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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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U.S. Policy on Zimbabwe Leaves Door Open for China

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The clearest image yet of the failure of United States’ policy towards Zimbabwe was on display last week when President Emmerson Mnangagwa toured the site of his country’s new parliament building, funded by the Chinese government and being built by a Chinese contractor.

Scheduled for completion by March 2021, this $140 million building at Mount Hampdennear Harare will stand six stories tall as the largest building in Africa funded by China. It will soon be the seat of Zimbabwe’s democracy as the country ends its decades of isolation. But rather than western democracies coming forward to support Zimbabwe in this transition, it is China which has filled the gap.

“We cannot tire in repeating our sincere and deep gratitude to China for the magnificent gesture…we are grateful,” President Mnangagwa said as he toured the site.

According to the Johns Hopkins School of Advanced International Studies in Washington, China extended loans worth $2.2 billion to Zimbabwe during 2000-2017.Recent loans have been awarded for the upgrade of Harare’s airport as well as construction of the Hwange 7 and 8 power plant project.

The West, on the other hand, has stuck to sanctions as its foreign policy tool. These were first imposed on Zimbabwe in the early 2000s by the U.S. and European Union in response to the alleged crackdown on political opponents by former president Robert Mugabe. This included financial and travel restrictions against specific individuals and companies.

Many of these measures are still in place today despite Mugabe’s resignation in 2017 and Mnangagwa’s election last year. The EU, however, has begun to normalise its relations with Zimbabwe, with only a few sanctions remaining.  The start of political talks in June was perceived as a positive sign towards abandoning all EU sanctions in the near future.

An EU memo ahead of talks in Harare last week, noted that Zimbabwe has made progress by not enforcing its empowerment law, which would have required all foreign investors to cede at least 51% of their shares in local operations to Zimbabweans.

The memo also said the government’s interim compensation of white farmers whose land was seized under Mugabe was a positive gesture towards re-opening export markets in the EU. In a budget statement last week, Finance Minister Mthuli Ncube set aside $24 million to compensate white farmers, 768 of whom had consented to the interim compensation scheme.

The U.S., meanwhile, has maintained wide-ranging sanctions, at least until March 2020. Officials in Washington claim this is due to Zimbabwe’s failure to change laws curbing protests and media freedoms – a strange assessment since Mnangagwa’s government is currently modernising 30 Mugabe-era laws to meet Western standards. A controversial emergency law has already been replaced, and media laws are being replaced with new legislations currently in Parliament.

Following decades of open hostility with Zimbabwe, the West is now jeopardising the opportunity to work constructively with the Mnangagwa government. Under Mugabe, Zimbabwe had actively pursued Chinese investment under his ‘Look East’ policy. But after Mugabe resigned, Mnangagwa said restoring ties with the West and western financial institutions was one of his major priorities.

That was the moment when the U.S could have helped turn Zimbabwe around, bringing in international investment and technical knowhow. But the U.S. instead chose to extend its sanctions, leaving Zimbabwe’s economy reeling from high inflation and power shortages, exacerbated by the effects of climate change. Despite signals of keeping the door open, the Mnangagwa government is slowly but surely being forced to turn back to the arms of a willing China.

Guo Shaochun, the Chinese Ambassador to Zimbabwe, summed up the West’s short-sighted approach.“No country is perfect. No country knows Zimbabwe better than Zimbabwe. Zimbabwe doesn’t need other countries to teach it to do this or not to do that. Zimbabwe needs real partners and real help without any political conditions. Zimbabwe has the wisdom & ability to address its own issues,” Guo tweeted on November 16.

At the site of Zimbabwe’s new parliament, President Mnangagw aexpressed his frustration last week, saying Western countries had done “nothing except criticise” Zimbabwe.

“Those countries who speak against our relations with our good friends have done nothing except to impose sanctions on us,” the president pointed out.

The situation is not yet completely lost, however. If the U.S. were to reach out to Zimbabwe and acknowledge the painful reforms undertaken by Mnangagwa, it could still turn this southern African country towards the West.

The U.S. should also immediately allow Zimbabwe access to international lending agencies and provide technical expertise that is urgently needed, and, above all, eliminate sanctions when these come up for renewal in March.

Winning the hearts and minds of Zimbabweans – the most educated population in Africa – will take more than the ‘stick’ approach that has been tried so far; a ‘carrot’ will do the work much better. If the West doesn’t grab this opportunity, then it should not be surprised when China steps in to reap the benefits.

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A New Currency Offers New Hope for Zimbabwe

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For many Zimbabweans queuing up outside banks last week, it must have felt like the beginning of a new era. A decade after the Zimbabwean dollar was abandoned after falling victim to years of hyper-inflation, crisp new “Zimdollars” have once again entered circulation. However, this time around the denominations come – at least for now – in two and five dollar bills, instead of the 100 million dollar notes that were printed towards the end of the last Zimbabwean dollar.

This new generation Zimdollar is the latest salvo by the government to combat the physical cash crunch and a crucial step ahead in its currency reforms. The Reserve Bank of Zimbabwe plans to incrementally inject $1 billion into the economy over the next six months, stimulating demand and production in a measured manner while keeping money supply in check.

“We will make sure that we drip-feed the physical cash into the market in order to ensure that there is sufficient cash in the economy,” said central bank chief John Mangudya. “We believe this will also help in eliminating queues at the bank where people spend countless hours of productive time queuing for cash.”

Mangudya added that the new Zimdollar would take the place of existing electronic money, alleviating the fear that the cash injection in the middle of an economic crisis would stoke inflation. Keeping price increases and speculative behaviour in check is also one of the reasons why the Reserve Bank is initially issuing lower denomination notes and coins.

For Zimbabweans, the new cash is a welcome relief. Over the past 10 years, they had to juggle a multitude of currencies and proxies. Following the collapse of the old Zimbabwean dollar in 2009, a basket of currencies became legal tender in the country, from the US dollar to the Chinese yuan. By 2015, the foreign currency notes dried up at the banks, which started the chronic cash shortage in Zimbabwe. The central bank introduced bond notes as a surrogate currency, but black market speculation quickly eroded their value, which then triggered the creation of electronic notes.

Given Zimbabwe’s disastrous state of affairs, a popular uprising ensued against the country’s long-time strongman Robert Mugabe, leading to his resignation two years ago. He was replaced by Emmerson Mnangagwa, who then won the presidential election in July 2018. He inherited a struggling economy marked by hyperinflation, cash shortages, a budget deficit, endemic corruption and a lack of monetary sovereignty.

Promising wide-ranging reforms, Mnangagwa appointed MthuliNcube as Finance Minister, a respected economist who was a professor of Public Policy at Oxford with a PhD in Mathematical Finance from Cambridge University. Mnangagwa tasked him to stabilise and transform the Zimbabwean economy so that it could achieve upper middle-income status by 2030, in line with countries such as Russia, China, Thailand, Costa Rica, Turkey and Malaysia (in fact, Zimbabwe was upgraded by the World Bank from a low income to lower middle income country in July).

Facing large fiscal deficits due to the expansion of underground economic activity and the sanctions imposed on Zimbabwe during Mugabe’s rule – which restricted access to U.S. dollars – Ncube launched the Transitional Stabilisation Programme (TSP) a year ago with far-reaching currency and structural reforms. The move was endorsed by the International Monetary Fund (IMF), with whom Zimbabwe signed a two-year monitoring programme that could earn it debt forgiveness and future financing.

In February this year, the government introduced the so-called Real Time Gross Settlement (RTGS) dollar and abandoned its multi-currency system four months later. By now, most Zimbabweans had resorted to mobile money, which became an integral part of the country’s payment system. But it too had its challenges, as wallet holders had to pay premiums of up to 50% to price-gouging mobile money agents to access their funds in cash. This contributed to the rapid depreciation of the currency and compounded the cash shortage. This month’s issuance of the physical Zimdollar bills aims to alleviate that problem, as the availability of cash will eliminate the extortionate premiums incurred when transacting through mobile money.

The new currency likely faces an uphill battle. But the government is confident, urging Zimbabweans to embrace the freshly minted bills and coins to ensure they find traction in the market. Leaders from politics, business and civil society need to play their part as well, shedding their differences and quarrels and rally collectively behind the Zimdollar.

Its roll-out comes at a critical time for the government’s reform agenda, coinciding with the presentation of Zimbabwe’s 2020 budget, which revolved around enhancing productivity, growth, competitiveness and job creation, and the passing of the Maintenance of Peace and Order (MOPA) bill, which replaced a controversial emergency law that dated back to the Mugabe era, a key demand by the U.S. government to remove sanctions.

Implementing reforms – especially after decades of mismanagement – is a painful process and Zimbabweans are tired. But with political will tangible results are gradually being achieved. The country may be on the cusp of a better future, finally putting the years of isolation behind it. Perseverance and collaboration will help to ease the way.

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The Geopolitics of natural resources of Western Sahara

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In the post-bipolar international legal literature, the right to self-determination is part of the broader concept of human rights, and the only aspect of self-determination that remains in current international relations is the right to self-determination for peoples to dispense with their natural wealth, a concept related of the right of development.

Western Sahara is regarded by the UN as the last colony in Africa. However, Morocco continues to occupy the Saharawi territory without any respect to UN resolutions on decolonization. The main driver of this colonisation is natural resources.

In fact, with the natural resources of Western Sahara that Morocco buys the political positions of the States, to finance lobbyists in the EU and the USA to defend the Moroccan thesis of occupation, and at the same time to develop its internal economy and encourage the movement of Moroccan populations to Western Sahara, to make Sahrawi a minority in their homeland.

Natural resources determining factor in conflicts

There is a high likelihood that most of the important (armed) conflicts in our twenty-first century will be those concerning resources. All the conflicts have an economic aspect, with greater or lesser weight in their emergence and development. Indeed, the French sociologist Gaston Bouthoul states that Germany had to resort to the 1914 war as a result of the too costly economic struggle that it had sustained against others great industrial and exporting powers.

With the same idea, the famous phrase of the Prussian strategist Carl von Clausewitz “War is not an independent phenomenon, but the continuation of politics by different means”, one could say that geopolitics is nothing more than the concentrated expression of geo-economics.

This left Lenin the leader of the Russian Revolution of 1917, to observe that “politics is the concentrated expression of the economy”, something that we live and that is perfectly valid for all times, economic aspects have been the main engine of interstate relations, the economic realities that truly set the pace for the rest of the politics, including the bellicose or the pacific, which leaves Napoléon Bonaparte to say, “war is done with three things: money, money, money”.

The natural resources and their economic exploitation have contributed, and continue to do so, to favour a kind of occupation of the Western Sahara Territory, which would introduce a more complex resolution of a conflict encysted for more than forty-four years.

The marginalized and impoverished of Saharawi people, whether during the Spanish colonial era or during the Moroccan colonial period

We can say that the economic side of the colonialism phenomenon constitutes the decisive characteristic feature of Spanish presence in Western Sahara. Indeed, the international economic crisis which began in the 1870s contributed to the origin of spurred Spain to rush its colonization of the southern flank of Western Sahara, while the other parts of Western Sahara were only pacified late in 1934, by stimulating the imagination of those caught up in it to find means of escaping from a precarious situations.

Historically, since 1884  and until the arrival of the Franco in power in Spain, Western Sahara, had an essentially economic value, both for its proximity to the old caravan routes, and mainly for the very rich fishing bank that runs along its coasts, since one of the most important in the world and has represented the grease between both banks along of history. In addition, the political interest of Western Sahara lay in its geostrategic position in the Atlantic as a rearguard of the Canary archipelago.

The occupation of Western Sahara aims to build up a powerful national economy, whose production is geared to the needs of the mother country while isolating the colonial economy which is just the supplier of the raw materials needed for the economy of the colonial state. This will be amplified with the exploitation of Saharawi phosphates in the region of Boukraa in 1967.

In view of these 44 years of Moroccan occupation of Western Sahara, the Moroccan practice use the same process as that of the Spanish colonial era. In fact, Morocco will start relentlessly to exploit the natural resources (fishing, phosphates, agriculture, other precious metals solar and wind energy, ) of the Saharawi people while marginalizing indigenous populations, by favouring Moroccan settlers who today represent an undeniable majority in the daily life of the occupied territories.

Spain and Morocco they have an important common denominator, that of being despotic regimes and their objective aims to eliminate Saharawi political and cultural identity. However, the international law of the Non-Self-Governing Territories distorts the equation of the colonizing country

The low profile of UN action in Western Sahara to protect the natural resources of the Saharawi people

In 1975 the International Court of Justice (ICJ) Advisory Opinion insisted that the people of Western Sahara should be fully decolonised and allowed their right to self- determination.

From then until today, this opinion has had its political and legal importance, since it has served as a support for the Polisario Front position and explains in a clear way the favouring votes to the self-determination of the Saharawi people within the AU and UN.

The legal aspect will be strengthened in favour of the right of the Saharawi people and their sovereignty over their natural wealth in the opinion of the UN legal counsel Hans Corell stated succinctly in 2002,in accordance with the international law, one cannot exploit the natural resources of an occupied country without the express consent of the indigenous population. To do so is plunder.

These legal instruments in favour of the Saharawi people will be reinforced by the two judgments of the European Court of Justice of 2016 and 2018 regarding raw materials exploited by Morocco with connivance and complicity of some EU states.

However, like MINURSO the only mission of the UN without wings to supervise the human rights in Western Sahara, so how will be protected the natural resources of the Saharawi people:it is a bubble dream.

You have to notice, the discrete role of the UN which is constant, already in 1975, Spain retired without holding the referendum of self-determination, we see that the Security Council does not show a special interest, it is more likely favourable to the role that Morocco plays in the area as an ally of France and Europe from the geostrategicpoint view to leave the situation as it is in an endless status quo.the UN is unable or unwilling to force Morocco to respect the referendum.

We can conclude that the UN has never taken a firm and clear position around Western Sahara and has never used all the mechanisms at its disposal, as would be the use of Chapter VII of the UN Charter and maintain the application of Chapter VI concerning the peaceful rule of controversy and supports negotiations between Morocco and Polisario, as if they are two equal parties.

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