SANF 16 no 7
The operationalization of the proposed SADC Regional Development Fund is expected to provide alternative financing modalities for southern Africa to support its integration agenda.
Ultimately, the fund should allow the region to take full control of its regional integration agenda, which currently depends on external support.
It is estimated that more than 70 percent of the Southern African Development Community (SADC) budget comes from International Cooperating Partners (ICPs) – a situation that compromises the ownership and sustainability of regional programmes.
In this regard, the decision by the SADC Committee of Ministers of Finance and Investment to finalize the establishment of the SADC Development Fund is a positive step towards accelerating regional integration in southern Africa.
Speaking during a meeting of the SADC Committee of Ministers of Finance and Investment on 12 March in Gaborone, Botswana, chairperson of the SADC Council of Ministers, Kenneth Matambo said it was time the region took charge of its development agenda.
“Committing our own resources to dealing with these issues is important while we seek the support of our International Cooperating Partners to complement our limited funds,” Matambo, who is also the Minister of Finance and Development Planning of Botswana said.
SADC Executive Secretary, Dr Stergomena Lawrence Tax concurred, saying the establishment of the fund will promote development in the region.
“I believe that the stage has been set for the region to move forward and establish the needed mechanism for resource mobilisation, and take its rightful place in the global arena,” she said.
The SADC Regional Development Fund is a financial mechanism intended to mobilize resources from member states, the private sector and development partners to finance programmes and projects to deepen regional integration.
Development of the fund has been going on for a long time, albeit with challenges related to administrative and logistical issues.
However, a SADC document released at the 33rd SADC Summit held in Lilongwe, Malawi in August 2013, indicated that a lot of groundwork has been made with regards to the 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 will take up US$444 million of the share capital and US$144 million will come from ICPs.
Under the proposal, subscription to shares will be made over five years in equal instalments. The first subscription will be due within the first year of the Fund coming into force.
Any shares not subscribed to by the end of the fifth year will be reallocated to other member states on the basis of ability to pay.
The proposal is 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 will be allocated based on economic ability.
In terms of the administrative structure, the facility will have a board of governors comprising ministers responsible for finance in member states as well as a board of directors tasked with its day-to-day operations.
The board of governors will be the highest decision-making organ for the Fund and will have powers to admit new members; increase or decrease the share capital; amend the statutes governing the facility; as well as appoint directors.
The fund will have a chief executive officer who will be responsible for the daily running of its operations.
The creation of the facility comes at a time when there has been concern about the slow pace of implementation of regional programmes and projects, largely due to lack of funds and over-reliance on ICPs for support.
The operationalization of the fund is expected to be done through a two phased approach, with phase one focusing on project preparation and development, and phase two dealing with the infrastructure development, industrial development, integration and economic adjustment and social development windows.
Each window will focus on the following:
- The infrastructure window will provide financial support for implementation of regional infrastructure projects mainly emanating from the SADC Regional Infrastructure Development Master Plan;
- The integration and economic adjustment window will support and facilitate efforts by member states to implement the SADC economic integration agenda
- The industrial development window will support the industrialisation process in the region; and
- The social development window will support the human and social aspects of the regional agenda and incorporate all other related funds such as the SADC Regional HIV and AIDS Fund.
The selection of projects for consideration under the fund will, among other things, ensure that these advance the goal of promoting sustainable socio-economic development in the region.
The SADC Committee of Ministers of Finance and Investment is one of a series of meetings held prior to the SADC Council of Ministers that took place on 14-15 March.
The SADC Council of Ministers deliberated on a wide range of issues, including the approval of the budget for implementation of the region’s operational plans.
The Council approved the SADC budget for the 2016/17 financial year of about US$72 million. The budget for the 2015/16 financial year was US$79.4 million.
Southern Africa has identified priority areas for implementation during the year. These include the implementation of key milestones on industrialization, trade, infrastructure development, as well as peace and security. sardc.net
