Towards a free trade regime
The Abuja Treaty agreed to in May 1994 has the same significance to Africa as the Treaty of Rome has for European integration. SADC has the same significance for the Southern African region as AGCC has for the Gulf. HE Yacoob Abba Omar contributes to this issue by addressing the challenges and prospects for regional integration in his part of the world

The IMF’s October 2007 report for the Sub-Saharan African region says that the region has “experienced its strongest growth and lowest inflation in over 30 years. Growth in sub-Saharan Africa should reach 6 percent in 2007 and 6.75 percent in 2008”. These are remarkable figures for a region which has an image of poverty and disasters.

The establishment of Africa-wide bodies which have been pushing democratic reforms, better governance and improved economic performance can justifiably lay claim to these developments. The year 1994 has a special significance in the African calendar. That was the year in which South Africans had their first democratic elections, ensuring the liberation of the one African country which remained under some form of colonial rule.
 
It was also the year in which leaders of the African continent gathered in Abuja, Nigeria to commit themselves to the creation of an African Economic Community (AEC). The Abuja Treaty detailed the vision for the establishment of AEC by 2028. It set out six stages which need to be passed before we could achieve that. At the core of the process is the strengthening of the regional economic communities (RECs), of which the Southern African Development Community (SADC) is one. The SADC consists of South Africa and Tanzania, two countries which have diplomatic representation in Oman, as well as Angola, Botswana, Democratic Republic of Congo (DRC), Lesotho, Malawi, Mauritius, Madagascar, Mozambique, Namibia, the Seychelles, Swaziland, Zambia and Zimbabwe.

According to the Abuja Treaty, the path to the AEC lie in:

• Strengthening the RECs, and where they did not exist, to help create them. The following RECs apart from SADC are now in place: Economic Community of West African States (Ecowas), Community Market for Eastern and Southern African States (Comesa), one for the central African countries and one for the North African states.

• Stabilising tariff and other barriers as well as achieving sectoral integration.

• Establishing FTAs/Customs Unions for each REC. This would be followed by harmonization of tariffs amongst RECs.

• Establishing an Africa-wide Customs Union. This must contribute to having a single set of external tariffs and revenues from that being shared in an equitable manner.

• Electing a Pan-African Parliament (PAP) - currently the delegates to PAP are nominated by the member countries. This can then lead to the African Economic and Monetary Union, a Central Bank and a single currency. There have already been suggestions that the currency be called the ‘Swahili’ – a language which is being promoted as Africa’s lingua franca.

• Implementing the African Monetary programme by 2021 which can lead to the AEC.

The IMF’s October 2007 report illustrates the strides already made. It states that “continued progress in stabilizing economies and implementing reforms in most countries has helped sustain rising investment and productivity.

“In the current expansion, many countries have benefited from terms of trade, but there is also signs that macroeconomic and policy conditions continue to improve, which should help sustain growth”. The report also identifies the decline in armed conflict and political instability as major contributors to growth.

Given the important role trade plays in improving growth, the SADC region has decided to fast track the move towards a regional FTA. It aims to establish that by 2008, when 85 percent of goods traded in the region should have zero tariffs. The aim is to have this raised to 100 percent by 2012. It wants to have a SADC Customs Union in place by 2010 so that it can have a common external tariff. The next milestones would be a SADC Common Market by 2015, a SADC Monetary Union by 2016, and a single currency by 2018.

South Africa has had some measure of experience in monetary harmonization through the Southern African Customs Union (SACU), which includes Botswana, Namibia, Lesotho and Swaziland. SACU shares a common tariff regime without any internal barriers. Customs revenues are shared according to an agreed formula. As Gabriel Nahimana, writing for Project Syndicate, wrote about Southern Africa: “Protocols and political treaties are not sufficient to boost integration. The major barrier is the region’s great diversity in economic and institutional development. The SADC’s regional plan establishes a time frame for policy implementation over the next fifteen years that takes these constraints into account.”

Speaking at the launch of the Communications Strategy and Plan of Action for the SADC FTA on 10 October 2007 at SADC Head Office in Gaborone, Botswana, the Executive Secretary of SADC, Dr Tomaz Augusto Salomão expressed confidence on SADC achieving that objective. He said: “An audit study was carried by the Secretariat to examine the gazetted tariff phase programme. I am happy to announce to you that the results of the audit study are positive and indeed validate a concrete basis for the launch of the FTA in 2008. Specific actions to support those member states that are lacking in implementing fully the tariff phase-down programme have been put in place. I am confident, therefore, that all outstanding issues would be resolved before the launch of the FTA in 2008.”

President Mbeki expressed our concerns succinctly when he said that care must be taken that “the obviously dominant position of the South African economy does not serve further to entrench the underdevelopment of the other SADC members.”

Since 2000, when South Africa began implementing a free trade system for the region to 2005, our exports to the region have increased from $30 billion to $45 billion. Imports from the region increased from $3.5 billion to $10 billion. These figures starkly highlight the challenge the region faces in ensuring a freer trade regime. If SADC gets this right it could benefit hugely. One report has shown that eliminating all restrictions on international travel in the region could mean an extra half a million tourists every year. This would translate into the region’s GDP increasing by about $1.5 billion, helping create 70 000 new jobs.

Now that is something to look forward to!

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