Reflections on SACU sustainability



MASERU – The 7th Summit of the Heads of State of the Southern African Customs Union (SACU) that was held yesterday in Botswana reflected on the Russia-Ukraine conflict and the Covid-19 pandemic, their impact on the economy and how it can be sustainably revived. The Heads of State said the current Russia-Ukraine conflict, which if not resolved peacefully through dialogue and negotiation, can further affect the region.

They said the war between the two countries will result in inflation surges, especially on food and fuel prices thus dimming the growth prospects of the already fragile economies. As a result, they discussed food security measures to mitigate the increase in food prices and food shortages. The summit undertook to remain resolute to implementing recovery programmes that assist in rebuilding economic resilience, building on work already being done on analysing the impact of Covid-19 to bring SACU economies back on a sustainable economic growth trajectory, including prioritising investments in edible oils and other agricultural value chain development as a matter of urgency.

The summit agreed that SACU should maximise the opportunity being presented by the emerging global developments and accelerate the implementation of the SACU industrialisation programme which will result in increased productive capacity to reduce the reliance on imports, especially on food and fertiliser. Furthermore, the Summit endorsed the priority sectors in agro-processing specifically leather and leather products, meat and meat products, fruits and vegetables, textiles and clothing, pharmaceuticals, cosmetics and essential oils, automotives and mineral beneficiation.

It further directed the council to prioritise fertilizers, agro-chemicals and seed production as part of the ongoing work on agro-processing to deal with the existential challenges the region is faced with regards to food security. Delivering his opening speech Botswana president, Mokgweetsi Masisi, noted that they are gathered for the 7th Summit to deliberate on key issues concerning SACU, with a view to providing the necessary political and strategic guidance to the various institutions on the SACU Agenda.

He said due to covid 19, human lives were lost, livelihoods altered, economies and cross-border logistics and supply chain management that facilitates the movement of essential were supplies disrupted, to such magnitudes that the socio economic ills that countries are battling with were all aggravated. He said the situation calls for efforts aimed at reviving economies and how they can make the economies be more resilient when faced with the prospect of similar crisis. Masisi noted that countries need to take lessons from what they could have done differently to inform what to do better going forward. He said this will enable them to efficiently harness their limited resources to implement post-Covid-19 economic recovery plans.

“As members of a Customs Union, stronger regulatory and administrative collaboration can only aid us in responding in a coordinated manner; to facilitate the seamless movement of goods within the common customs area. It is only through mutual partnerships that our people and traders can derive the maximum benefits from what SACU aims to achieve,” he said. Masisi said the Rusian-Ukraine conflict has worsened the already depressed economy due to the impact of the Covid-19 pandemic, articulating that this, together with the disruptions of the global supply chains, has resulted in a surge in inflation all over the world including the African region.

He noted that the surge in inflation, especially for food and energy, remains a present global risk which is hurting consumers and wearing down their purchasing power. “With regard to emerging markets and developing countries, growth projections for 2022 stand at 3.8 percent compared to 6.8 percent in 2021, with an improvement forecast in 2023 to 4.4 percent. In Sub-Saharan Africa, growth forecast has been revised downwards to 3.8 percent for 2022 and 4 percent for 2023.

“In relation to trade, for the year 2020, global trade was estimated at US$22 trillion representing a contraction from the US$25 trillion recorded in 2019. This, however, rebound in 2021, by more than US$ 6 trillion, reaching US$28 trillion and is projected to decline in 2022,” he stated.

He said for the SACU region, the overall weighted growth is estimated to have contracted by 6.5 percent in 2020, down from 0.3 percent in 2019, amid recent growth revisions by the member states, while growth is estimated at 4.9 percent in 2021 and would decline in 2022. He said member states are now at a stage where there is increasing risk for stagflation, thus a call for the region, to undertake countercyclical measures to cushion their economies. He highlighted the importance of accelerating the implementation

of economic recovery plans and to continue to mobilise necessary financial support. Addressing the Summit, the Executive Secretary of the SACU, Paulina Mbala Elago, noted that SACU seeks to deepen regional economic integration through the development of regional value chains. She said to guide this work, the SACU member states have adopted a vision for industrialisation which seeks to build a diversified, competitive, sustainable and equitable industrial base that supports structural transformation and the economic integration of the SACU region.

She said to attain this vision, priority sectors, have been selected based on their potential to benefit the region, the opportunities they present and their overall contribution to economic development. She said these include Agro-processing, textiles and clothing, cosmetics and essential oils and pharmaceuticals.

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