1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

c u rre n t ly exists in SADC governments is supported by sound
economic management. In this context while the argument is
dominated by trade liberalisation there is a realisation that nontariff
barriers affect trade, p roduction and inve s t m e n t . T h e
Ministers of Trade and Industry are mainly concerned with the
first two barr i e r s .The Ministers of Finance on the other hand
a re more concerned with ensuring that the gains from macro -
economic re forms which counties have been undert a k i n g
i n d i v i d u a l ly are regionalised by varying the intensity, scope and
sequencing of economic policies.
H owever the Sector has had considerable difficulties in
understanding the nature of the problems because of lack of an
adequate database on which to base the analy s i s . In 1996 the
Committee of Governors ap p roved a project on the
d evelopment of a statistical database with economic and
financial info r m a t i o n . A re p o rt “Statistical tables and graphs fo r
SADC countries” is produced bi-annu a l ly for presentation to
the meeting of SADC Central Bank Gove r n o r s . The ap p rove d
statistics appearing in this re p o rt are now available on In t e r n e t ,
a dd re s s : w w w. s a d c b a n ke r s . o r g . The developments in the
statistical data base are discussed by senior officials from the
central banks’ Departments of Research and Economics. T h e
latest development concerns the proposed inclusion of fiscal
statistics to show the sources of government income and
distribution of government expenditure.
The statistics project is part of the Sector’s effo rts in the
d evelopment of public confidence and information efficiency. I t
has not been possible in the past to tackle governance issues
because the information base was ve ry narrow. T h e
i m p rovements in the database will ensure that the sector
e f fe c t i ve ly deals with macro-economic convergence issues and
a c c o rd i n g ly adopts measurable indicators for conve r g e n c e
c r i t e r i a .
An improvement in the management of SADC economies has
been characterised by the re m oval of exchange controls as part
of economic re fo r m .H oweve r, the speed and effe c t i veness of
relaxation of exchange controls have not been assessed
re g i o n a l ly. The governors adopted a project looking at a
t h e o retical study on the macro-economic and re g u l a t o ry
f r a m ework that should accompany the liberalisation of
exchange contro l s . The study noted that most SADC
economies have already liberalised exchange controls on cert a i n
c a t e gories of the current account, such as other export s ,
i m p o rt s , s e rvices and income. A first objective for SADC
economies should be to adopt A rticle VIII of the IMF’s A rt i c l e s
of A g re e m e n t .Once this has been attained, f u rther relaxation on
the capital account are called fo r. G i ven the need for fo re i g n
i nvestment in SADC countries it was recommended to
Ministers that obstacles hindering inward financial flows should
be re c o n s i d e re d ,e s p e c i a l ly control restrictions on inward dire c t
i nve s t m e n t ,equity and port folio inve s t m e n t .
The consistency of the above conclusions we re echoed by the
Committee of Stock Exchanges in their recommendations to
Ministers on harmonisation of economic activities with
re fe rence to movement of capital flow s . South Africa acted on
these re c o m m e n d a t i o n s .The 1998/99 South African budget has
a l l owed a further relaxation of capital flows within SADC fro m
a limit of ZAR50 million to ZAR250 million. L i kew i s e
institutional investors can now increase their fo reign curre n c y
t r a n s fers from 2 percent to 10 percent of their previous ye a r ’s
net inflow of funds.
The developments in SADC are happening in the context of
g l o b a l i s a t i o n ,as a result of the expansion of internationally -
d r i ven economic changes. It has thus been deemed useful to
include cooperation in international negotiations with the
multilateral institutions, e s p e c i a l ly in the development of
Multilateral Investment A g re e m e n t s ,in the discussions of the
Ministers of Finance. At present this debate is not we l l
a rticulated but it is clear that in the process of re-orientation of
the development strategy from a national strategy to a re g i o n a l
o n e, it would be re l evant to assess the possibility of
s t rengthening the bargaining power of member countries. T h e
concern is that as developments are instituted by the Wo r l d
Trade Organisation (WTO ) , the Organisation for Economic
Co-operation and Development (OECD) and the United
Nations Confe rence on Trade and Development (UNCTA D ) ,i t
is almost impossible for developing countries to single-handedly
p o s i t i ve ly influence the outcomes for themselve s . Instead of
waiting to respond to events once they are final it is perc e i ve d
that SADC Finance Ministers should collaborate with their
trade counterparts for the fo r mulation of a coherent strategy
on multilateral investment agreements for the benefit of the
re g i o n .It is envisaged that the issues arising out of this debate
will be codified to form a significant section of the pro p o s e d
Finance and Investment pro t o c o l .
I I . FINANCIAL MANAG E M E N T
Multilateral institutions have alw ays emphasised the import a n c e
of good governance in any developing country. This in many
instances has been used as a criteria for evaluating the level of
d evelopment finance flows that the developing countries get. I N
as much as good governance is part of the debate in Southern
A f r i c a , the SADC Ministers of Finance decided that financial
management as a theme would be one of the crucial areas that
SADC would be evaluated upon.A c c o rd i n g ly a programme that
a dd ress this theme have been adopted. At the core of this
p rogramme is an attempt to add ress national problems in a way
that simu l t a n e o u s ly add resses regional needs.
Together with organisations, i n s t i t u t i o n s ,and associations at
international and regional leve l , the Finance and Inve s t m e n t
Sector Co-ordinating Unit (FISCU) is invo l ved in devising a
s t r a t e gy to add ress accounting and auditing matters within the
SADC re g i o n .Among the regional bodies invo l ved are the East
and Southern African Association of Accountants- General
( E S A AG ) ,the Eastern, Central and Southern African Fe d e r a t i o n
of Accountants (ECSAFA ) , the Southern African Deve l o p m e n t
C o m munity Organisation of Supreme Audit Institutions
( S A D C O S A I ) .The World Bank and the Canadian International
D evelopment Agency are the two international partners whose
assistance has been sought to fund the activities of these
o r g a n i s a t i o n s .
At the core of the financial management agenda is the desire to
bring about harmonisation of the accountancy and auditing
p ro fessions on a regional basis.
The scope of the issues to be cove red in this programme cove r s
a c c o u n t i n g , a u d i t i n g , government accountability, ethics and
norms of the pro fe s s i o n , m e rcantile law, and education and
training of pro fessionals in the accounting and auditing fields. I t
would be a futile exe rcise if SADC we re to attempt to conduct
this work independent of the developments in the pro fe s s i o n s
world wide. For this reason the associations have had to be
c o nversant with developments on improved financial re p o rt i n g
based on the adoption of international accounting and auditing
s t a n d a rds as pro mulgated by the International Federation of
Accountants (IFAC) and the International Accounting and
S t a n d a rds Committee (IASC). E f fo rts by the governments within
SADC to improve accountability and there by prov i d e
responsible control of government finances will have the add e d
benefit of increasing investor confidence while complying with
international standard s . F u rt h e r m o re ; with the inclusion of
Auditors-Generals in this initiative, c a re will be placed on
s t rengthening their powers to enfo rce accountability and
c o m p l i a n c e. While it is generally unquestioned in the private
sector that internal audit is a management tool that ensure s
good corporate gove r n a n c e, in the public sector the idea has
still to be fully marke t e d .It is hoped that the commitment of the
Auditors-Generals to this programme will re i n fo rce the
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