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(ZAMBEZI TIMES) The 27th Ordinary Summit of SADC

The 27th Ordinary Summit of SADC
Written by Henry Kyambalesa
Aug 21, 2007 at 08:00 PM

LUSAKA, Aug. 21 - It is gratifying to learn that Zambians warmly welcomed to Lusaka the SADC Heads of State and Government, First Ladies, Ministers, the Executive Secretary, the Deputy Executive Secretary, the Chief Director, Heads of Delegations, and Delegates who have come to attend the 27th Ordinary Summit of the Southern African Development Community (SADC).

I am confident that they all enjoyed the beauty, warmth, friendliness, and rich cultures and traditions of our beloved country and its people during their brief stay in Lusaka between August 10 and 18, 2007.

Was It a Mere Political Gathering?

The extreme and persistent poverty, hunger, disease, and a host of other problems that have come to characterize life in SADC member-countries in particular, and in the African Union in general, are certainly unprecedented in recent human history. And, to make things worse, there seem to be no easy solutions or quick fixes to the catalogue of socio-economic ills facing the African conti¬nent!

Integration of Africa’s national economies, I believe, is one of the viable ways in which the continent’s sons and daughters are likely to redeem their Mother from its current state of socio-economic decay and backwardness. If it is diligently and relentlessly pursued, economic integration can actually facilitate the attainment of pronounced and sustained levels of socio-economic development in member-countries.

As such, citizens in SADC member-countries expected Heads of State and Government to consider the Lusaka Summit as a great opportunity for them—individually and collectively—to seek and eventually pursue viable development strategies and initiatives that will lead to a meaningful improvement in the livelihoods of the citizenry in each and every SADC member-country.

Given the enormous public resources that were committed to the convening of the Summit, we will all be disappointed if it turns out to have been a “talk show”—a mere political gathering characterized by rhetoric and speech-making that will not culminate in concrete action.

Zambians, particularly, had very high expectations of the outcome of the Summit mainly because the Zambian government, as the host of the Summit, was responsible for providing transport and protocol facilities, and to provide security for all delegates during their brief stay in Lusaka.

Local public resources were, for example, committed to cater for the following: (a) State Escort for each of the SADC Heads of State and Government; (b) One Chauffer-Driven Car for each of the visiting First Ladies; (c) One Chauffer-Driven Car for each of the visiting Ministers; (d) One Chauffer-Driven Car for the Executive Secretary; (e) One Chauffer-Driven Car for the Deputy Executive Secretary; (f) One Chauffer-Driven Car for the Chief Director; (g) One Chauffer-Driven Car for each of the Heads of Delegations; and (h) mini-buses for the transportation of Delegates between the conference venue and their respective hotels.

Importance of Membership in the SADC

SADC member-countries are not going to make any headway in socio-economic development if they cannot profoundly integrate their economies. The enormity of development hurdles facing much of the SADC region—including limited domestic markets, inaccessible foreign markets, lack of investment capital, and unfavorable terms of trade with industrialized nations—certainly calls for what may be referred to as “south-south” economic cooperation if the current socio-economic decay and backwardness in the region are to be redressed.

SADC leaders, therefore, need to realize that their countries’ real future does not hinge on seeking the compassion of, or excessive and protracted reliance on, industrialized nations in matters of socio-economic development; rather, they need to take full responsibility for finding viable solutions to their countries’ socio-economic ills.

There are many reasons why strong and permanent membership in a regional economic bloc like the SADC is essential in a country’s quest for sustained and heightened socio-economic development. Let us consider some of these reasons.

1. A Competitive Edge.—There is a pressing need for Southern African countries to maintain strong and permanent membership in the SADC in order to become more competitive through cooperative scientific and technological endeavors and eventually be in a better position to venture in the modern global economic system that is characterized by such regional economic blocs as the European Free Trade Association (EFTA), the European Union (EU), the North American Free Trade Agreement (NAFTA) bloc of countries, the Organization of American States, the South American Community of Nations, the Arab Common Market, and the Association of Southeast Asian Nations (ASEAN).

The successful conclusion of the Uruguay Round in December 1993 (which re-affirmed the need for an open, liberal and competitive international trading system) should particularly prompt SADC member-countries to move briskly in converting SADC from a mere regional grouping to a free trade area, a customs union, a common market, an economic union, a monetary union, and, ultimately, a political union.

If they dilly-dally in taking up this challenge, they should not expect economic units in their countries to gain the necessary technological and industrial competence they need to be able to become sturdy participants in the potentially competitive global economy of the 21st century. In the longer run, the region’s leaders should not be surprised when their national economies turn into permanent retail outlets for commodities produced in various economic blocs around the world.

2. Market Limitations.—A large population is an important element in a country’s quest for enhanced socio-economic development. Many development economists have recognized this fact, arguing that a large overall population can, among other things, increase the potential size of a country’s domestic market to a level that is economically favorable to an expansion in both local and foreign investment.

For Southern African countries, this should be obvious considering the fact that ready access to foreign markets is thwarted by numerous and insurmountable export-related problems—including poor transportation infrastructure, inadequate information relating to foreign markets, dependence on the exportation of cheap primary commodities, and inadequate communications infrastructure. After all, it should be common sense that growing markets generally stimulate invention, rather than invention coming first and creating a market!

The issue concerning the size of a country’s market may also be discerned in terms of population density. The low population densities of some of the countries in the Southern African region have partly made the provision of educational, healthcare and training facilities in the region’s countries difficult, and have also negatively affected agricultural development by complicating the distribution of essential tools, fertilizers and pesticides.

The Malthusian view that population growth needs to be stemmed in order to prevent the misery, hunger and pestilence that can follow if the population exceeds the carrying capacity of a given physical environment does not, therefore, apply to most of sparsely populated, resource-rich Southern African countries. As such, global population control efforts need to be appropriately directed at countries whose population densities are excessive, such as Belgium, Germany, India, Japan, the Netherlands, the Philippines, Singapore, and the United Kingdom.

In this regard, it is important to be mindful of the fact that African countries in general cannot benefit from economies of scale that are usually associated with large-scale production mainly due to the limited potential markets for their outputs. In other words, most African countries cannot achieve economies of scale in production due to their small populations and can, as such, benefit from large-scale production only through openness and regional integration.

In addition to the problem of limited local goods markets, African countries cannot, by and large, depend on foreign markets as a “vent for surplus” for their products due to the inaccessibility of such markets.

In short, Africa’s most urgent need is an internal market that is large enough to absorb African economies’ outputs of both agriculture and industrialization—and economic integration seems to be the most, if not the only, feasible way in which such an internal market can be created within a few years or so if African leaders are keen on pursuing the endeavor!

In fact, the larger consumer and industrial markets that can be created through the integration of national economies can make it possible for member-countries to attract the foreign capital they need for boosting business activity and, among other worthwhile benefits, increasing the level of employment.

3. Economies of Scale.—Economic integration is, among other things, a means of doing away with the disadvantages of small size, and of making possible the attainment of member-countries’ desired levels of socio-economic development; among other things, it can make it possible for member-countries to exploit both economies of scale and economies of scope, and to capitalize on differences in comparative advantage in the production of commodities.

Also, there are important gains from economic integration that are associated with the opportunities for specialization made possible by the integration of markets; for example, economies of scale may be realized not only from the manufacturing industry, but also from the potential large-scale dispensation of public services and utilities.

For certain kinds of public services, there may also be economies to be derived from operation over a wider geographical area. In the case of air and rail transport, for instance, there is a very strong case for operating on a large enough scale to make full use of both specialized abilities and any available machines of large capacity.

4. Competitive Environment.—Another potential and benign effect of economic integration relates to the emergence of greater competition in commerce and industry in an economic bloc. The reduction or removal of trade barriers brings about a more competitive market environment and eventually reduces the degree of monopoly power that might have been present prior to integration.

5. Stable Financial Market.—The eventual creation of a monetary union and/or an optimum currency area can facilitate the creation of a larger, more stable financial market since it can, among other things, eliminate exchange-rate variability in an economically integrated region. Also, the attainment of greater exchange-rate stability and certainty facilitated by a common currency can result in more stable and soundly based economic growth for an integrated region as a whole.

Moreover, it can be reasoned that elimination of currency fluctuations within an integrated region can increase trade among member-countries, since such fluctuations inhibit business enterprises from expanding their operations in other member-countries. This seems all too obvious considering the fact that fluctuations in exchange rates can more than wipe out the normal profits from any given business organization’s sales.

Further, it may be assumed that a monetary union can eliminate the need for member-countries that may experience a decline in the aggregate demand for their export products to consider currency devaluations—which are now proved to be both ineffective in correcting a country’s economic shocks and more likely to generate high levels of inflation—as a means of making their products competitive in other member-countries.

Besides, economic integration can lead to intra-industry specialization so that all member-countries can produce and sell similar products, making them more alike and eventually reducing the chances of any one member-country becoming a victim of an economic shock.

6. Terms of Trade.—By and large, Southern African countries, like all other developing countries worldwide, face unfavorable terms of trade (TOT) in their trade with industrialized nations; the price indices of their export products—that is, primary commodities—are generally lower than the price indices of the manufactured goods which they import from industrialized nations. The greater trade among African countries which is likely to culminate from economic integration can, on the other hand, lead to “even TOT,” since their economies are generally at similar stages of industrialization.

7. Other Rationales.—Economic integration can also benefit member-countries in terms of administrative savings which they are likely to realize from a reduction in the functions of the customs units of their governments, and, among other things, the greater bargaining power which they can collectively gain by being constituent members of a regional economic bloc.

People Are Fed Up of the Blame Game

In every African country today, there is a general expectation (among the citizenry) for leadership with both vision and compass. Citizens are sick and tired of leaders who have continued to find scapegoats for their own failure to address the basic needs and expectations of the common people—leaders who have continued to attribute failure and mediocrity in governance to what have become traditional and convenient scapegoats; that is: colonialism, neo-colonialism, globalization, the World Bank, and the International Monetary Fund (IMF), among others.

But really, can any of these scapegoats be faulted for bloated national governments which cannot live within their means, the electoral malpractices which block cadres of competent potential leaders from the realm of national leadership, or the hemorrhage of public resources through corruption and misappropriation?

A few selected views on who is really to blame for Africa’s persistent socio-economic ills is perhaps in order at this juncture:

(a) “We cannot avoid the fact that a lot of our problems in Africa arise from bad governance.”—Julius K. Nyerere, “Governance in Africa: Address,” http://www.uneca.org/, Addis Ababa, March 2, 1998.

(b) “The failure of African rulers, African governments, African governance institutions … account for the emergence of first, political decay, then socio-political instability, followed by social fragmentation, and finally political disorders in contemporary Africa.”—Anice, L., “Descent into Sociopolitical Decay: Legacies of Maldevelopment in Africa,” in Mulugeta, A., editor, Africa in the Contemporary International Disorder: Crises and Possibilities (New York: University Press of America, Inc., 1996).

(c) The African continent has, thus far, been led by leaders who lack “creativity and ingenuity” and are slow “to understand how the world system operates.”—Paraphrased from Mathurin Houngnikpo, “Stuck at the Runway: Africa’s Distress Call,” Africa Insight, Volume 30/Number 1, May 2000.

According to Alassane D. Ouattara, bad or poor governance can very easily be identified; among other things, it manifests itself through a large public sector and a small private sector, weak public institutions, and weak, complex, inequitable, and arbitrarily enforced rules and regulations. (Ouattara, A. D., “Towards Better Governance: The Next Stage of Africa’s Journey of Economic Reform,” International Monetary Fund (IMF), June 27, 1998.

It may, therefore, not be an exaggeration to conclude that it is, by and large, the leadership factor which has made Africa to become a haven for the following kinds of nation-states in post-independence Africa that are cited in the literature, which Kingsley Y. Amoako has discussed in a speech entitled “Governance for a Progressing Africa: Opening Statement at the Second Africa Governance Forum,” presented in Accra, Ghana, on June 25, 1998:

(a) The Patrimonial State: A political setting in which government leaders treat the state as their own piece of property;

(b) The Predatory State: A state in which government officials look upon the citizenry as prey for their rapacious greed;

(c) The Shadow State: The kind of state that is generally characterized by informal political networks and a shadow economy punctuated by illegal activities; and

(d) The Collapsed State: A state in which common people are generally left to their own devices while government officials revel in conspicuous, state-financed luxury.

Further, Amoako has identified a fifth kind of state—that is, a state where leaders impose sufficient repression to keep their opponents weak and maintain their own power, while adhering to enough democratic formalities that they might just pass themselves off as democrats. Accordingly, we may refer to this additional kind of nation-state as “the repressive state.”

Membership in Both SADC and COMESA

The current proliferation of integration projects in Africa has tended to result in some countries becoming members of two or more economic groupings. This is likely to generate commercial problems arising from obligations which individual African states have assumed under the different treaties and trade agreements governing the regional groupings.

In 2002, the World Trade Organization (WTO) cited the problem facing the Republic of Zambia in this regard: the country’s membership in overlapping preferential trade arrangements has made its trade regime more difficult to manage given the different provisions, goals and geographical coverage involved.

A prudent measure which African leaders can take in order to circumvent the potential problems and implications associated with membership in two or more economic blocs is to merge some of the economic blocs. In fact, such a measure can also forestall the potential for costly duplication of effort by regional economic blocs on the continent.

The European Union’s advice (cited in Wasamunu, M., “EU Advises COMESA, SADC to Merge,” The Post, http://www.zamnet.zm/zamnet/post/, February 10, 2000) to leaders of SADC and COMESA member-countries to merge the two institutions is, therefore, worthy of urgent and serious consideration; after all, this is an issue which leaders of the member-countries of the two regional blocs have generally shown great interest in resolving since the early 1990s.

Preferably, the smaller SADC needs to be incorporated into the larger COMESA bloc. In August 1992, Dr. Frederick Chiluba (former president of Zambia) minced no words in stating some of the compelling reasons why it would be prudent for SADC and COMESA heads of state to seriously consider the prospect of merging the two regional economic blocs:

“Having one institution is the way forward. It will combine resources and expertise which are currently dissipated in the two institutions. It will provide the wider market [needed] ... for achievement of economies of scale necessary for resilient economic production units.”—Chiluba, F., Dr., quoted in Mandaza, I., “SADC: An Economic Agenda or a Mere Political Expression?” Southern Africa Political and Economic Monthly, August 1992, Volume 5, Number 11, p. 19.

Henry Kyambalesa
www.agenda123.com
Founder and President
Agenda for Change (AfC)

Labels: HENRY KYAMBALESA, SADC

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