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ECONOMY: “Borderless Southern Africa Is a Pie in the Sky”

Servaas van den Bosch

WINDHOEK, Aug 17 2010 (IPS) - Regional economic integration plans in southern Africa are not rooted in reality, according to civil society organisations holding a parallel meeting alongside the Southern African Development Community (SADC) summit in Namibia’s capital of Windhoek.

Activists at the People's Summit, which is running parallel with the SADC heads of state summit in Windhoek, Namibia. Credit: Servaas van den Bosch/IPS

Activists at the People's Summit, which is running parallel with the SADC heads of state summit in Windhoek, Namibia. Credit: Servaas van den Bosch/IPS

Banned by the Namibian government from marching and voicing their discontent while the SADC heads of state meet between Aug 16-17, civil society organised a “people’s summit” in the city’s Catholic cathedral to discuss trade agreements and regional economic integration.

“A borderless southern Africa is a pie in the sky at the moment,” says trade analyst Dot Keet from the Alternative Information and Development Centre (AIDC), based in South Africa. “The 2008 SADC Free Trade Agreement wasn’t signed by all member states. More importantly, it is not being implemented.”

The customs union due to be launched in 2010 has been put on the backburner because the region is not ready.

Part of the failure to move ahead with a regional economic integration agenda, which foresees a monetary union in 2015 and a common currency in 2018, is due to the widely varying priorities of SADC member states, according to Keet and other civil society analysts.

“Botswana wants to be this hub for business and financial services, banking on its strong legal system and market access to South Africa,” explains Keet. “Countries like Lesotho and Swaziland desperately want to hold on to the aid they receive.

“Some countries are going ahead with liberalisation at a faster rate than others, which has dramatic effects on the region.”

According to Keet, “trade is extremely imbalanced currently. For instance, for every 20 products that South Africa exports to Zambia, only one comes back. A functioning free trade area (FTA) will exacerbate this situation. The countries with stronger economies take advantage of the weaker countries that have little to offer.”

In additions, the economic partnership agreements (EPAs) with the European Union (EU), spelling out liberalisation of 85 percent of tariff lines, will make it easier for European goods to enter the FTA. “This will multiply the existing trade imbalances,” states Keet.

Cross-border traders in the region, who recently obtained a tax waiver on consignments under 500 dollars, could be severely affected by different tariff regimes in the SADC area, she argues.

“Mozambique is liberalising tariffs at a fast pace, which can cause problems for traders trying to import goods into South Africa that has a different tariff regime. Border officials will interrogate the traders more intensely and examine the origin of the products closely.”

United Nations (UN) Millennium Campaign coordinator Thomas Deve says, “not one single country in the region is happy with the pace of development. Instead of resource mobilisation through trade, liberalisation has led to deindustrialisation and massive job losses, with the number of poor people in the region increasing”.

The UN Millennium Campaign is aimed at mobilising popular support for the actualisation of the UN millennium development goals.

The civil society representatives argue that the process of economic integration needs to be stripped from political rhetoric and built up from the ground.

Rumbidzai Masango of the Economic Justice Network (EJN), a project of the Fellowship of Christian Councils of Southern Africa (FOCCISA), says that: “SADC is not ready for the ambitious milestones that are currently set out.

“Introducing one currency in the near future would throw countries like South Africa and Namibia 10 years back.” FOCCISA is an ecumenical organisation working with 11 national church councils in southern Africa.

She adds: “The region should set minimum standards with regards to inflation targets, budget deficits and monetary policies. It’s important to ensure countries are stable before marrying the different economies.”

Keet agrees: “The region needs to move rapidly to put in place common strategies where it can. The transport and communications sector is one area where progress can be made quickly. But we also really need strategies on water management, food security and energy provision.

“Even a common industrial policy like South Africa is pushing at the moment is not out of reach,” Keet believes.

The immediate economic survival of the region depends on harmonisation of policies and a common negotiating position with the EU and other trade blocs, argue the trade experts.

The perceived dominance of South Africa in SADC does not have to be an impediment, says Keet. “You can’t wish South Africa away. Instead the other countries can stick together to offer a counter-weight.

“They have to negotiate a charter on cross border investment, regulating the profits South Africa companies can repatriate. Pretoria will welcome this as it will alleviate some of the political pressure.

“This heads of state summit will deliver the usual rhetoric. What I really would like to see is the SADC states coming together in the EPA discussions and negotiating as one bloc,” says Keet.

“As long as we haven’t determined our own position in the region on some vital issues such as export taxes, infant industry protection, rules of origin and so on, there cannot be final EPAs,” she adds.

“Economic integration will be gradual, incremental and based on variable geometry in different sectors,” argues Keet, who is of the opinion that the system of preferences in the EU – currently the focus of heated negotiations – will gradually disappear.

“And then our products will have to compete with those of the rest of the world.”

Masango calls it a “catch-22 situation”: “Countries are coerced into signing for future development, yet the regional economic integration that the EPAs supposedly offer is clearly not taking place.”

For example, some provisions, such as those on fisheries, are contradictory to countries’ development goals, Masango argues. “The Europeans want to come and fish in waters all along Africa’s shores and sell the fish at huge profit in Europe.

“But, on the other hand, it is often impossible for African countries to export fish themselves because of the high phyto-sanitary requirements. How can that be fair trade?” she asks.

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