Hindrances to SADC FTA

Nkonde, Humphrey; Mmegi/The Reporter (Gaborone) 2008-07-09

Numerous factors - including globalisation and the political, economic and social situation in Zimbabwe "may derail the transformation of the Southern African Development Community (SADC) into a Free Trade Area (FTA) and the creation of a customs union".

During a SADC meeting in Lusaka, Zambia in August 2007, it was agreed that the sub-region should transform itself into an FTA and have a comprehensive customs union. The transformation of SADC is expected to be launched in August this year.

However, the United Nations Economic Commission for Africa - Southern Africa (UNECA-SA) has expressed fear that the creation of the FTA would be derailed, especially considering the situation in Zimbabwe.

According to UNECA-SA Director Jennifer Kargbo, solutions to the problems in Zimbabwe will be sought, and the transformation of SADC into an FTA would not be derailed. The FTA could be created, but in dealing with Zimbabwe there will be difficulties.

One of the aims of regional integration is broadening the geographical areas of trade markets, so this area would be narrowed due to the political, economic and social situation in Zimbabwe. The country’s hyperinflation has shot above 100 000%, and there are shortages of raw materials, foreign exchange, power and water.

Poverty and unemployment levels are high, meaning that it will take some time for Zimbabwe to attract investments from within SADC or to offer a good market for goods. According to an analysis on regional integration which was published in Zimbabwe’s Financial Gazette, the Zimbabwe Economic Society has said that the problems in the country have a negative effect on overall economic growth and development.

"The economic situation in Zimbabwe has accentuated this problem as the economy has shrunk for the past seven years due to several disastrous economic programmes whose implementation militate against economic growth and development", the society says.

Some analysts have rallied behind regime change in the country, which they say could solve some of its economic problems. However, reviving the economy in Zimbabwe will not be easy, especially in times of rising oil and food prices.

Beyond the problem of Zimbabwe in regional integration, there is a need to harmonise trade blocs in Southern Africa, such as SADC, COMESA, SACU and the EAC. South Africa, for instance, belongs to SADC as well as SACU, but is not a member of COMESA. The country also has a global pattern in its system under the Economic Partnership Agreements (EPAs) with the European Union (EU), which has an effect on all members of SACU.

Dot Keet, a South African trade policy expert, has been reported in a Zambian newspaper as saying that South Africa should have considered the interests of its neighbours before signing a trade agreement with the EU.

"In the context of EPAs, South Africa must recognise that it has seriously failed to take fully into account the interests of the BLNS when it signed its free trade agreement with the EU (the TDCA or Trade, Development and Cooperation Agreement). The mid-term review of the TDCA, the EPA-induced crisis in SACU and the potential collapse of SACU, or at least severe complications within its functioning, all demand that the entire TDCA be radically reviewed, revised, reduced or removed all together", he said.

In spite of SA wishing to foster trade links beyond the SADC region, it could be vulnerable in international trade and may need its neighbours’ support. For instance, the country is deficient in water while Zambia controls 40 percent of SADC water resources.

The other problem is that SA was structured by colonialists in such a way that it depends on surrounding states for mining labour. Consequently, the mining industry in the country attracts an estimated 500 000 immigrants, mostly from within the sub-region, every year. It is estimated that with the political and economic crisis in Zimbabwe, four million Zimbabweans have crossed into South Africa.