SILAIR MCGETTLANENG

(PhD) Chief Research Specialist, Programme Leader, Governance and Security Africa Institute of South Africa

South Africa Keywords:, SADC, SAKU, Komesa, regional integration

The purpose of this article is to determine the most effective way of regional integration in Southern Africa - within the framework of the South African Customs Union (SACU) or the South African Development Community (SADC).

It is widely believed that South Africa should pay more attention to integration within SACU and that it is SACU that will absorb SADC and even the Common Market for Eastern and Southern Africa (COMESA-COMESA)*.

The answer to the question of which of the two regional organizations - SACU or SADC-is more effective is of great importance for determining South Africa's policy in the field of regional and continental integration.

The author analyzes SADC as a regional economic community and SACU as a customs union in the context of South Africa's contribution to integration processes not only at the regional, but also at the continental level. This is the answer to those who insist on the dominance of SACU and the inevitability of joining SADC and COMESA.

Thus, Mzukishi Kobo, who was responsible for shaping trade policy in the South African Ministry of Trade and Industry, mistakenly believes that the 2002 SAKU Treaty "provides an opportunity to move towards deeper integration, which could resolve the confusion of regional integration schemes with partially duplicated membership" ^.1 However, the Treaty does not provide for such a possibility and not even implied.

He is echoed by Peter Draper, a former employee of the same ministry, head of the Development through Trade Program at the South African Institute of International Relations, and Nkulululeko Khumalo, a participant in this Program. They reduce regional integration in Southern Africa to trade integration, mistakenly viewing it as a means of "trade facilitation" ^.2

In fact, the existence of SACU only complicates the problem of dual membership, primarily because SACU contributes to SADC-based regional integration by being a customs union.

The regional integration of Southern Africa is an integral part of the struggle for socio-political and economic development and progress in the region. It is of strategic and tactical importance for the realization of the idea of unity and solidarity not only at the regional, but also at the continental level, and serves the cause of sustainable democratic development of regional political and economic structures.

It is extremely important that the countries of the region have agreements on a common integration strategy in the form of providing social services and significantly improving the material situation of the population. As for SACU, unlike SADC, it does not create these opportunities for Southern African States, nor does it contribute to eliminating regional inequalities.

Agreement between these countries on a common strategy is important not only for their relations, but also for developing contacts with external players and protecting the interests of the region as a whole and its members separately. Leaders of regional integration are both regional and global actors, often with different, even opposing interests. In turn, global actors, especially developed capitalist countries, see the integration project as a means of expanding access to the resources of Southern Africa.

* SACU members - 5 countries: Botswana, Lesotho, Namibia, South Africa, Swaziland.

SADC members are 14 countries: Angola, Botswana, DR Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe.

COMESA members are 19 countries: Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, Zimbabwe.

SADC's struggle to reduce the economic dependence of its members on external actors is being carried out within the framework of structural economic transformations in Southern Africa. This is noted in the SADC report (1998), commissioned by the United Nations Development Programme, which states:: "The economic structure of SADC member countries is based on the ambitions of white settlers... This type of colonial economy is a major obstacle to industrial diversification in the region. Almost all countries depend on the export of primary products and semi-finished products to the world market, which is characterized by unequal terms of trade that favor developed countries and fluctuating commodity prices that cause instability in fragile developing economies. " ³

Rational use of human, natural, material and financial resources is an integral part of the struggle for regional integration and is directly related to the need to solve the problem of dual membership in regional economic unions, which leads to more complex processes of coordination and coordination of their policies and programs. Having raised the question of whether economic communities promote or hinder integration, the United Nations Economic Commission for Africa (UNECA) concluded in 2004 that overlapping membership in regional organizations has a number of disadvantages. Among them:

- fragmentation of the economic space and differences in approaches to regional integration;

- high total cost of membership in economic communities;

- competition for receiving donor assistance;

- contradictions in the obligations of Member States;

- duplication of efforts;

- reduced opportunities for regional economic communities to pursue consistent and effective integration policies ⁴.

These and other shortcomings turn regional economic communities into obstacles to integration.

For its part, the African Union (AU) special Commission noted among the weaknesses of regional economic communities the lack of leadership, the inability to identify agreed and coordinated goals and, consequently, to implement any organized planning; the dispersion of research, approaches, programs, actions and decisions; competition that undermines solidarity and the ability to sacrifice anything for the sake of development. for the common good; the dispersion of resources; the expansion of the bureaucracy, the need for additional meetings and negotiations, which places a huge financial burden on the States of Southern Africa.⁵

If regional economic communities want to act as drivers of integration, these shortcomings must be eliminated. South Africa should promote regional integration by seeking the unification of SAKU and SADC.

South Africa is in a prime position to ask other countries in the region to what extent they are committed to coordinating and streamlining regional economic communities.

This issue was also raised in 2009 by the Minister of Foreign Affairs of Mauritius, Vijay S. Mahan: "The nuclear power plant [African Economic Community] should have been built with the help of regional economic communities (RECs) as building blocks. But where are we now? It was decided to work on the basis of five distribution zones... But a decision has not yet been made, and Member States have already begun lobbying for recognition of other sub-regional entities as RECs! Obviously, now there will be many regional economic communities! We have yet to develop the ability to say no in Africa! Today, the AU has to work with eight RESS, not to mention other groups fighting for recognition and space! " ⁶

It is essential for South Africa to increase its contribution to the regional integration of Southern Africa in order to avoid the problems associated with different standards, competing interests and unnecessary human, financial and infrastructure costs, as well as to facilitate the movement of goods, services, labor, capital and expand markets.

In this context, the central question is what is the most effective tool that can be used to contribute to the achievement of the goals set: SACA, SADC, or a combination of them?

Given the fact that all SACU member States are also members of SADC, South Africa should recognize that the most effective way to promote regional and continental integration is through SADC, especially since this organization is recognized by the Afro-Union, and SACU is a customs union, and the AU does not consider it an element of the continental integration system.

The decision of South Africa not to become a member of COMESA deserves a positive assessment, as it serves as an example of solving the problem of overlapping memberships in regional economic communities.

The claim that SAKU could engulf SADC and even the COMESA countries is largely driven by the perception of the world's largest population.-

The idea that South Africa ^should dominate Southern Africa7 served as the theoretical basis for the policy formulated in 1978 by the Prime Minister of South Africa, P. Botha, concerning the so-called Southern Africa Constellation (SUA). Central to the strategy for the creation of the SSA was South Africa, which had economic, financial, trade, technological, military power, as well as a transport and port network. Constellation would consolidate the dependence of the states of this part of the continent on South Africa and provide it with political levers of influence on them.⁸

Dependency relations between South Africa, on the one hand, and the BLNC countries (Botswana, Lesotho, Namibia, Swaziland) and other States in the region, on the other, have experienced the end of apartheid. Moreover, South Africa's economic dominance in this part of Africa has increased.

South Africa failed to annex Botswana and Lesotho. Namibia also achieved political independence. Overcoming the economic dependence of the BLNS countries and other states in the region on South Africa is primarily a political problem. The fact that SAKU is unable to absorb SADC and KOMESA is directly relevant to this problem. The SAC is a revenue-sharing and trade facilitation tool, not a regional economic community9.

At the same time, SADC's activities face differences in the interests of countries in the region. For example, Angola relies heavily on Brazil and Portugal for trade and investment.

Since SADC has not been particularly successful in regional integration, the desire to turn its attention to SAKA was understandable. However, despite the declaration made at the meeting of Heads of State and Government of SACU member States in Windhoek, Namibia, in April 2010, that SACU's mission is to become "a driving force for regional integration and development, industrial and economic diversification, increased regional trade and investment, and global competitiveness" ¹⁰, this remains only a declaration of intent, as it does not contain any plan of action.

SAKU'S POSITION

SAKU has never set itself the task of achieving regional integration, except for the creation of a customs union. Relatively free movement of goods within its zone is allowed. In addition, Lesotho, Namibia, South Africa and Swaziland are in the common currency area. The Rand of South Africa is used in Lesotho, Namibia and Swaziland, which coordinate their monetary policy with South Africa. Thanks to the use of the South African rand, they remain financially stable. There is a free flow of capital between the four countries. Botswana also follows South Africa in shaping its fiscal policy.

The use of SAC as a model of regional integration creates a number of problems, some of which are related to the existence of uniform foreign trade tariffs in the member countries. If SADC member States want to join SACA, they will have to change their tariffs and their obligations to the World Trade Organization (WTO).

The second problem is the revenue sharing scheme created by SAKU. It does not provide equal conditions for all participants and does not facilitate the admission of new members to the organization. This is a limited total revenue pool, where one participant gets more and the other gets less. When new members are admitted to SAKA, revenues will remain the same, but they will be divided into more countries. Namibia, Botswana, Lesotho and Swaziland are highly dependent on the pool, and they fear a revision of the terms of income distribution, as a result of the reform, their incomes may decrease ¹¹.

On April 22, 2010, at the meeting of the Heads of State and Government of the member States dedicated to the 100th anniversary of SAKA in Windhoek, a document was adopted approving SAKA as an economic community. However, the fact that Southern African countries are contributing to regional integration through SADC rather than SACA was recognized during the meeting, in particular by the Presidents of Namibia and Botswana, Hivikepunye Pohamba and Seretse Jan Khama. According to Pohamba, " SACU's activities are essential for broader regional integration under SADC auspices... We also recognize the important role of SACU as a SADC unit (emphasis added)."¹²

In turn, Khama said that " in parallel with the implementation of the SAKU ideas, our participation in SADC should also be taken into account. This is important because it is only through teamwork in the broader SADC context that we can ensure the smooth regional integration of Southern Africa. " ¹³

The views of Pohamba and Khama are important for a number of reasons: SAKU integration is not an integration of Southern Africa as a whole, but a process that contributes to it. The perception of SACU as a "SADC unit" contradicts the perception of SACU as a regional organization, although SACU's role as a customs union is highly appreciated.

SAKU'S INCOME DISTRIBUTION FORMULA. SOUTH AFRICA'S POSITION

Issues of income distribution and development of zanima trade-

They play a major role in relations between South Africa and its SAC partners.

South Africa is the most economically developed member of SACU and SADC. South African imports have the greatest impact on total SAKU revenues. The amount of customs fees and duties received by South Africa reaches 98% of the total SAKU fee. The total population of the BLNS countries is less than 8 million, while in South Africa it is 50 million. This means that the LLDC countries cannot conduct trade operations on a scale comparable to that of South Africa.

According to the 2002 agreement, the amount of customs revenue that is expected to be received for the next year should be estimated jointly by the countries. However, the BLNS member States have not yet assumed this responsibility due to the lack of an institutional and legal framework. All ratings are made by South Africa. Funds for the current year are borrowed by South Africa on behalf of SACU, and only after the end of the financial year are estimates consistent with real indicators. This is an additional responsibility that South Africa has under SACU.

Customs revenues are distributed according to the volume of trade or import of SAKU. BLNS countries mainly import from South Africa. In this regard, when applying the distribution formula, they receive, on average, 90% of customs revenues. In other words, South Africa compensates these countries for the purchase of a larger volume of goods.

The dependence of the BLNS countries, especially Swaziland and Lesotho, on SAKU revenues, mainly from Customs revenues, is constantly growing. From 60 to 70% of the total income of the member States-income under the SAC. 70% of Swaziland's national budget comes from SAKU.

The problem faced by SAKU and the BLNS countries is the instability of customs revenues. During the recession, fewer goods are imported, especially to South Africa. Consequently, less revenue is collected and distributed. This has negative consequences for the most dependent members of the SAKU. Swaziland, for example, is forced to borrow from South Africa during the recession.

In Swaziland, income diversification has not been given much attention. The claim of Richard Gibbs and Karen Treasure that for "more than 90 years, from 1910 to 2002, the BLNC countries were almost entirely dependent on the SACU for income and market access, unable to influence the Union's policies", with a minor correction, is still true today. ¹⁴

The "correction" is that the LLDC countries are still almost completely dependent on the SAC (in terms of revenue), but they have gained the opportunity to influence its policies, which serves their narrow, short-term interests. They cannot meet their long-term goals, as this requires economic transformation, social development and diversification of income sources. The influence of the LLDC States on the SAC policy is still focused on maintaining their dependence on the Union's revenues, and this is not a model of sustainable development.

South Africa is committed to changing the income distribution scheme not only for its own benefit, but also for the long-term interests of the LLDC countries. Robert Davis's claim* that"the regional integration program can go downhill if it becomes a tool used by weaker partners to strengthen their demands for a stronger party" ¹⁵ was addressed not only to SADC members, but also to the SAC.

SOUTH AFRICA-BLNS: TRADE RELATIONS

South Africa sells more than it buys to the BLNS countries, and therefore has a huge trade surplus with the SACU member States. South Africa sets trade tariffs, and as a result, the BLNS does not have its own tariff policy. The 2002 Agreement provides for a collective decision-making process, but the provision on the perpetual right of the BLNS countries to compensation payments still remains.

The consensus-based decision-making process contradicts the interests not of South Africa, but of the BLNS countries, which often deliberately confuse their national interests with those of the SACU. In other words, they are using the organization as a means to advance their interests by teaming up on some key issues against South Africa, which to some extent has become a hostage of the BLNS, on the grounds that if they do not receive funds from SACU in the same amount, they will face serious socio-political, economic and financial problems. At the same time, it is possible that a significant number of BLNS citizens will migrate to South Africa, thus increasing political tensions in this country.

NAMIBIA'S REACTION TO SOUTH AFRICA'S POSITION

What are the socio-economic challenges that motivate Namibia to cooperate with South Africa in the framework of SACU?

80% of the goods consumed in Namibia are produced in South Africa. Namibia itself consumes what it does not produce and is used by South Africa as a "pocket" market.

Namibia exports beef to South Africa, and then imports-

* Minister of Trade and Industry of South Africa (Editor's note).

ruet it from South Africa. Namibia has a well-developed fishing industry, which is supposed to be processed locally to create jobs, and then exported as a finished product. Namibia exports copper, but does not process it into finished products, and exports all manganese without any on-site processing. Namibia has a higher level of industrial development than Botswana, Lesotho and Swaziland. These are also" pocket " markets in South Africa.

The factors that characterize Namibia's relations with South Africa are basically the same as those that determine the economic ties between the SACU members and South Africa. In fact, the BLS countries simply export their raw materials and import finished products. According to Tjekero Tvei, Deputy Minister of Trade and Industry of Namibia, " in 21 years of post-colonial development, Namibia has not even built up the capacity to produce toothpicks. We need them and import them from China... We must develop our production capacities and better improve the tax system. " ¹⁶

Namibians interviewed by the author in Windhoek in October 2011 do not agree that South Africa finances the LLDC countries through payments to the SAC's general income pool. They claim that South Africa profits from Namibia, which is its "pocket" market, and that through South African companies operating in Namibia, this country contributes to the socio-economic development of South Africa. Through the consumption of South African goods, Namibians help create and maintain jobs in South Africa. In addition, South African goods are extremely expensive in Namibia, meaning that the country's residents allegedly pay more for them than they should.

Namibians also claim that the Common Currency Area in which the SAKU countries are located is beneficial to South Africa: the BLNS export capital to South Africa, which is used for its further development, and argue that if these economic benefits are compared with the contribution of South Africa to SAKU revenues, it can be concluded that the BLNS countries are in a less favorable position, than South Africa. They argue that a misperception about the socio-economic and financial relations between South Africa and its SAC partners is due to South Africa's lopsided position and that the BLNS are more likely to receive less compensation.

The question of who benefits more from cooperation in the SAC format remains crucial for the discussion on changing the income distribution scheme. The LLDC countries will seek to ensure that change does not benefit only South Africa, whose calls for reform are interpreted as its intention to reduce its contribution to the income pool.

The problem is that the distribution scheme allows you to reduce the contribution of some only at the expense of others. Meanwhile, the change should not be significant, since the balance of power is already against South Africa, whose contribution to the development of the BLNS countries is a factor contributing to the achievement of a political compromise, including on the issue of income.

SAKU'S NEW MISSION

In 2010, the Heads of State and Government of the SACU reached an agreement on a common concept and work program for the consolidation of the Customs union17. One of the main aspects of the agreement is the institutionalization of the summit of Heads of State and Government as a tool for strengthening the union.

The work programme includes infrastructure development; trade facilitation; revision of the income distribution formula; measures to diversify the industrial development of members and their participation in trade negotiations with third parties. Sectors such as mining, agricultural processing, textile and automotive industries were identified as cooperation priorities ¹⁸.

The issue of regional integration in Southern Africa is not part of this program, which once again shows that SACU is a revenue-sharing tool, and not an organization aimed at strengthening regional integration.

This program can contribute to the development of mutually beneficial economic, financial, trade and industrial relations between the countries of Southern Africa. This is important not only for the success of regional or continental integration, but also for the establishment of control over their own economies by the member countries of the SAC. The program can help LLDCs countries diversify their sources of income.

The SAC has no authority to regulate trade in services, intellectual property rights, emigration, or foreign direct investment. The adoption and implementation of a unified policy in the field of international relations, in particular on the movement of people, capital, information, goods and services, as well as the transfer of information across national borders, are of strategic importance for regional integration. Trade in services (financial, telecommunications, transport, etc.) is crucial for creating bilateral ties between individual sectors of the SADC ¹⁹ member countries ' economy, as it contributes to the creation of new jobs in the formal and informal sectors of national economies.

South Africa, a leader in finance, telecommunications, maritime, road and air transport and tourism, can contribute to the diversification of SADC member economies, where financial and transport services are underdeveloped, telecommunications services are expensive, and related infrastructure (hotels, roads, banks) has limited access to global networks and booking systems ²⁰. Improving these services will help to increase the export potential of SADC member countries. Growing mutual trade and capacity-building in Southern Africa will eventually lead to the export of services to foreign markets.

CONCLUSIONS AND RECOMMENDATIONS

The existence of SAKU is currently a stumbling block for the regional integration of Southern Africa. The income distribution formula remains an obstacle to the admission of other SADC countries to the SACA. Many experts disagree with the view that SACU is destined to absorb SADC and even the COMESA countries, but they do not expect drastic changes in SACU's policy.

SAKU was not created to achieve regional integration in Southern Africa. The apartheid regime in South Africa pursued anti-democratic goals and opposed the integration of South Africa, but in favor of bringing the countries of the Black Sea Region closer to South Africa and moving away from other states in the region.

Regional integration "can only be as strong as its constituent parts"²¹, and if members of the SACU are truly committed to integration, they should have demonstrated this in the SADC framework. This is what Presidents Pohamba and Khama said when they argued that regional integration in Southern Africa can only be achieved through SADC.

SACU owes South Africa its achievements in democratizing governance. It took many years for the Customs Union to establish the Council of Ministers, the Customs Union Commission, the Technical Relations Committee and the Secretariat - structures dealing primarily with operational issues. Only the Council of Ministers forms the policy. The 2002 agreement provided for the organization of 7 structures, some of them - the tariff council, national agencies and the tribunal-have not yet been established. The Tariff Council operates only in South Africa, while the South African Foreign Trade Commission serves as the SAKU Tariff Council. In 2009, the SACU Council of Ministers extended the mandate of the National Tariff authority of South Africa in this capacity for a further three years.²²

The Customs Union should give up its status as a" SADC unit " and integrate into it. SAC needs to focus its human, natural, material and financial resources on helping SADC, an effective regional economic community, achieve regional integration.

Translated from English by S. V. KOSTELYANETS, Candidate of Political Sciences , Institute of Africa, Russian Academy of Sciences

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^{Draper P.. Khumalo N.} 2 Friend or Foe? South Africa and Sub-Saharan Africa in the Global Trading System // Reconfiguring the Compass.., p. 18.

³ UNDP. Southern African Development Community and Southern African Political Economy Series, 1998 // SADC Regional Human Development Report 1998: Government and Human Development in Southern Africa. Harare: SAPES Books, p. 16.

⁴ UN Economic Commission for Africa, 2004. The Drivers of Regional Integration for Africa's Development: Assessing Regional Integration in Africa 11: Rationalizing Regional Economic Communities. Addis Ababa: Economic Community Commission for Africa, p. 7.

⁵ African Union. A Survey of the Capacity Needs of African's Regional Economic Communities: An ACBF Operations Research. Harare: African Capacity Building Foundation. 2008, p. 66 - 67.

^{Makhan V. S.} 6 Making Regional Integration Work in Africa: A Reflection on Strategies and Institutional Requirements // African Capacity Building Foundation. Development Memoirs Series. Knowledge Management Department, Harare. 2009, July, p. 20 - 21.

^{Grundy K.W.} 7 South Africa in the Political Economy of Southern Africa // International Politics of Southern Africa. Bloomington: Indiana University Press, 1982, p. 153 - 160.

^{Price R.M.} 8 Pretoria's Southern African Strategy //' African Affairs. 1984, 83 (330), January, p. 15.

⁹ SACU, 2009. Outcomes of the Special SACU Council of Ministers Meeting held on 17 September 2009 in Ezulwini, Swaziland, p. 1.

¹⁰ SACU, 2010. Final Communique: The Heads of State and Government Meeting of the Member States ot the Southern African Customs Union adopted on Thursday, the 22nd April 2010 in Windhoek, Namibia, p. 2.

¹¹ Sherbourne, interviewed by the author on 27 October, 2011 in Windhoek, Namibia.

¹² Address by His Excellency Hifikepunye Pohamba, President of Namibia, on the occasion of the launch of SACU's Centenary Celebrations on 22 April, 2010. Windhoek, Namibia. SACU Annual Report 2009/10: Implementing a Common Agenda towards Regional Integration in Southern Africa. Windhoek: SACU, p. 64.

¹³ Statement by His Excellency Lt. General Seretse Khama Ian Khama, President of the Republic of Botswana, at the 2010 SACU Heads of State and Government Meeting on 22 April, 2010... SACU Annual Report 2009/10.., p. 68.

^{Gibb R., Treasure K.} 14 SACU at Centenary: Theory and Practice of Democratising Regionalism // South African Journal of International Affairs. 2011, 18(1), April, p. 9.

^{Davies R.} 15 The Case for Economic Integration in Southern Africa // South Africa and the World Economy in the 1990s. Cape Town and Johannesburg: David Philip and Washington DC: The Brookings Institution. 1993, p. 220.

^{Tweya T.} 16 Namibia's Revenue Collection in Dilemma // The Villager (Windhoek). August 8 to August 14, 2011, p. 4.

¹⁷ SACU, 2010. Final Communique...

¹⁸ Ibidem.

^{Kategekwa J.} 19 Trade in Services in the SADC Region: Considerations in the EPAS // South Bulletin: Reflections and Foresights. Geneva: South Centre. Issue 2, October 16, 2007, p. 4.

²⁰ Ibidem.

²¹ Ibid., p. 602.

²² Ibid., p. 38 - 39.

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