufficiently empowered.
• Closing the international divide: SADC broadly lags behind other regions of the world in human development. However, recent protocols that address reforms in governance and distributive systems and establish mechanisms for protecting people against downside risks (including disease pandemics, political instabilities, insecurity, droughts and adverse terms of trade) are beginning to show promising effects in most SADC countries. To close this divide, SADC will have to seek deeper subregional integration, including enhancing its subregional and international development cooperation efforts, in part through buy-in into international charters, conventions and agreements, and through domesticating these and applying them diligently
• Promoting social integration: the subregion’s record in one aspect of social integration, namely cultural exchange, looks positive. Levels of inbound tourism are considered as a proxy for cultural exchange and the indicators suggest that inbound tourism has grown in all economies in SADC in recent times, except in one country (DRC). This indicates an increasing level of social integration. However, many bottlenecks to deeper integration still abound, such as limited liberalisation of movement of natural persons, lack of security in some countries, cultural divides across countries, and limited cultural exchanges. Moreover, most of the subregional arrangements are either not yet in effect or have been rather ineffective. These bottlenecks should be addressed through the explicit inclusion of social-integration strategies in subregional protocols and by setting up institutions at subregional level with legislative powers to increase the chances of successful implementation of subregional protocols and agreements.
• Enhancing trade achievements: despite the impressive architecture of subregional trade arrangements in SADC, trade performance has been limited. South Africa, with its relatively more impressive trade record, dominates the subregion. The member States will have to work together to overcome internal supply-side constraints in the subregion and to negotiate for their current preferential market access to global markets to be maintained to the extent possible. They will have to adopt negotiating positions that reflect this common interest. Moreover, it will be important to find avenues for dismantling internal non-tariff barriers to trade within the subregion, through research and systematic regional trade negotiations.
• Strengthening subregional economic cooperation: considering that integration along trade lines may only contribute to broad-based human development in a limited manner, the subregion should continue with efforts to increase economic cooperation. Private-sector development and facilitating the expansion of the private sector will be critical for improving economic prospects. Subregional policies and strategies should support this. Currently, although credit to the private sector has been increasing,
domestic savings and investment have been declining, implying that there is an emphasis on foreign investment. In principle it is good that the subregion has been attracting increasing amount of FDI. However, care has to be taken that investments are not to the complete exclusion and isolation of would-be local economic actors. Deliwould-berate policies will would-be required to ensure that the ownership of capital can be extended to the domestic private sector in SADC.
• On enhancing agriculture specifically: Although the majority of people in SADC, particularly the poor, rely on agriculture, the agriculture sector makes the smallest contribution to GDP in the SADC subregion, except for South Africa, and has the lowest value-added or productivity. The subregion’s inability to make significant gains in expanding agriculture and agricultural productivity further marginalizes the poor and limits the prospects for human development. Most member States urgently need to formulate and implement the subregional agricultural policies and strategies that should improve outputs, productivity, marketing, market access and commerce.
Improving the record of agriculture would provide significant gains for food security, nutrition, employment and, ultimately, human development.
There is therefore an urgent need to intensify efforts, policies and actions in agriculture.
• Harnessing the boom in natural resources: Since early 2000, most countries that are rich in mineral resources have enjoyed a boom in natural resource demand and prices, and this has resulted in higher national earnings from extractive industries. However, this has come at a price, measured in depletion of natural resources. Moreover, the extractive industry is highly capital-intensive and driven largely by foreign capital and unfortunately it does not foster inclusive growth or poverty reduction. There is therefore urgent need for countries to transform their economic systems, forming structures that support long-term and sustainable distribution of fortunes from the extractive industries to local populations. This could be through the establishment of more robust mechanisms for capturing rents from the industry and through additional mechanisms such as stabilisation funds for sterilising the booms and distributing their benefits.
• Establishing subregional prerequisites for human development: The prerequisites include stable political, social and civic environments, underpinned by good economic and political governance, transparency and accountability. SADC has made progress in establishing thriving democracies, although the degree of success varies from one member State to another. However, it lags behind in a number of critical areas. One of these is the track record on corruption, which is almost endemic in many SADC member States. Rather than improving relative to the rest of the world, many States have regressed recently. There is an urgent need to
reinforce the fight against corruption in the subregion through establishing or strengthening, legal arming or re-arming, and financially resourcing key national and subregional institutions that jointly fight corruption, including legislative and law enforcement bodies.
• Increasing real GDP and real per capita GDP levels: Although a few countries have been ahead of the pack, SADC countries appear to have generally achieved a reasonable degree of economic convergence in terms of real GDP performance per capita, which has followed similar upward trends across the majority of countries. SADC initiatives supportive of this growth should continue and be scaled up. For countries that have been trailing, and particularly for those that have experienced steady deterioration in their real per capita GDPs, subregional initiatives should be stepped up that are tailored closely to addressing the political, social, economic and demographic factors that have led to these circumstances. Although the SADC bloc has made progress in holding talks about and with the countries in distress, these have been slow in yielding roadmaps to lasting solutions.
• Improving trade through export sophistication and diversification:
Although SADC has been growing its share of exports in world trade, the rate of growth has been low. The trade performance of the subregional bloc has been found to lie way below its potential. This limited performance in trade signals that SADC member States have not yet been able to take advantage of the benefits of the subregional integration links which have already been forged. One plausible empirical explanation that has been posited about the inability of African countries, including SADC Members, to make significant gains in trade-based growth has to do with their low levels of export sophistication. Thus, national and subregional strategies should be formulated and implemented that address this through training and improving human capital, adapting technologies, shifting technical mixes and mobilising investment resources, entrepreneurship and so on.
Steps should be taken to tackle many other challenges, including limited diversification of exports, which inhibits the subregion from improving trade and exploiting the benefits of subregional integration.
• Enhancing external-sector performance: concerted efforts towards economic diversification should be promoted and supported to shield member States from shocks arising from global commodity price movements and from other external shocks. In terms of national positions towards external debts and current-account deficits, efforts should be pursued to keep the external economies stable and sustainable under macroeconomic frameworks based on common principles and tenets. The ability to tap into international capital markets for future funding for the much-needed infrastructure projects in the subregion will depend on the sustainability of the existing debts and
current-account deficits and member States’ accumulation of international reserves, among other things.
• Supporting subregional infrastructure development: in order to develop a reliable and effective subregional framework for infrastructure development and to achieve the desired outcomes, the SADC subregion will need to:
review the legal and regulatory framework to remove the clauses that cannot be reinforced and strengthen those that can; work towards harmonisation of subregional and national-level policies to expedite the enforceability of the SADC legal and regulatory frameworks; create subregional bureaus of statistics to collect, process and publish statistical data that can easily be accessed by the citizens of the subregion to increase their levels of awareness and subsequently policymakers’ accountability to their electorates; and promote institutions for subregional policy research and analysis in order to provide evidence-based policy advice to member States.
• Supporting environmental sustainability, mitigating climate change effects and improving food security: In order to achieve environmental sustainability, economies in SADC should re-define themselves. The subregion should create “green” economies with environmentally friendly and thus sustainable technologies, production techniques and consumption habits. On the other hand, SADC will have to devise policies, strategies and legal arrangements to help mitigate or cope with the impacts of environmental degradation and climate change that are already starting to affect human development in the subregion. SADC will have to establish incentives and regulations for addressing the dual challenge posed by urbanisation. It will also have to formulate and apply safeguards and mitigation strategies for coping with climate change, including options such as seeking the cooperation and financial support of the more advanced economies in the international community, particularly given the disproportionately greater roles of those advanced economies in causing global climate change.
Subregional institutions that have the right political influence should remind those primarily responsible for climate change to bear the greater cost of this change by invoking the principle that “polluter pays”.