Yash Ramkolowan, Matthew Stern and Zulaikha Brey
Annually in Swaziland, a special home that made an important contribution to the fight against Apartheid, is celebrated. Number 43. Trelawney Park was an undercover home to a large number of ANC and Umkhonto we Sizwe veterans, who used this home both as a shelter and as a base for operations. The strength, character and generosity of the “Mother” of the house is remembered through “Magogoism” – the act of giving back to the community. 2015 marks an especially momentous milestone, marking 50 years of the home’s existence.
More formally, 2015 also marked the 2nd annual Number 43. Business Roundtable; bringing together a diverse range of representatives from business, government and non-profit organisations from South Africa, Swaziland and neighbouring countries. This year, special emphasis was placed on ensuring the active participation of the youth in the celebrations – with the introduction of a youth roundtable.
Regional integration in Southern Africa, and the opportunities for and constraints hindering deeper integration, remain a key focus of the Roundtable discussions. The Governor of the South African Reserve Bank, Mr. Lesetja Kganyago, acted as “Chief Instigator” at the 2nd annual event. To help guide the discussions, DNA Economics prepared an assessment of Africa’s progress in achieving integration. The South African Reserve Bank Governor then introduced the five broad themes that define and drive integration: Trade, Infrastructure, Technology, Finance and People. Some of the discussion emanating around these themes is summarised below.
Governor Kganyago (DNA Economics)
With respect to trade, one of the fundamental purposes of deeper integration is the ability to move goods across borders faster and at a reduced cost. Deeper integration should therefore encourage the movement of goods between businesses and organisations across borders. While governments are quick to voice their commitment to regional integration, this does not always lead to the removal of actual barriers to trade.
Improved cross-border infrastructure is imperative for deeper integration. Within Africa, infrastructure is one of the most significant bottlenecks to deeper integration, increasing the cost of trade. This bottleneck is further exacerbated by a lack of common infrastructure standards across the continent. In an effort to deal with Africa’s infrastructure deficit, the African Union (through the NEPAD Agency and the African Development Bank) has formulated the Programme for Infrastructure Development in Africa (PIDA) to identify and market bankable African infrastructure projects. Increasingly, partnerships between the private and public sectors will be required to fill this infrastructure deficit.
The rapidly changing technology landscape provides the continent with the opportunity to leapfrog manufacturing, communication and service processes. Advancing technology has important ramifications for regional integration, both in terms of deepening integration and by impacting on the way in which countries regulate the cross-border use of technology. Communications technology in particular, has revolutionised the speed and degree to which information, data and knowledge, can be shared over vast distances. Defining common policies will be key to enhancing the use of technology in the information age.
Access to finance and the use of financial instruments is often highlighted as a key inhibiting factor for Africa’s growth, at both a microeconomic and a macroeconomic level. Importantly, and unlike many other services sectors, banking services on the continent are predominantly provided by banks based in and established on the African continent.
Cross-border transaction and remittance costs remain high. Nevertheless, efforts at deepening financial integration are beginning to bear fruit, particularly through reducing the cost of transactions. An example of this is the establishment of the central SADC Integrated Regional Settlement System (SIRESS); under which all intra-SADC payments are settled, with the South African Rand the agreed upon intra-regional settlement currency. Currently, the system is live and operating in 9 SADC Member States, with a further 3 Member States expected to go live by the end of 2015. This settlement system is expected to lower transaction costs for both low- and high-value transactions, including remittances.
Finally, and possibly most importantly, when considering integration initiatives, governments often neglect to recognise the need to facilitate the movement of people across borders. SACU is a striking example of this. Despite being the oldest customs union in the World, the movement of people across borders is heavily stifled by customs procedures and regulatory processes. Within a wider context, facilitating the movement of people, and business persons in particular, is a fundamental requirement for deeper integration.
This high level platform provides a unique occasion for robust discussion on the issues facing Africa, and Southern Africa in particular in general, and the main constraints and opportunities to regional integration in SADC in particular. Drawing in key decision makers to confront and respond to these challenges ensures better collaboration between the private and public sectors in pursuing deeper integration.