SA within Southern Africa: Regional economic integration for poverty reduction?

A couple of years ago in a radio interview on South Africa and Africa, my response to a question on how well was South Africa doing compared with the rest of the continent was that “although there are broad areas where one can safely argue that South Africa is doing relatively well compared with other African/developing nations, my understanding of South Africa’s approach on this issue is that the development of South Africa is closely linked to that of the whole of the African continent. Africa as a whole has some ubiquitous challenges, which are largely historical. Some African countries have peculiar challenges that are largely informed by respective conditions of those countries.”

In a nutshell, the point I had hoped to drive home was that South Africa’s fortunes were interwoven with those of the rest of Africa. I have not yet come across evidence to the contrary. As such, it appears perfectly correct that South Africa pursues programmes aimed at the renaissance of Africa and socio-economic transformation of the entire continent. Whether progress is good or poor is a matter of debate. This piece is not about that; it is about recent developments and future plans of the Southern African Development Community.

To start with, two “facts” seem to have stood the test of time: that economic growth is the best recipe for sustained poverty reduction, and that expanded markets create more economic opportunities. This, however, does not imply that countries should leave things to Adam Smith’s “invisible hand” or Charles Darwin’s “survival of the fittest”. Countries remain morally responsible for ensuring that their populations are taken care of.

Countries belonging to Mercado Común del Sur (Mercosur) in South America, for instance, continue, many years later, to pursue vigorously the noble cause of ensuring that people do not go to bed hungry while the fortunate benefit — in the short to medium term — from the fruits of bigger markets. Most likely, Mercosur accounts for the biggest social pensions programmes in the world: the likes of the Bolsa Familia programme in Brazil, Familias en Accion in Columbia, Jefes de Hogares in Argentina, Juntos in Peru, Tekopora in Paraguay, Bono de Desarrollo Humano in Ecuador, and Chile’s numerous social development initiatives. In fact, across the globe one finds experiences worth studying in programmes that some disparagingly term “handouts”, but which ease the risks to vulnerable people.

Linked to these two “facts” is that redistribution needs growth of national per-capita income to be at least positive. Africa, including a large number of SADC countries, has an experience that is not positive — that is, negative gross national product per-capita incomes. This, in fact, is one of the fundamental explanations for why poverty has not declined in Africa when it has declined everywhere else. We need to grow our economies and ensure that our growth is shared widely.

The official launch of the SADC free trade area (FTA) in August provides a rare window for this to happen. SADC seems to be finally turning the corner, and the leadership that we have always been yearning for is doing what it is very capable of doing. It is human ingenuity such as that epitomised by the SADC FTA initiative that will bring about sustainable improvements in the living conditions of the many — the undoing of social constructs that are immoral, and the eradication of man-made structural barriers that many Africans confront every day. Hopefully, many Southern Africans will be able to access SADC products and services at fairer prices in future.

The new SADC chairperson, President Thabo Mbeki, described the objectives of the FTA quite persuasively: “to pool our limited resources and build an economic base to address the challenges of economic growth and development, create the basis for regional markets and industries to overcome the limits of small national markets, to achieve economies of scale and enhance competitiveness as a platform to participate more effectively in the world economy”. It will “resuscitate that shared vision and commitment, the unity and cohesion that have characterised SADC from its inception, as we consider the next step that will be required to further advance our regional integration efforts in Southern Africa”.

It is important to give a sense of what regional integration means in practice. It is a building block upon which high rates of economic growth and industrialisation can be met collectively within the region. As part of its implementation, member states negotiate tariff reduction schedules, rules of origin, dispute-settlement mechanisms, special product agreements, elimination of non-tariff barriers and harmonisation of customs, trade documentation and clearance procedures. Most of this began in 1996 when SADC leaders endorsed a trade protocol. Eleven out of 14 SADC countries acceded to planned tariff and non-tariff barriers schedules. The others — Angola, the Democratic Republic of Congo and Malawi — are still dealing with matters relating to the Protocol on Trade.

The envisaged regional economic integration will be an ideal mechanism towards the successful implementation of developmental states in SADC — states seen as those that are active in pursuing developmental agendas, working with social partners and having the capacity and appropriate organisation for their predetermined developmental objectives. However, there are many people who are sceptical about Africa, including SADC. This is not new. For instance, Robert Bates argued in the early 1980s that Africa’s problem was active states that destroyed things in their activism. Bates, and many others like him, has been proven wrong.

But some still hold a view that Africa will fail, if not that it has already failed. Last year, for instance, Stefan Andreasson audaciously argued that Southern Africa seems unlikely to accomplish the developmental-state ideal because the notion is used as political rhetoric without actually looking at the possibilities of it being achievable. Such arguments are rather premature in suggesting that possibilities of achieving high rates of economic growth and social development are impossible in SADC.

Hand-picking the Zimbabwe challenge to make the point is problematic. Some SADC countries have just started with developmental-state policies after many years spent recovering from the imposed, inappropriately conceptualised and uninformed structural adjustment programmes of the 1990s. In fact, some scholars find Botswana, Mauritius and, to some extent, South Africa to be in the select group of the so-called developmental states. As Peter Evans put it: “State involvement is a given. The appropriate question is not how much, but what kind.” Thandika Mkandawire demonstrated, already in 2001, that many African states were developmental in both their aspirations and economic performance.

There are, of course, challenges that need to be managed within the SADC FTA. Some have argued that it will give more economically stable countries an unfair advantage in attracting foreign direct investment. To deal with this, SADC countries do indeed require some introspection, or at least their private sectors need to think hard. Advantaged countries could be used as an entry for familiarisation with disadvantaged countries. Collective trade bargaining could also be used as an instrument at international trade talks in order to give more weight and bargaining for the Southern Africa region. Also, self-interest within any capitalist trading system is also a major obstacle that SADC countries should overcome as a unit, as outside bilateral trade agreements could lead to some of these countries being put at a disadvantage in trade terms and regulations. As Fernado de Soto indirectly advises, let’s try to have effective governments in the same vein that Karl Polanyi, Chalmers Johnson and Alice Amsden ululated in other cases.

John Lennon dreamt that we could quite conceivably construct a world — an Africa, in this case — in which all the people are sharing. Through the FTA we need to correct Ernest “Che” Guevara’s recollection of Africa, through the Congo revolutionary army, that we take a “whole day for a walk that would have normally taken 30 minutes”. About 50 years on, if one is benchmarking with Ghana, for example, Africa is still far behind what Fidel Castro’s Cuba achieved in a relatively shorter time period. For example, many African children are still out of school and many people still go to bed hungry. This is an indictment of our fathers of African independence such as Nkrumah, Nyerere, Tambo, Mandela and others, including the good friends of Africa such as Frantz Fanon and WEB du Bois. As South Africa takes over the chair of SADC, it has a major role to play in working with the rest of the SADC countries to accelerate equitable integration across the region’s countries for poverty reduction.

Vivek Arora, in a recent study, found that a 1% increase in the rate of South Africa’s economic growth leads to a 0,5% increase in the rate of growth of the rest of Africa. This can be interpreted to mean that if the whole of SADC’s growth picked up and was shared widely, we would not only be addressing the challenges of Southern Africa but also those of the rest of our continent. South Africa’s role is well defined.

SADC’s job is much more difficult, if the envisaged outcomes are to be accomplished. As the FTA graduates, as planned, to a customs union, a number of challenges must be addressed. Among the critical ones are the need to speed up sound harmonisation of policies that can facilitate trade; deciding on the future of the Southern Africa customs union; addressing supply-side constraints that most SADC countries are facing that limit their access to the 250-million-people market; ensuring that countries that have already been benefiting from the SADC market do sign off on the protocol; and so on. The issue of supply-side constraints will be the most difficult one as many SADC countries are predominantly rural and have weak infrastructure. Some practical assistance, including packaging of farming products and access to the SADC market, could be devised for subsistence farmers of countries such as Malawi and Zambia.

The move to a customs union implies free labour mobility around SADC countries, and this and other issues call for complementary reforms to increase the likelihood of deriving benefits from the FTA. There will be a need to deal with the social cost of adjustment for most countries. It is perhaps here that the role of SADC civil societies is critical. There should be monitoring mechanisms to ensure that the FTA is effectively implemented and, more importantly, to ensure that the benefits accrue to the right people. The point needs to be made that the issue may not be simple market access but rather a question of development — aid for trade — because longer implementation times, as in the case of the World Trade Organisation’s schedules for developing countries, do not really help.

Arguably, initiatives such as regional economic integration are necessary steps in an effort towards further reclaiming Africa’s place in global affairs! This century can be persuasively dubbed as the African century. Africa, after many years of navigating historical structural barriers, is finally set for better things. Encouraging signs are everywhere; objectives set out in the African Union’s Constitutive Act, in the New Partnership for Africa’s Development and so on seem within reach.