1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

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d e m a n d s .The declining levels of SADC government deficit which accompany the falling inflation rates, bear testimony to this commitment. In 1997, six SADC 1 ) economies re f l e c t e d government surpluses, with Botswana and Mauritius re c o rd i n g government surpluses of 8 percent and 4.5 percent re s p e c t i ve ly. L e s o t h o, S w a z i l a n d , Tanzania and Zambia also re c o rd e d government surpluses, while Malaw i , M o z a m b i q u e, N a m i b i a , South Africa and Zimbabwe reflected government deficits. i m p o rt cover varied from as high as thirty seven months cove r ( B o t sw a n a ,1996) to as low as 2.4 weeks cover (Mozambique). 1)1997 Government deficit data for A n gola not av a i l a b l e. BALANCE OF PAY M E N T S Ty p i c a l ly of the problems curre n t ly facing the developing wo r l d , SADC countries continue to experience the constraints in the balance of pay m e n t s . O n ly five SADC economies (Lesotho, N a m i b i a ,South A f r i c a ,Swaziland and Zimbabwe ) , had curre n t account surpluses in 1997 2 ) . 2)1997 data on the balance of payments for Botswana and Mauritius unav a i l a b l e. EXTERNAL DEBT The analysis of external debt burden indicates that over the medium and even longer term, in most SADC economies, d e b t b u rden will remain a source of serious concern and re g i o n a l economies’ external position will remain vulnerable to external s h o c k s . In fact, it has been argued that the major hurdle fo r g rowth and development in the developing world is a debt b u rd e n .SADC as part of the developing world is no exception to this.A c c o rd i n g ly, the fact that most of SADC economies have l ow external debt levels is indicative of a better future for the R e g i o n . H oweve r, it is wo rth noting that four of the SADC economies are extre m e ly burdened by external debt and their economies will continue to be highly vulnerable to external s h o c k s , and macro-economic stability will remain an ev a s i ve go a l .F u rt h e r, it is encouraging to note that Mozambique, due to its exceptional good performance in stabilising its economy has qualified for a HIPC (Highly Indebted Poor Countries) Initiative. H oweve r, even after taking into account possible debt re l i e f available under HIPC, the net present value of the debt and the d e b t - s e rvice ratio still remains high for a country undergo i n g major tranformation like Mozambique, but nonetheless the impact of the initial relief is pro m i s i n g .The granting of debt re l i e f to Mozambique should encourage other members of SADC to maintain their commitment on stabilising their macro e c o n o m i e s with the objective of qualifying for HIPC and this will act as a s p r i n g b o a rd for growth and development within the Region. While most SADC economies are experiencing curre n t account deficits, on ave r a g e, fo reign exchange re s e rve s c o n t i nued to strengthen for most of SADC member states.T h e 15
Southern Africa and Competitive n e s s This ye a r ’s theme at the Southern African Economic Summit of the World Economic Fo r u m , is “Priorities for Global C o m p e t i t i veness in the 21st Century ”.O ver the past few ye a r s , m a ny of the Southern African Development Commu n i t y (SADC) economies have moved aw ay from isolation and patterns of low growth - South A f r i c a ’s ap a rtheid regime has been dissolve d , dictatorships have been replaced by democracies and economic policy in general is moving rap i d ly t ow a rds free market principles. N ow, t h e re is an incre a s i n g amount of international attention being paid to Southern A f r i c a , which is beginning to be seen as a region with enormous p o t e n t i a l . In terms of competitive n e s s , h oweve r, S A D C, as a whole lags behind the developed wo r l d , as well as behind some of the other so-called “emerging markets” such as China, South East A s i a , Latin America and Eastern Euro p e. H aving embraced the policy logic of the free market and its implications - minimising state intervention in the economy, l owering barriers to trade and attracting fo reign inve s t m e n t ,among others - the countries of Southern Africa have no option but to accept the realities of the economic env i ronment in the 21st Century. Te c h n o l o gy is advancing at a rapid rate, the volume of cro s s - b o rder cap i t a l f l ows is expanding, i nvestors are incre a s i n g ly looking outside their traditional boundaries for new opportunities and new w ays of making money ; in short , the world is becoming smaller. On top of this, donor aid to developing countries is not as fo rthcoming as it used to be. To be players in the wo r l d e c o n o my in the next century, the countries of Southern A f r i c a will need to become more competitive, and to develop some w ay of holding their own against the dominant fo rc e s . The Africa Competitiveness Report A f r i c a ’s entry into the world economy is evidenced by the p roduction (for the first time) of the Africa Competitive n e s s R e p o rt .Compiled for this ye a r ’s World Economic Forum (held in Davo s , Switzerland in Janu a ry / Fe b r u a ry) the re p o rt looks at 24 African countries and evaluates them in terms of their c o m p e t i t i ve n e s s .Conclusions are based on a survey of A f r i c a n b u s i n e s s ,as well as data collected from sources such as the World Bank, the International Monetary Fund, the UN, a n d African ministries of finance and central statistical offices. A l l SADC countries, with the exception of the Democratic Republic of Congo and the Sey c h e l l e s ,a re included. Topping the overall Competitiveness Index (calculated on the basis of six indices - openness, gove r n m e n t , f i n a n c e, l a b o u r, i n f r a s t r u c t u re and institutions) is Mauritius. Other high-ranking SADC countries include Botswana (3), Namibia (4) and South Africa (7). Swaziland (8), Lesotho (10), Zambia (12) and Ta n z a n i a (16) fall into the middle rankings, whilst Mozambique (18), Z i m b a b we (20), M a l aw i(21) and A n gola (23) are near the bottom of the table. The re p o rt explains Mauritius’s and Botsw a n a ’s re l a t i ve ly high l evel of competitiveness in terms of the stability (both political and economic) of the countries, as well as we l l - m a n a g e d economies and sound macroeconomic policies which have been in place for some time. The re p o rt also found evidence of “ g e o g r aphic bunching”, i . e. countries in a certain geograp h i c a l a rea tended to have similar rankings - this is most notable in relation to the Southern African Customs Union countries. A c o rrelation between competitiveness and human we l f a re was also noted, suggesting that competitiveness could contribute to higher levels of human deve l o p m e n t ,and vice ve r s a . Countries generally re g a rded as “ good re formers” (e. g . Mozambique) did not necessarily fare well in terms of c o m p e t i t i ve n e s s illustrating , that real change does not take place overnight and that time is needed to strengthen institutions, i n f r a s t r u c t u re and the economy in general. W h e re countries such as Mozambique did obtain high rankings was in terms of t wo new indices, the Improvement Index and the Optimism I n d e x .Data for these indices was obtained from “ d i rection of change” questions in the survey. Tanzania (3), Mozambique (4) and Zimbabwe (6) we re, a c c o rding to the re p o rt , the thre e countries which showed the most improvement in terms of business env i ronment over the years 1992-97. M o z a m b i q u e topped the Optimism Index for the years 1997-99; b u s i n e s s e s we re also optimistic about the prospects of Tanzania (2) and Zambia (6). The re p o rt explains the re l a t i ve ly low ranking of countries such as Botsw a n a ,N a m i b i a ,Mauritius and South A f r i c a in these indices part ly in terms of contentment rather than p e s s i m i s m ,although obviously in the case of South A f r i c a ,f a c t o r s such as crime and the instability associated with transition play a major role as we l l . O ve r a l l , the re p o rt emphasises the importance of go o d government and good leadership as one of the pre requisites of a successful economy. This encompasses political and policy stability and transparency between business and gove r n m e n t . Other areas of particular importance to the business c o m munity we re found to be openness to trade, i m p rove d i n f r a s t r u c t u re and low levels of corr u p t i o n . In the “ E s s ays” section of the Africa Competitiveness Report , the authors and contributors go into greater detail about issues such as fo reign direct investment flow s , g l o b a l i z a t i o n ,p o l i t i c a l aspects of the re form process and developing competitive a d v a n t a g e.The message of the re p o rt is clear:state interve n t i o n in the economy should be kept to a minimu m , fo re i g n i nvestment is crucial to grow t h , no economy can function in i s o l a t i o n , economies should focus on developing a stro n g gove r n m e n t ,good leadership and well-functioning institutions a re import a n t . The Africa Competitiveness Report highlights both how far Southern Africa has come, and how far the region has to go b e fo re becoming a “success story ” . Instead of taking rigid, fo r mulaic ap p roach to re fo r m , the re p o rt offers frank and practical discussions of problems which are uniquely A f r i c a n . Southern Africa as a region has had its own singular history and often the difficulties faced by policy makers today are as a re s u l t of the legacy of Southern A f r i c a ’s past.The re p o rt recognises the distinction between policy and implementation and that something that looks good on paper may not necessarily wo r k in practice. F u rt h e r m o re, the re p o rt recognises the potential of countries which are still battling to ove rcome the effects of political turmoil and badly-managed economies. S A D C countries would there fo re do well to take heed of the re p o rt . Regional Integration and Competitive n e s s One area which the Africa Competitiveness Report does not m a ke much mention of is the benefits of regional integration in terms of competitive n e s s .The World Investment Report (1997) e x p l o res the possibility of South Africa becoming a “ g row t h 17
Page 1 and 2: 1998 SOUTHERN AFRICA ECONOMIC SUMMI
Page 3 and 4: CONTENTS I N D E X Abbreviations 2
Page 5 and 6: THE SADC FINANCE AND INVESTMENT SEC
Page 7 and 8: c u rre n t ly exists in SADC gover
Page 9: REGIONAL MAC RO-ECONOMIC HIGHLIGHTS
Page 13 and 14: had agreed to accept the general fr
Page 15 and 16: A NG OL A of GDP in 1996. E x p o r
Page 17 and 18: A NG OL A Projects for Possible Inv
Page 19 and 20: A recent event in the political sce
Page 21 and 22: B O T S WA N A B OT S WANA STOCK MA
Page 23 and 24: B O T S WA N A P rotection of Inve
Page 25 and 26: scheduled for 23 May 1998. Eight po
Page 27 and 28: L E S O T H O The money market is d
Page 29 and 30: L E S O T H O L E S OT H O :P ROJEC
Page 31 and 32: p a r l i a m e n t a ry elections,
Page 33 and 34: M a l awi Stock Exchange The stock
Page 35 and 36: M A L AW I I nvestment Code The Inv
Page 37 and 38: M A L AW I S TAT I S T I C S(USDm u
Page 39 and 40: M au r i t i u s c o u n t ry is se
Page 41 and 42: M au r i t i u s Mauritian Investme
Page 43 and 44: M au r i t i u s Ta x a t i o n Tax
Page 45 and 46: c u rre n t ly holds 129 seats in P
Page 47 and 48: M O Z A M B IQ U E combined with a
Page 49 and 50: The current status of the project i
Page 51 and 52: M O Z A M B IQ U E dermersal fish f
Page 53 and 54: After talks between the South Afric
Page 55 and 56: N A M I B I A Namibia does not impo
Page 57 and 58: N A M I B I A I nvestment Code A c
Page 59 and 60: Johannesburg Stock Exchange. G E N
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S O U T H A F RI C A that some East
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S O U TH A F R I C A cities of Joha
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S O U TH A F R I C A INDUSTRIAL FIN
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S O U T H A F R I C A * M a c h i n
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p rocessing industries,t e x t i l
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S WA Z I L A N D Swaziland Stock Ma
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S WA Z I L A N D The Ministry of En
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Snow capped peaks of Kilimanjaro. G
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TA N Z A N I A exchange rate, the s
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TA N Z A N I A S TATISTICS (USDm, u
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Z A M B I A the supply of water for
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Z A M B I A Fo reign Tr a d e Zambi
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Z A M B I A Other institutions incl
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Victoria Falls. G E N E R A L I N F
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Z I M BA BW E Z i m b a b we Stock
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Z I M BA BW E - No restrictions on
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LIST OF SOURCES S o u rces containi
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1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

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