Southern African Regional Poverty Network (SARPN) SARPN thematic photo
Regional themes > Poverty reduction frameworks and critiques Last update: 2020-11-27  

 Related documents

  [table of contents]  

Regional Integration in Southern Africa: Overview of recent developments


Membership of a regional integration arrangement is a political choice of any one country, whether based on political, social, geographic and/or economic considerations. A salient feature of Eastern and Southern African (ESA) is the existence of multiple overlapping regional agreements, namely the Southern African Customs Union (SACU), Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), East African Community (EAC), Indian Ocean Commission (IOC) and Inter-governmental Authority for Development (IGAD). These regional integration arrangements (RIAs) are supplemented by regional arrangements such as the Regional Integration Facilitation Forum (RIFF) and the Multilateral Monetary Agreement (MMA). Most of the countries belong to at least two of these regional groups, except for Mozambique. For instance, South Africa and Botswana are members of both SADC and SACU, while Namibia and Swaziland hold membership of three regional integration agreements, are part of the common monetary area and also participate in the RIFF.

From a brief overview of these RIAs within the ESA region, it is apparent that conflicts may arise from multiple memberships in RIAs, which have similar mandates but different modalities for achieving these. If these RIAs were seen as variable geometry and multi-speed approaches to regional integration, they could have reinforced regional integration, particularly in the areas of sectoral cooperation. However, as practiced in the sub-region and in the absence of thorough planning and effective management, these seem to result in confusion and conflict for both governments and the private sector. Membership fees and participation in the activities of these RIAs are also costly, while particularly SADC and COMESA do not effectively use non-payment as a sanction mechanism on participation.

The southern Africa region constitutes a small market, smaller than that of Turkey and about 5% of the United States market, but within the African context, SADC’s aggregate gross domestic product (GDP), amounting to US$187.7 billion in 2000, is more than double that of the Economic Community for West African States (ECOWAS) and equivalent to more than half (56%) of Sub-Saharan Africa’s aggregate GDP. SADC’s total volume of exports (estimated at US$66 billion) is three times that of the CFA Zone and more than double that of ECOWAS. With almost 200 million inhabitants in 2000, the sub-region’s total population, which is about a third of that of sub-Saharan Africa (SSA), is nearly double that of the CFA zone.

However, intra-regionally, socio-economic development is highly uneven, with long-term internecine war in some countries contributing to such development patterns, as indicated by the following:

  • Diversity in political regimes and differences in levels of political stability characterize the sub-region. Over the past few years some countries in the sub-region have witnessed consolidation of a democratic culture, good governance, the rule of law and respect for human rights. Angola and the DRC (with nearly 40% of the sub-region’s population) are slowly emerging from decades-long internecine war, which also drew in other southern and central African countries. The second most economically diversified country, Zimbabwe, is facing a serious political and economic crisis, which have resulted in its de-linking from international and regional financial support.

  • The combined sub-regional population of almost 200 million is unevenly distributed. South Africa (SA), Tanzania and the Democratic Republic of the Congo (DRC) have 64% of the population, with the remainder unevenly distributed among the other 11 countries. The five smallest countries in terms of population (Botswana, Lesotho, Mauritius, Namibia, and the Seychelles) account for only 3.4% of the sub-regional total.

  • SA accounted for nearly 70% of the subregion’s total GDP of US$187.7 million in 2000. The five smallest (Seychelles, Lesotho, Swaziland, Malawi and Namibia) accounted for 4%. SA’s economy was 138 times larger than that of Lesotho, the second smallest economy.

  • The average GNP per capita for the subregion (in nominal dollars) was US$932 in 2000, with a difference of nearly 90 times between the highest (Seychelles) and lowest (DRC). The United Nations Development Program (UNDP) human development index (HDI) ranked Mauritius1 the highest among SADC countries (71st of 175 countries with an HDI of 0.761) and Mozambique the lowest (168th with an HDI of 0.341).

  • About 40% of the sub-region’s population or 76 million people is estimated to be living in extreme poverty. Poverty is increasing despite the recent higher growth rates in the sub-region, due to increasing unemployment. Unemployment is estimated to have increased from 30.5% in 1986 to nearly 59% (51 million people) in 2000. Even in Botswana and Mauritius, which are among the region’s best economic growth performers, unemployment is rising.

  • Whereas SADC countries appear to be performing well in providing universal basic education (except Mozambique and Tanzania) they are under-performing (including SA) in providing secondary and tertiary education. This could be seen as a serious structural weakness, given the increasing importance of skills in the globalizing world economy (with knowledge-intensity being crucial in enhancing competitiveness). The sub-region is facing yet another threat to its development in having the highest adult HIV/AIDS prevalence rate in the world. Estimated HIV/AIDS prevalence rates among adults in 1999 ranged from about 36% in Botswana, 25% in Zimbabwe and Swaziland, and 20% in SA and Zambia. Estimates indicate that the adverse social and economic impact of HIV/AIDS will be substantial, affecting GDP growth, labor supply, income inequality, domestic saving, productivity, and human, physical and social capital. The spread of the HIV/AIDS pandemic will most probably further compound the problem of poverty in the region in the foreseeable future.

  • Insufficient and often poorly maintained infrastructures as well as limitations in regional linkages, no less due to legislative and administrative constraints, are deterrents to trade and investment.

  • In terms of economic structure, the subregion seems to be struggling to diversify its productive base with progressive industrialization remaining elusive in most countries. Between 1970-98, the share of agriculture in GDP increased in Zambia and Zimbabwe, while in Mozambique, Namibia, SA, Tanzania, Zambia and Zimbabwe the share of industry in GDP decreased as did the share of manufacturing in the more industrialized countries of the sub-region (SA and Zimbabwe). Overall, economies in the sub-region are largely undiversified, resulting in a lack of complementarity, which limits the scope for trade, except between SA and the rest of the region. The economies are reasonably open, and given that most countries in the sub-region are heavily dependent on exports of primary and semi-processed agricultural and mineral commodities, the sub-regional economy remains excessively vulnerable to rainfall variations and commodity price fluctuations. As an emerging market, SA is vulnerable to the volatility in financial flows for such markets. The impacts of financial volatility on the SA economy are transmitted through both the real and financial sides of the economy to other SADC countries due to trade and financial linkages between these economies.
Stabilization and adjustment experiences have seen significant convergence in the broad policies that have been pursued, although the outcomes of such policies and programs are varying significantly, even widely in some instances, across countries. Since the beginning of the 1990s, seven countries, have been undertaking International Monetary Fund (IMF)/World Bank (WB) financed stabilization and adjustment programs, six are implementing home-grown programs (SA, Botswana, Swaziland, Namibia, Seychelles and Mauritius), while Angola and the DRC have opened lines of communication with the Fund and the Bank and are receiving post-conflict reconstruction support. Overall over the last decade, the outcomes of adjustment in the sub-region have been mixed, although the sub-region has made some progress in macroeconomic stabilization.
  • Macroeconomic stabilization: Most SADC countries have undertaken reforms, including measures aimed at improving monetary and fiscal policies and management. Their interest rates are more flexible and they have been eliminating preferential interest rates for state-owned enterprises; they have strengthened their tax administrations and have been broadening their revenue bases through the introduction of e.g. value-added tax; and they have been liberalizing their exchange control regimes and adopted flexible exchange rates. Mauritius and Zambia have achieved the highest degree of external current account and capital account liberalization on the subcontinent. Fiscal deficits have fallen sharply and inflation is under control in many countries. In 2000, eight countries (Botswana, Lesotho, Mauritius, Namibia, the Seychelles, SA, Swaziland and Tanzania) recorded single digit inflation levels. However, given some of the countries’ aid-dependence and high debtburdens, their maintenance of sound macroeconomic policies may, for the foreseeable future, depend heavily on massive debt write-downs; very large continued aid flows; and very large foreign direct investment flows, the latter which are unlikely to materialize quickly. The absence of any one of these three essential conditions, therefore, would jeopardize the sustainability of sound macroeconomic policies and the apparent macroeconomic achievements.

  • Financial system reforms: SADC countries have been opening up competition within their financial systems, are becoming more compliant with international standards of rules of supervision, and are moving towards increased central bank autonomy. According to an IMF study on financial sector development in SSA, Botswana, Lesotho, Namibia, and Tanzania have taken steps toward full autonomy of their central banks2, while the independence of the South African Reserve Bank is constitutionally enshrined, giving it full(er) responsibility to conduct monetary policy with price stability as its ultimate goal. Except for SA, however, financial markets remain small, narrow and shallow.

  • Strengthening of investment frameworks: Several SADC countries have also reformed the legal, judiciary and regulatory frameworks governing business activities, including through accession to multilateral conventions and entering into bilateral investment treaties. Many state-owned enterprises have been or are in the process of being restructured and privatized, while private sector involvement in the management, financing and provision of infrastructure is encouraged through a range of modalities – albeit at varying speed and scope. They are actively promoting investment including through offering a host of investment incentives. Although, on aggregate, the sub-region has maintained its proportional level of foreign investment flows to Africa (about 35-37%) between 1990 and 1999, it has failed to attract a proportionate share of growing foreign direct investment (FDI) flows to developing countries. Its share in 1999 was roughly 50% of that in 1990. Furthermore, it failed to attract the kind of investment that buttresses economic development, i.e. investment in industry, specifically the manufacturing sector, which is necessary for production and trade diversification. They have attracted largely resource-seeking FDI and project finance, associated with privatization and public -private provision of infrastructure. Intra-regionally, cross-border investment, particularly from SA and Mauritius, has increased.

  • Liberalization of trade and exchange regimes: Trade flows across SADC in the last decade have been influenced by changes in: tariffs, non-tariff barriers (NTBs), exchange rates and various types of trade taxes and subsidies including export incentives. Non-SACU governments in SADC have changed their policies unilaterally; while changes in bilateral trade agreements with SA and in macroeconomic policies (e.g. fiscal and monetary policies) also have had an inevitable impact on trade competitiveness in relation to neighboring countries. Although recorded intra-regional trade levels remain low, a distinct outcome of changes in the sub-region’s trade regimes has been a growing annual trade surplus for SA vis-а-vis the rest of SADC.
Debt burdens and aid -dependence: Five of the eight low-income countries in the sub-region3 can be considered as severely indebted4, while one is considered a moderately indebted low-income country. Due to their debt overhang, high sovereign risk perceptions and generally underdeveloped financial systems, access remains limited or closed to official sources of funds, apart from on highly concessional terms, as well as to international and domestic capital markets. Many of the countries thus remain highly dependent on official development assistance for filling the savings-investment gap. Aid dependence in SADC remains high: in 1999, it has received US$19.7 per capita in aid, roughly the same level as in 1980, and more than the average of US$18 per capita for SSA.

Economic growth has recovered in many countries since 1995. In 2000, real GDP growth was estimated at more than 8% in the Democratic Republic of Congo (DRC), more than 7% in Mauritius, nearly 6% in Botswana and more than 5% in Tanzania5. However, of particular concern is the poor growth performance of the largest economy, SA, and the second-largest SADC economy, Zimbabwe, which has been experiencing a socio-economic and political setback, with threatening disruptive implications for regional integration in SADC. The slowdown in growth since the 1980s and in particularly since the latter half of the 1990s in SA and Zimbabwe, reflects in the declining growth levels for the sub-region as a whole.

Overall, the sub-region’s economies share important failures. So far, their efforts have failed to achieve: sufficiently high and sustainable rates of growth ; sufficie nt expansion of employment opportunities and sufficient progress with poverty alleviation. These failures reflect, in turn, their inability to improve the quality of investment; to enhance human or social capital sufficiently and to increase labor mobilit y to the extent that circumstances warrant within and across the countries6.

Socio-economic performance and outcomes in the sub-region are attributable to both policy reforms and other influences. Exogenous influences such as adverse changes in climatic conditions, political instability and deteriorating risk perceptions as well as the global economic environment and commodity markets have been driving a wedge between domestic economic policies and outcomes. In addition, other non-policy factors operating in the sub-region’s economies such as their weak institutional, financial and physical infrastructure and administrative capabilities may also explain the observed discrepancies between policies and outcomes and the shared failures in terms of low economic growth, unemployment and poverty. These issues raise a question for intensified cooperation on macroeconomic policies at regional level as to whether such cooperation would necessarily result in better outcomes for individual countries or the sub-region as a whole? The answer to this question is not clear. In contrast, these issues clearly point to strengthening cooperation on the structural issues, which are weakening the link between policies and outcomes. These structural weaknesses are observed in all countries in the sub-region, albeit to different extents, and include weak financial systems, infrastructural inefficiencies, and insufficient human capital and institutional capabilities.

SA, by virtue of its size and level of economic development, is perceived to pose a threat to other countries in the sub-region, given the potential for unbalanced development within the RIA. However, it is also widely seen as an important regional actor - both as a resource upon which other SADC countries can draw in the sphere of technical expertise and as a catalyst for deeper economic integration. Moreover, the sheer size and purchasing power of the South African economy holds important benefits for other SADC member countries whose economic development has been constrained by small and weak domestic economies.


From the brief overview of recent developments in regional integration in southern Africa, it is observed that the countries in the sub-region have identified many common challenges amenable to region-wide solutions ranging from macroeconomic issues, trade and industry, education and health to infrastructural developments and service delivery. In SADC, member states have developed a number of protocols which provide a legal framework for their cooperation in various areas such as transport and communications, industry and trade, finance and investment, natural resource management, water, mining, energy, health, education, human resource development and on aspects of security and politics. The protocols, when signed and ratified, are mechanisms for locking countries into the same policies and approaches to development. For SADC, the development and negotiation of protocols are seen as progress per se, given that the time for this often allows preparation on the country level for their implementation - by adopting appropriate policies and associated institutional mechanisms for their implementation. This then often explains the long time taken for such protocol development and negotiation. By August 2001, 10 regional legal instruments have come into force, another 10 have been signed or ratified but are not yet in force, while a host of others are in the preparation phase.

Currently, there is no mechanism in place for monitoring and evaluating the direction and pace of regional integration. This background paper has also not attempted to design such a monitoring and evaluation system. In stead, it has merely reported on progress made in cooperation of the various sectors, and even then such progress cannot be unambiguously attributed to membership of the RIA. Many policy and institutional changes in the constituent countries have come about through unilateral decisions, although their pace of implementation might have been accelerated through complementary regional-level obligations. On the one hand, it seems that political problems, inappropriate institutional mechanisms and the uncoordinated pace in implementing sectoral programs and projects are bogging down regional integration. On the other hand, it seems that much progress has been made in some discrete areas of cooperation, i.e. either in entire sectors or in specific sub-sectors.

Henceforth, the shift in SADC’s agenda from sectoral cooperation to market integration would require not only continued cooperation in specific sectors/areas, but also stronger linkages within and between the various sectors or areas of cooperation if it were to be successful. Thus, the implementation of the Trade Protocol has given rise to new challenges to the sub-region’s objective of economic integration, foremost of which is the strengthening of multisectoral linkages and the coordination of the activities of the various sectors within the framework of market integration. The few protocols in force, and then only for a short period, has not been sufficient to achieve greater policy credibility and anchor all member countries to continued pursuit of sound policies. However, the implementation of the Trade Protocol has set in motion a seemingly self-accelerating mechanism for regional economic integration as the adoption of certain sectoral protocols necessitates the adoption of others, especially where the interests of the private sector are concerned. Unlike in the past, SADC is now forced to deal, over the short term and in very practical ways, with sectorally crosscutting issues such as e.g. competitiveness, regional dimensions of poverty and trade efficiency. The issues embodied in e.g. the trade efficiency concept namely customs, transport, banking and insurance, information for trade, business practices and telecommunication have been the responsibility of mainly four SADC sectors: trade and industry; finance and investment; transport, communication and meteorology; and employment and labor. Up till now, the interface between these sectors as captured by the trade efficiency concept has not been pursued in a region-wide, integrated and coordinated way, mainly due to the institutional division of sector coordination among member states, apart from the predominant paradigm of cooperation and harmonization as opposed to integration.

Deeper integration in the sub-region has been precluded therefore also by SADC’s decentralized, sectorally- and project-based institutional arrangements. Some of the institutional constraints have related to the SADC Secretariat’s lack of power, authority and resources required for facilitating regional integration; the sector coordinating units’ highly uneven capacity to pursue and implement policies; the SADC Program of Action’s lack of a clear regional focus; the limited capacity to mobilize the region’s own resources and resultant over-dependence on external financial resources; and the failure to address governance, peace and security issues in the wake of growing political divisions within SADC. SADC’s decision to realign its institutional machinery and processes with its regional integration agenda, by clustering its 20 odd sectors into four directorates and centralizing these within a strengthened Secretariat, as well as that of designing and managing a regional development strategy are thus important steps towards deeper regional integration. Apart from a more clearly articulated and focused ‘common agenda’, deeper regional integration would critically hinge on the speedy implementation and smooth functioning of the new regional institutional mechanisms.


The sub-region is attracting huge annual amounts of grant funding from bilateral and multilateral sources such as the EU and its constituent countries as well as the USA, and to a lesser extent from the African Development Bank, the World Bank and sub-regional institutions such as the Development Bank of Southern Africa. Bilateral cooperating partners such as the EU and OECD countries are making grant funds available for SADC’s regional coordination function, regional ‘public goods and services’ and/or multi-country projects. In relation to the EU and the USAID, the World Bank is not only a relative newcomer to the regional integration arena in southern Africa, but in terms of grant financing, even if leveraged by trust and other funds, it is also a ‘small player’ on the supra-national level, partic ularly for the coordination function. However, as the experience of the DBSA shows, a small budget need not be equated with insignificance. This is particularly so for multi-country or regional goods and services which require implementation on the country level whether through projects, which could be amenable for financing through Bank financial products, or policy and institutional reforms, which could lend themselves for inclusion in Bank country operational work. Similar to the lack of a centralized and accessible management information system for monitoring and evaluating progress in SADC’s cooperation and integration agenda, SADC seems to have failed to comprehensively record the sourcing and application of funds for its SPA. In the last section of the document an attempt is made to record some of the international cooperating partners’ involvement in SADC. However, much more detailed information would be required on the content of at least the EU’s and USA’s support programs to identify opportunities for leveraging its much larger allocation of grant funding with that of the Bank’s own resources, should that be deemed desirable. This type of information is particularly important to avoid overlap in support, which seemingly exists even between the sub-region’s two major international cooperating partners – the EU and USA. Furthermore, a good grasp of the modus operandi of the various international cooperating partners would be critical for the Bank to form ‘smart partnerships’, particularly given its relatively limited resources for regional cooperation activities that cannot carry any cost recovery.

  1. Seychelles, a small island-state, is excluded.
  2. See IMF, 1998. Financial Sector Development in Sub-Saharan African Countries. Occasional Paper No. 169, IMF, Washington D.C.
  3. The low-income countries in SADC are Angola, the DRC, Lesotho, Malawi, Mozambique, Tanzania, Zambia and Zimbabwe.
  4. Severely indebted low-income countries are Angola, the DRC, Malawi, Mozambique, Tanzania and Zambia, while Zimbabwe is classified as a moderately-indebted low-income country.
  5. World Bank, SIMA, Regional Database, 2001.
  6. SADC Finance and Investment Sector Coordinating Unit, 2000. Executive Summary of the Studies on Convergence & Adjustment, Investment and Development Finance. Pretoria, FISCU, June 2000.
  [table of contents]  

Octoplus Information Solutions Top of page | Home | Contact SARPN | Disclaimer