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South Africa’s Economic Hegemonic Imperatives in SADC

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South Africa is the current chair of SADC, and as such its leadership is of paramount interest. South Africa is also the gateway to foreign direct investment to the developing world. The country also holds the key for the success of SADC both at economic and political level. However, since 1994 Pretoria has only intermittently, and reluctantly so, demonstrated leadership in SADC. More than 24 years later, a majority of key institutions for regional integration are largely inefficient and the prospects for human development index are painfully blur. A number of factors were earmarked to comprehend the lethargic state of regional integration and development in SADC. These include the lack of political will amongst member states to integrate for development purposes, various levels of economic development and systems.

Retrospectively, since the achievement of a democratic state, South Africa earmarked Southern Africa as its foremost foreign relations priority. This relationship with the region is a delicate one for Pretoria as it has to fulfill its roles as regional, continental and global player. South Africa assumed the region’s responsibility as to address such issues as closer collaboration and economic integration and utilised the SADC as a vehicle to steer the developmental agenda of the region. Arguably, this has benefited the region since South Africa’s spotlight on the global arena helps intensify the regions potential in many aspects. Notwithstanding the fact that this has not always brought the desired results for the region and beyond. Subsequently, South Africa has, overtime, continued to isolate itself from the region and likewise the region may have also chose to isolate South Africa in its own dealings.  South Africa acceded to the SADC Treaty on 29 August 1994 at the Heads of States Summit in Gaborone, Botswana. This accession was approved by the Senate and National Assembly in September 1994.After joining SADC South Africa was given a sector responsibility for finance, investment and health. This was a decision that was formed by South Africa’s comparative advantage in this area. It is undeniable that South Africa is the most developed and advanced economy in SADC and on the continent of Africa. This position cannot be ignored if the possibility of regional integration is prioritized on the region and the continent itself. For this reason, it is perhaps essential to earmark the owing to its economic strength South Africa also holds the capacity to make or break regional integration within the SADC and the continent. Moreover South Africa can be described as the economic hub of the region.

Consequently, South Africa is often confronted with a crisis of trying to balance its domestic, regional and global interests especially with the rise of transnational cooperation’s including membership into the BRICS group of countries. Evidently, in the process the probability of conflict of interest is inevitable. On the other hand, the success of the SADC unequivocally rely on South Africa’s will to support and develop it as envisaged. SADC established the Regional Indicative Strategic Development Plan as a thorough guide to intensify integration. According to the 15 year plan, the key milestone are to reach a Free Trade area in 2008, Customs Union in 2010, Common Market in 2015, Monetary Union in 2016 and regional currency in 2018. The Regional Indicative Strategic Developmental Plan (RISDP) remains the strongest indicator of SADC’s desire for deeper integration with an objective of achieving a level of intra-regional unrestricted flow of goods, services and investment. The RISDP cannot be implemented without the support of the biggest economy of the region. SADC needs South Africa but the fear is that the same cannot be said of South Africa needing SADC.

According to Alde and Pere, South Africa’s biggest export market is SADC. This is often overlooked when surveying South Africa’s trade figures, the reason being that a great portion of South Africa’s exports to other countries are concealed within SACU. Evidently, the relevance of the SADC market to South Africa should not be underestimated. Since 1994 the South African government has regarded the Southern African region as the foremost priority of its foreign relations. To exemplify the prominence attached to this region, the first foreign policy document adopted by its democratic government was in fact a “Framework for Co-operation in Southern Africa” endorsed by Cabinet in August 1996. In terms of this “Framework”, the vision for the Southern African region is one of the highest possible degree of economic cooperation, mutual assistance where necessary and joint planning of regional development initiative, leading to integration consistent with socio-economic, environmental and political realities.

South Africa has taken a leading role in the region to address such issues as robust cooperation and economic integration. These include the establishment of a free trade area within the region, the development of basic infrastructure, the development of human resources and the creation of the necessary capacity to drive this complicated process forward, as well as the urgent need for peace, democracy and good governance to be established throughout the region. Nevertheless, history has proven that South Africa bullies its fellow member states within the region. South Africa opts to wield its economic power when negotiating with partners in both SACU and SADC. This oversight plays itself out in how some South African government officials view their regional partners. For example in response to questions about the consequences of the negative impact that an EU/SA Free Trade Agreement would have on its SACU member states. Former Director of Regional Economic Organisations within the South African Ministry of Foreign Affairs Willem Bosman maintained that, there is a need for a shock treatment that is necessary to fellow SACU member states. Bosman further maintained that SACU members are on their own, as South Africa would no longer provide for the 50% of their budget….”now you will have to tax your own people; you also have to work according to the structures of a free independent country”. The irony of this statement is that even if the new SACU agreement replaced the old agreement in 2002, SACU largely remains an apartheid-created relic, designed to ensure that South Africa would have a captive market for its agricultural and non-international competitive manufactured products. This economic dependency of the SACU states on South Africa was “part of a strategy to ensure that South Africa’s economic hegemony in Africa. If SACU states experienced economic deterioration as a result of the EU/SA Free Trade Agreement, who will buy South Africa’s non-international competitive manufactured products? By placing integration at the global level a priority, South Africa has always risked national and regional economic destabilization.

South African’s global integration agenda

In the interest, for many, South Africa has an urgent need to further integrate its economy into the world economy. This could also be at the expense of its SADC counterparts. Nevertheless, for South Africa to attract good foreign direct investment, therefore there’s an urgent need for South Africa be seen as an environment of peace and tranquility not just in South Africa but the region. Many global players who take interest in investing in Africa perceive South Africa as the gate way.  Nonetheless unfamiliar circumstances arise from the role played by external partners in the region, especially the EU and the USA. In respect of the EU, the outcomes of the Economic Partnership Agreements negotiations will fundamentally alter the peace and nature of regional integration in Africa. Other global players refuse to be side-lined. This was illustrated by the recent introduction of the China-Africa office in South Africa in March 2008. South Africa has to assume leadership in ensuring that the Zimbabwean problems are resolved since regional peace is important for the national economy of South Africa. Nonetheless, many have questioned South African former President Thabo Mbeki’s impartiality in the process. What this means is that there has to be a balance of interest between national, regional and global integration aspirations for South Africa.

Moreover, there are ways in which South Africa has attempted to integrate its economy in the world economy at the expense of its regional counterparts. It is also noteworthy to point out that this was inevitable in light of long term planning. The EU/SA TDCA agreement stabling a free trade areas demonstrate this phenomenon. South Africa become a signatory to this trade agreement with full knowledge that it would bare devastating impact on both the members of SACU and SADC. In light of the SACU, the agreement was endorsed without consultation without consultation with the other BLNS SACU member states. This was a precise disregard of the SACU Treaty that stipulates that such agreements must be approved by all SACU members. By acting unilateral, it is clear that South Africa is trying to monopolise/maximize these economic benefits for itself at the expense of the other members.

In light of SADC, the fear of EU goods flooding the regional market has been duly noted. This is because when EU goods have entered South Africa, it becomes relatively easy to have them anywhere else within the SADC region and Africa at large.  Evidently, this has undermined the agricultural and industrial sectors. A number of SADC states launched a complained that South Africa only became serious about completing the negotiations for the SADC FTA when it had completed negotiations with the EU. However, a few South African trade officials felt that the EU/SA FTA allowed them to become more integrated into the world economy, notwithstanding the fact that the consequences could also be severe for South Africa’s own economy.

A look at the TDCA agreement will show that South Africa has divided attention, with more emphasis place on the EU and not the SADC region. This agreement follows several aspects; strengthening dialogue between the parties, supporting South Africa in its economic and social transition processes, promoting regional cooperation and the country’s economic integration in Southern Africa and in the world economy, and expanding and liberalizing trade in goods, services and capital between the parties. The amount of loss of revenue is very high since SACU and SADC states will not be able to levy duties on the EU products. “Based on respect for democratic principles, human rights and the rule of law, the Agreement establishes a regular political dialogue on subjects of common interest, both at bilateral and regional level (within the framework of the EU’s dialogue with the countries of Southern Africa and with the group of the African Caribbean and Pacific (ACP) countries. The duration of the agreement is unspecified, but provision is made for its revision every five years of the date of its entry into force in order to consider possible amendments. The agreement covers a number of areas and includes a future developments clause making it possible to widen the field of cooperation”.

Concluding remarks

South Africa’s dominance in southern Africa, most prolific in the economic sphere, remains uncontested. South Africa accounts for about 60% of SADC’s total trade and about 70% of the regions GDP. The country is also within the region, the most diversified economy and thus critical to SADC’s drive towards developmental regionalism. Nevertheless, it is also true that a relationship of interdependence binds South Africa to the region. Moreover, in varying degrees, the economies of other SADC member states also benefit from employment opportunities, skills transfer, tax revenues and global linkages as a result of the business activities of South Africa firms.

Charles Matseke studied his Masters in International Relations and Foreign Policy at the SARChI: Chair for African Diplomacy and Foreign Policy at the University of Johannesburg. He is currentlyProgram Manager for Africa-China in International Forums at the Centre for Africa-China Studies at the University of Johannesburg. His main areas of focus are developmental policy and developmental foreign policy. He has published on these areas in various platforms.

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South Africa Stands on Verge of Massive Domestic Crisis

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Russian tourists in South Africa usually go home lost in admiration, at least they did before the pandemic. Palm trees, beaches, exotic African animals and folk dances to the beat of the drums, stunning natural reserves, wonderful roads, marvelous restaurants, luxury hotels, amazing wine. South Africa produces the ultimate impression of a prosperous and stable country—both economically developed and politically stable. Indeed, South Africa is rich in mineral resources that are constantly going up in price, and it has a relatively developed industry. It regularly holds quite democratic elections, whose results have never been contested so far.

However, the prosperous façade is hiding a host of grave problems. Economy-wise, the principal issue lies in the public sector. Virtually every state corporation is billions in debt accrued owing to corruption, embezzlements, inefficiency, inept management. Eskom alone, a state corporation that controls power generation and distribution, owes the state about ZAR 400 bn. (USD 26 bn.). This is a tremendous amount for South Africa. Eskom cannot even pay interest on it. Its power plants are in such a state that shutting the power down for several hours a day for another round of repairs is a rule rather than an exception. This is not at all conducive to normal functioning of businesses and industry. Eskom’s predicament is one of the main reasons why South Africa has lost its once high investment rating.

And here we arrive at politics. Technically, South Africa can generate far more energy than it does now. Large enterprises, mines, and many farmers have long since installed solar panels and other devices to make sure they have electric power. Many offer to supply their extra power to Eskom, but the government turns them down. This also limits amounts of energy private businesses can generate. Privatization is out of the question, while it is the only thing that could save the power grid from collapse. The government is quite content with its role of a monopoly that generates power from coal and has no competition. The reasons for that are pure politics.

The African National Congress (ANC), South Africa’s ruling party, sees itself as the party of workers and the poor, and although it does not assume the name of a socialist party, it clearly prefers a government-controlled economy. Additionally, there are more practical reasons: trade unions are the ANC’s core voters, and they are opposed to privatizing Eskom and other state corporations. Additionally, they are fundamentally opposed to bringing private businesses into the power generating industry, since such a move may result in competition and lower wages that are far higher in South Africa than in countries with comparable GDP despite its 45% unemployment rate, which is an abnormal combination.

Today, the ANC is facing a choice: either in-depth structural reforms that are unpopular, or stagnation and possible collapse. The party arrives at this choice in a state of internal crisis. The ANC’s leaders and local functionaries are locked into a struggle between corrupt and political groups, clans, and factions. In the upcoming December, the ANC’s party conference is to choose a new leader or re-elect the current president Cyril Ramaphosa. At the next national elections, the elected leader will inevitably become the country’s president. Even though the ANC is losing its popularity, Mr. Ramaphosa will remain the leader of the majority party since there is no real electoral alternative. Ramaphosa’s main rivals are supporters of former president Jacob Zuma, who advances a populist agenda (for instance, expropriation, primarily of land, and introducing universal healthcare, which the country has no money or infrastructure for).

Contradictions within the party are running so high that political assassinations have happened locally. Membership in provincial delegations that will be attending the December elections is bought and sold along with votes of individual delegates and entire delegations. The delegation of the province of KwaZulu-Natal (Zuma’s province) is the largest, since the ANC has the largest membership here. Zuma’s supporters have good chances. A split in the party and anarchy cannot be ruled out in the event of one of their candidates being elected. Even if the party subsists as a united organization, a change in its course will result in expropriation or takeover of farms, enterprises, or maybe even banks. That will plunge South Africa in utter economic collapse.

If the current president’s faction remains in power, he will have to implement unpopular market reforms and attempt to fight corruption: he simply has no other agenda. His opponents will be destabilizing the situation up to inciting riots. Such riots were already organized in June last year allegedly in support of Zuma who had been charged with corruption and contempt of court. In reality, it was an attempt to show the party and the people that Ramaphosa was unable to control the situation, or maybe even to remove him from the office of the president of the party and the country. Back then, crowds numbering in thousands looted and burned down thousands of stores and warehouses, including the huge warehouses in the port of Durban; they houses commodities for the entire country. South Africa’s economy lost billions, and over 400 people died. A replay of these events amid unemployment and poverty already exacerbated by the pandemic cannot be ruled out.

From our partner RIAC

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Russia Readies to Gather African leaders for 2nd Summit in Addis Ababa, Ethiopia

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Russia gears up to gather African leaders, regional economic blocs, business community and civil society for the next summit in Addis Ababa, and that will witness another round of sparkling speeches reiterating Soviet-era assistance to Africa, outlining broad roadmap indicating possible sectors for investment in Africa. As traditionally done, the summit will be characterized by issuing a joint communiqué and finally sign fresh bilateral agreements with African countries.

Minister of Foreign Affairs of the Russian Federation, Sergey Lavrov, in a message to African representatives who were at the 25th St. Petersburg International Economic Forum (SPIEF) in June, explained that despite the unprecedented sanctions and information warfare launched by the United States and its satellites, Russia manages to maintain the entire bilateral cooperation in working order, and in these difficult and crucial times the strategic partnership with Africa has become a priority of Russia’s foreign policy.

Russia highly appreciates the readiness of Africans to further step up economic cooperation and expand mutually beneficial trade and investment ties under these new changing conditions, he emphasized, and further offered the highly-official assurance that “the signed agreements and the results will be consolidated at the forthcoming second Russia-Africa summit.”

With the rapid geopolitical changes leading to creating a new global economic order which is at its exploratory stage, Russia has aready shown its limitation of financial capabilities in investing in Africa. It has, in practical terms, not engaged in infrastructure development, agriculture and industry on the continent. It is still remote from the African civil society with its public outreach policy, and yet to leverage unto the newly created African Continental Free Trade Area (AfCFTA).

But a careful study and analysis monitored by this author vividly shows that Russia has some limitations. Its external economic footprints are comparatively weak, policies hardly promote its template of any new economic models. The economic component is the most significant though, Russia needs a more comprehensive geo-economic roadmap strategically wielded or knitted into the broad spectrum in Africa. What Russia has can be described as ministry to ministry-centered relations.

Beyond that trend, Russia has to be prominently seen in the economic sectors in Africa. It has to project an irreplaceable role with its economic diplomacy as a balancing force and as a practical key player, and this should fall in pursuit of its desire to become leader of the new global order. The geopolitical reordering of the world cannot simply be achieved through consistent criticisms of Europe’s and the West’s political influence in their various global domains.

As Abayomi Azikiwe, Director of the Pan-African News Wire, explained in his analytical article headlined “Biden Foreign Policy has Alienated Africa: Russia-Africa Summit to Reconvene in Ethiopia” in June, Moscow is seeking to strengthen relations with states and geopolitical regions which have not condemned the operations in Ukraine that began late February aims at “demilitarizing” and “de-nazifying” that former Soviet republic.

Many African states abstained from the United Nations resolutions attacking the Russian Federation while on a grassroots level, there have been expressions of solidarity for the position of Moscow. Senegalese President Macky Sall and AU Commission Chair Moussa Faki Mahamat held talks in Sochi on June 3 with President Putin. African states are facing monumental crises related to economic development, climate change and food deficits. The sanctions imposed by Washington and the EU have had a disastrous impact on the importation of agricultural products, Azikiwe wrote in his article.

Arguably the number of bilateral agreements signed is not the criteria for measuring success of influence in Africa. But, Lavrov said that the two most important goals of the summit will be to sign off on a “memorandum of understanding between the government of the Russian Federation and the African Union on basic principles of relations and co-operation” and a “memorandum of understanding between the Eurasian Economic Commission and the African Union on economic co-operation.” (https://www.intellinews.com/russia-preparing-for-second-africa-summit-to-build-closer-ties-as-it-pivots-away-from-the-west-247188/)

According to Abayomi Azikiwe, the holding of such a meeting between Russia and the AU during this period of heightened international tensions represents a repudiation of the U.S. foreign policy in Eastern Europe as well as on the African continent. There is much discontent over the failure of the U.S. to build relationships with the AU states based upon mutual interests.

The Pan-African News Wire says the Congress Passes Anti-Russia Bill Reinforcing Neo-colonialism in Africa. The Congressional bill approved by a wide margin would target and punish African states that maintain political and economic relations with the Russian Federation.

Labeled as the “Countering Malign Russian Activities in Africa Act” (H.R. 7311) was passed on April 27 by the House of Representatives in a bipartisan 419-9 majority. This legislative measure is broadly worded enabling the State Department to monitor the foreign policy of the Russian Federation in Africa including military affairs and any effort which Washington deems as malign influence. (www.congress.gov)

Abayomi Azikiwe, Director of the Pan-African News Wire, concluded that the central focus of the Biden administration’s foreign policy has been aimed at alienating AU states from Moscow and Beijing. The fact that these international gatherings of a substantive nature are occurring portends much for the future of Washington’s waning influence internationally.

Professor Ahmadu Aly Mbaye, an Economist at the Faculty of Cheikh Anta Diop University in Dakar, Senegal, argued the importance of infrastructure development in Africa. That many African countries have limited access to international financing to build quality infrastructure, and Russia as a member of BRICS can present new alternatives to financing African economies and facilitate better integration of Africa into the world economy, as African countries felt excluded from the international system.

In November 2021, as titled the ‘Situation Analytical Report’ was prepared by 25 policy experts, as part of a programme sponsored by the Russian Foreign Ministry. It was headed by Sergei A. Karaganov, Dean and Academic Supervisor of the Faculty of World Economy and International Relations of the National Research University’s Higher School of Economics (HSE University). Karaganov is also the Honorary Chairman of the Presidium of the Council on Foreign and Defence Policy.

The report noted that the first historic summit in 2019 created a good basis for launching or ushering in a new fifth stage of Russian-African relations. The joint declaration adopted at the summit raised the African agenda of Russia’s foreign policy to a new level and so far remains the main document determining the conceptual framework of Russian-African cooperation.

That report was very critically of Russia’s current policy towards Africa and even claimed that there was no consistent policy and/or consistency in the policy implementation at all. The intensification of political contacts is only with a focus on making them demonstrative. Russia’s foreign policy strategy regarding Africa needs to spell out and incorporate the development needs of African countries.

While the number of high-level meetings has increased, the share of substantive issues on the agenda remains small. There are little definitive results from such meetings. Apart from the absence of a public strategy for the continent, there is shortage of qualified personnel, the lack of coordination among various state and para-state institutions working with Africa. Many bilateral agreements, at the top and high political levels, have not been implemented.

The report lists insufficient and disorganized Russian-African lobbying, combined with the lack of “information hygiene” at all levels of public speaking among the main flaws of Russia’s current Africa policy. Under the circumstance, Russia needs to compile its various ideas for cooperation with Africa into a single comprehensive and publicly available strategy to achieve more success with Africa.

The report, however, suggested that the basis for cooperation at this level can be provided by the conceptual documents and ideas recognized and supported by all African countries: the approach of “African Solutions to African Problems” be strictly followed, working within the framework of the African Union Agenda 2063 and the UN Development Goals 2030.

For more information, look for the forthcoming Geopolitical Handbook titled “Putin’s African Dream and The New Dawn: Challenges and Emerging Opportunities” (Part 2) devoted to the second Russia-Africa Summit 2022.

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Training Young African Leaders Through the United States Leadership Programs

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The U.S. Department of State and the International Research & Exchanges Board (IREX), an international, nonprofit organization that specializes in global education and development, have offered admissions to the 2022 cohort of the “Mandela Washington Fellowship for Young African Leaders” in the United States.

The Mandela Washington Fellowship is funded by the U.S. Department of State’s Bureau of Educational and Cultural Affairs and administered in partnership with IREX. The fellowship creates stronger ties between 49 sub-Saharan African countries and the United States with the goal of strengthening democratic institutions, spurring economic growth, and enhancing peace and security on the continent. 

Accomplished in their careers and dedicated to serving their communities, the 2022 Mandela Washington Fellows represent the geographic, cultural, and racial diversity of Africa. The participants come from a variety of socioeconomic backgrounds including small business owners, public sector leaders, and non-profit professionals; represent equal numbers of women and men; and include individuals with disabilities.

This year the sellection was from a pool of more than 38,000 applicants, the 700 fellows are leaders in agriculture, civil society, education, healthcare, and other fields and different backgrounds. The fellows, between the ages of 25 and 35, are accomplished innovators and leaders in their communities and countries.

*The fellows participate in six-week Leadership Institutes, studying Business, Civic Engagement, or Public Management hosted by U.S. colleges or universities. Throughout the Institutes, fellows enrich local U.S. communities while sharing best practices.

*After the Institutes, fellows convene for a summit, where they forge connections with one another and U.S. leaders from the private, public, and non-profit sectors, setting the stage for long-term engagement between the United States and Africa.

*Professional Development Experiences (PDEs). Up to 100 competitively-sellected fellows work with private, public, and non-profit organizations for six weeks. Both fellows and hosts benefit from discussing shared issues and challenges in their sectors, broadening their perspectives, and positioning U.S. organizations for international engagement.

*Reciprocal Exchanges. The U.S. citizens have the opportunity to apply to travel to Africa to collaborate on projects with fellows, building upon connections initiated during the program. These partnerships and professional connections are intended to form lasting relationships, expand markets and networks, and increase mutual understanding.

*Opportunities for Alumni. The Fellowship Alumni continue to build the skills and connections developed during the program through access to ongoing professional development, networking, and collaboration opportunities with support from the U.S. Department of State and affiliated partners.

*Virtual Programming. The fellows watch presentation in a classroom at Syracuse University during their Mandela Washington Fellowship Leadership Institute. Then participate in a session with Dean James Steinberg at Syracuse University.

The fellowship leverages stakeholder expertise to deliver a suite of virtual programming for selected candidates and Fellowship Alumni to support their continued leadership development and strengthen their access to networks and resources.

For six weeks, the fellows participate in Leadership Institutes at 27 U.S. educational institutions, in 20 states across the United States. Throughout the program, they will develop lasting connections with Americans and enrich local communities while enhancing their skills through leadership training, experiential learning, and networking.  

They develop innovative solutions to pressing challenges in their home countries and collaborate with their peers from both the United States and Africa. Additionally, the fellows give back to their U.S. host communities: since 2014, Fellows have contributed to community service and worked with different organizations across the United States.  

The fellows connect with each other and U.S. professionals, setting the stage for continued collaboration when they return home. These substantive, short-term placements allow fellows to contribute their skills and insights to U.S. organizations and grow as early-career professionals. 

The fellows continue to build on their skills and connections developed during their time in the United States through access to ongoing professional development, networking, and collaboration opportunities for Alumni. The fellows may also apply for their U.S. colleagues to travel to Africa to continue project-based collaboration through the Reciprocal Exchange component.  

Launched in 2014, the Mandela Washington Fellowship is the flagship program of the Young African Leaders Initiative (YALI) and embodies the U.S. commitment to invest in the future of Africa. 

YALI was created in 2010 and supports young Africans as they spur economic growth and prosperity, strengthen democratic governance, and enhance peace and security across Africa. Since 2014, nearly 5,100 young leaders from every country in Sub-Saharan Africa have participated in the Mandela Washington Fellowship. 

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