OPINION: Making sense of economic issues in the Sadc chair’s acceptance speech

The 4th Southern African Development Cooperation (Sadc) industrialiSation week and its 39th summit were hosted in Tanzania during August 2019.

The new Sadc Chair President Magufuli delivered his acceptance speech on 17th August.

The 32 paged speech has huge economic and business tone, messages and issues. Some of these messages and issues are outlined and discussed in what follows.

Trade

Since the launching of the Sadc Free Trade Area in 2008, intra-regional trade has

been growing steadily from 16 percent of the regional Gross Domestic Product (GDP) to 22 percent in 2018.

However, intra and extra-regional trade performance is not good. In 2017, the region, with 16 Member States, a population of 327 million, area of 9,882,959 square kilometers blessed with abundant and diverse natural resources, only exported goods worth $143 billion. This is average of $8.94 billion per country

Comparatively, Mexico and Vietnam, countries with areas of 1,943,955 square kilometer and 331,210 square kilometer and a population of 132.5 million people and 97.5 million people each exported goods worth $403 billion and $214 billion, respectively.

This is an average of about 2.8 and 1.5 times more export from the two countrie respectively compared to Sadc, which is 5.8 and 29.8 square kilometres bigger than the two countries respectively.

Also Sadc has 2.5 times the population of Mexico and 3.4 times that of Vietnam.

The analysis shows that land mass and population size alone do not inflence trade performance. In order to unlock the trade potentials embeded in Sadc there are needs for trade facilitations in various ways including through improvements of business environment by, among other things, removing tariff and non tariff barriers (NTBs) to trade within SADC.

The region should also learn from Mexico, Vietnam and other comparator economies that have performed better on the trade indicator.

Econo-Growth

The Sadc region has not performed well on the economic growth macro-economic magnitude indicator. In 2018, the target was to post a GDP growth of 7.0 per cent. However, it grew by a mere 3.1 per cent. This is just 44.3 per cent attainment of the goal and missing the target by a whole 55.7 per cent.

The posted growth was below the continent’s average growth of 3.5 per cent; the Eastern African region growth of 5.7 per cent; the Northern African region growth of 4.9 per cent and the 3.3 per cent growth in the Western African region.

It is worth noting that the attained weak growth of just 3.1 is a result of average growth figures computed from the member states.

Statistically, there has been at least one positive outlier which is Tanzania.

It posted growth figure of 7 percent which is 100 per cent attainment of the Sadc econo-growth goal. It means that there are countries that have pulled the growth weight of Sadc down.

In order to improve this situation, there is a need to identify the countries that had lower than the set goal growth, reasons for weak growth and solutions for the same including learning from such positive outliers as Tanzania. Sadc should also learn from the higher than Sadc growth figures posted in other comparable regional blocks.

It is essential to note that what is desired is not just growth but qualified growth. Needed is jobs-creating -, incomes generating – and poverty reducing growth.

Needed too is inclussive and green growth that takes care of aquatic and terrestrial flora and fauna in the context of sustainability. We also need growth that respects human rights and good governance.

Security Issues

According to the new Sadc Chair, secutity threats including international terrorism, organised crime, climate change, drought, flood, hunger and diseases continue to face some Sadc countries.

This is an issue of very great economic concern because peace and security are among the most critical pre-conditions for socio-economic development and transformation that Sadc wants. The need for the block to work hard in making sure that it is free from conflicts cannot be overemphasised.

Economic emancipation

In its earlier life, Sadc aimed at political emancipation. This is the case for the Mulungushi Club, Front Line States and Sadcc. The main goal today is to use political achievements to advance socio-economic development and transformation.

More concerted efforts are needed for this to be realised. One sees very clear political will on the matter.

It is only by walking the talk that will be a game changer in bringing about the desired economic emancipation.

The author is professor of economics, a researcher and consultant based at Mzumbe University Dar es Salaam Business School.