Incoming SADC chair calls for “unified force” on resource mobilisation

by Joseph Ngwawi in Mbabane, Swaziland – SANF 16 no. 41
The annual summit of southern African leaders commenced in Swaziland on 30 August, with an undertaking by the incoming chairperson to push for finalisation of the establishment of a fund to ensure sustainability of the regional integration agenda.

The incoming chairperson of the Southern African Development Community (SADC), King Mswati III of Swaziland said he would use his tenure to ensure that “the numerous initiatives launched by SADC over the years become a reality for the benefit of our peoples.”

In an acceptance speech soon after taking over the chair from President Seretse Khama Ian Khama of Botswana, King Mswati said lack of resources has stalled the attainment of the full potential of the 15-member regional grouping.

“We have reached a juncture where as member states, we need to show commitment to our objectives by contributing to a fund that would serve as start-up capital for our programmes and projects in the various sectors,” he said, referring to the proposed SADC Regional Development Fund that has been on the cards for several years.

He said, when operational, the fund would be used as “collateral as we seek to raise funding from external sources to implement infrastructure projects in the region.”

During its tenure as SADC chair, Swaziland intends to focus on raising resources from SADC Member States and from International Cooperating Partners (ICPs).

The issue of a sustainable financing mechanism for SADC’s regional integration agenda dates as far back as 2006 when leaders from the region acknowledged at their 26th summit held in Lesotho that the march towards regional integration has been painstakingly slow and requires greater commitment by member states in order to attain the goal of a common future for southern Africa.

Ten years later, the issue is still topical but is now being addressed with more vigour.

King Mswati said it is critical for member states to operationalize the proposed SADC Regional Development Fund to ensure that the region is able to take full charge of its integration agenda, which currently depends on external support.

It is estimated that only nine percent of regional projects are presently funded by SADC Member States while the balance of 91 percent comes from ICPs. This situation has compromised the ownership and sustainability of regional programmes.

“We therefore, have to speak in one voice for resource mobilisation. They say a unified force is stronger than a unilateral force. SADC represents a unified force, so we hope we can strengthen our capabilities and speak as one family,” King Mswati said.

The region has during the past few years vigorously pursued an economic integration agenda involving the implementation of the SADC Industrialisation Strategy and Roadmap and the SADC Regional Infrastructure Development Master Plan.

Implementation of both strategic documents demands several billions of dollars, funds which the region has struggled to raise during the past few years.

“There should be no room for failure as our success will have a positive impact on our region and create a better future for our people,” said King Mswati.

According to a document released at the 33rd SADC Summit held in Lilongwe, Malawi in August 2013, some groundwork had been done with regard to establishment of the fund.

At the time there were suggestions that member states should take up 51 percent of the shares in the facility, against 37 percent for the private sector and 12 percent for ICPs.

It was also proposed that the fund will have seed capital of US$1.2 billion, with member states expected to contribute US$612 million while the private sector would take up US$444 million of the share capital and US$144 million was to come from ICPs.

Under the proposal, subscription to shares would be made over five years in equal instalments. The first subscription would be due within the first year of the Fund coming into force.

Any shares not subscribed to by the end of the fifth year would be reallocated to other member states on the basis of ability to pay.

The proposal was to have the first 25 percent of the shares divided equally among member states and members will be obliged to contribute. The remaining 26 percent would be allocated based on economic ability.

In addition to the creation of the SADC Regional Development Fund, the region is also in the process of engaging consultants to develop a SADC Resource Mobilisation Framework (Alternative Sources of Funding SADC Regional Programmes).

The framework will explore seven different but co-related alternative sources of funding to determine how fiscal space could be created to enable SADC Member States to finance regional programmes, projects and activities.

The possible sources include how to curb Illicit Financial Flows (IFFs); the creation of a regional lottery system; harnessing the resources from a proposed philanthropy network and database of private sector companies; development of a sharing formula for import and export levies; introduction of regional transport and tourism levies.

For example, the assignment on curbing IFFs and creation of fiscal space to enable SADC to fund its regional programmes will analyse illicit cross-border financial flows as a measure to prevent leakages from the region.

It is estimated that Africa lost more than US$1.8 trillion to IFFs between 1970 and 2008 alone, and continues to lose resources valued at up to US$150 billion annually through IFFs or “illicit capital flight”, mainly through tax evasion, and mispricing of goods and services by multinational companies, according to a recent study commissioned by the African Union.

This means that resources that are intended to develop Africa are being used elsewhere to improve the economies of other countries in Europe, Asia and the United States.

The 36th SADC Summit set for 30-31 August is running under the theme “Resource Mobilisation for Investment in Sustainable Energy Infrastructure for an Inclusive SADC Industrialisation for the Prosperity of the Region.” sardc.net


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