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Southern Africa: Spotlight on economic integration as SADC ministers meet

Southern African News Features, Harare

Southern Africa: Spotlight On Economic Integration As SADC Ministers Meet

By Joseph Ngwawi, Harare

21 March 2007

The spotlight falls on the march towards an integrated southern African economic community as ministers from the region meet in Lesotho on 22-23 March to discuss the budget for current financial year and regional projects.

With the Southern African Development Community (SADC) Free Trade Area set for launch in 2008, the SADC Council of Ministers is meeting in Maseru, Lesotho to assess progress on the region’s economic integration agenda.

The ministers will also discuss the budget on projects and activities for 2007/08.

SADC is moving towards creating an integrated economic community using the Free Trade Area as the entry point. Other regional targets are to have a Customs Union by 2010, a Common Market by 2015 and a Monetary Union by 2018.

The Council of Ministers will, among other things, consider the report of a ministerial taskforce set up at the 2006 Summit of SADC Heads of State and Government to propose a roadmap to reach agreed milestones for the implementation of the regional integration programme.

The first taskforce - comprising ministers responsible for finance, investment and economic development, trade and industry and the SADC Secretariat - presented its recommendations to an Extraordinary Summit held in October 2006 in South Africa.

The SADC heads of state and government then further directed the ministerial taskforce to undertake and finalise a study, which will evaluate an appropriate model for the SADC Customs Union.

One of the challenges is for member states to bring down tariff and non-tariff barriers in line with agreed timetables within specific product lines. The target is to ensure that 85 percent of all intra-regional trade is at zero tariffs by 2008.

Economic integration in SADC is guided by the Trade Protocol, which was signed in 1996 and came into force in 2000.

As part of its implementation, member states have been negotiating tariff reduction schedules, rules of origin, a dispute settlement mechanism, special product agreements, elimination of non tariff barriers and harmonisation of customs, trade documentation and clearance procedures.

Tariff phase down is based on a variable geometry model, taking into account the asymmetrical level of development in member states.

SADC member states are at different levels of development, with the South African economy far much more developed than the rest.

Countries within the Southern African Customs Union - Botswana, Lesotho, Namibia, South Africa and Swaziland - are liberalising faster, followed by Mauritius and Zimbabwe, while the rest follow.

Southern African leaders had during the Maseru summit in August 2006 voiced concern at the slow pace of implementation of regional projects and programmes, a situation blamed on inadequate funding of activities and lack of capacity at the SADC Secretariat based in Gaborone, Botswana.

The council is expected to discuss progress towards the setting up of a SADC Regional Development Fund, which will finance development projects from resources mobilised from member states.

It is envisaged that the 14 member states would have to raise funds from domestic sources such as insurance and pension funds to finance SADC projects and programmes.

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.

The Maseru summit agreed to improve this scenario by having the bulk of the funding for projects coming from regional sources.

The council will also be expected to discuss the sticky issue of multiple memberships of Regional Economic Communities (RECs) by member states.

Overlapping membership of RECs has 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.

Tariff reduction is divided into three categories, the first being goods that were to be liberalised by 2001, the second by 2008 and the third by 2012.

Ministers from each member state sit in council, usually from the ministries of foreign affairs, economic development, planning or finance.

It is responsible for supervising and monitoring the functions and development of SADC, and ensuring that policies are properly implemented, as well as making recommendations to the summit of heads of state and government.

Council is accountable to the SADC Summit of Heads of State and Government and currently meets twice yearly, first at the beginning of the year to approve the annual budget of the SADC institutions and in August to prepare for the annual meeting of the summit.

It is chaired by the Timothy Thahane, Minister of Finance & Development Planning of the Kingdom of Lesotho, the current chair of SADC.