SADC Committee of Ministers of Finance and Investment meets in Johannesburg
The SADC Committee of Ministers of Finance and Investment met in Johannesburg South Africa on 11 July, 2018, joined by central bank governors from the region to discuss areas of cooperation and improving regional financial coordination.
The meeting was chaired by the Honourable Nhlanhla Nene, Minister of Finance of South Africa, who is the Chairperson of the Committee of the Ministers of Finance and Investment, and Co-Chairperson of the SADC Macroeconomic Peer Review Panel.
In her remarks at the opening ceremony, the Executive Secretary, H.E. Dr Stergomena Lawrence Tax, expressed commitment by the SADC Secretariat to operationalise the urged the Ministers SADC Regional Development Fund (SADC-RDF) as a way of mobilising adequate and sustainable resources for SADC regional programmes.
Dr Tax informed the Ministers that, through engagement with Partners, the African Development Bank has accepted to support the Operationalisation of the SADC-RDF. She then called on the Ministers to seize this opportunity to move the region forward with speed by signing and ratifying the Agreement to operationalize the SADC-RDF.
Opening remarks by SADC Executive Secretary, Dr Stergomena Lawrence Tax, at the Meetings of the Committee of Ministers of Finance and Investments and SADC Macroeconomic Peer Review Panel
The Protocol on Finance and Investment is an integral pillar of the SADC economic integration agenda, and sets out a legal basis for harmonization and regional cooperation in the finance, investment and macroeconomic policy sub-sectors. The Protocol also provides the framework within which, a conducive and stable macroeconomic environment, and deepening of the financial sector can be enhanced for overall regional economic integration.
It is pleasing to note that there has been notable progress in these sub-sectors. Allow me to highlight progress in the area of crossborder payment, which is being championed by the Central Bank Governors. The SADC Integrated Regional Electronic Settlement System (SIRESS) has made progress, moving from single currency settlement system (Rand settlement) into a multicurrency settlement system, with the US Dollar as the additional currency of settlement. Settlement in US Dollars on the current platform is expected to go live in October 2018, while the whole multi-currency platform is expected to be fully operational by December 2019.
Noting that the facilitation of payments remains a key challenge to intra-SADC trade, the addition of the US Dollar, that account for about 60% of intra-SADC cross-border transactions is expected to facilitate greater cross-border trade and investment in the region. Progress has also been made in making SIRESS a more inclusive payment platform, which will also deal with low value cross border payments in the region. This milestone is important in consolidating progress and catalyzing developments in some of the milestones already attained by the Southern African Development Community (SADC), in particular, the SADC Free Trade Area. Member States are encouraged to learn from these successes, and in doing so, expedite implementation of other SADC programmes.
The operationalization of the Project Preparation and Development Facility (PPDF) was a key milestone for the region, which started with infrastructure development with a number of projects having been evaluated and developed to a bankability stage, ready for investment by public, private sector, and financial institutions. Todate a total of nine projects have been financed under the Facility.
Notwithstanding the achievements made, this milestone needs to be moved to the next level, by operationalizing the pdf SADC Regional Development Fund (316 KB) (SADC-RDF), the first step of which, would be to sign the Agreement and also deposit the respective instruments of ratification. While we all recognize the importance of mobilizing adequate and sustainable resources for our regional programmes, delays in signing and ratifying the Agreement, remains a matter of serious concern. This is the region’s vehicle that will facilitate mobilisation of resources for regional programmes and propel the region out of dependency and poverty, which deserve prioritization.
SADC has embarked on economic and technical transformation through the pdf SADC Industrialisation Strategy and Raodmap 2015-2063 (2.34 MB) , as a long term perspective. The programme will only be sustainable with sustainable financing. The Regional Development fund is aligned to this long term perspective and has prioritized Infrastructure and Industrialisation windows, which are to facilitate industrialisation with infrastructure development aimed to leverage industrialisation. The Regional Development Fund, and other sustainable ways of financing our regional programmes are unavoidable, recognizing the pace of the 4th Industrial Revolution.
The Secretariat remains committed to this noble cause, and through its engagement with Partners, the African Development Bank has accepted to support the Operationalisation of the SADC Regional Development Fund. Let us seize this opportunity to move our region forward with speed. While appreciating the achievements recorded in sustaining macro-economic fundamentals, the wheels of the integration agenda seem to be loosening. The macroeconomic fundamentals in some of our Member States seem to be slowly diverging from the targets that we had set for ourselves. For the past six (6) years, the Region has experienced dampened economic growth. This has affected other sectors including the financial sector as indicated by rising non-performing loans.
While inflation has slowed down in general, it remains high with some Member States still in the double digit levels. Weak exchange rates and aftermath impacts of weather-related factors, including the drought of 2015-16 continued to influence price movements in some of the Member States. In the fiscal sector, public revenues have remained low and in some instances declining in the face of increasing public expenditures. To this effect, may I call upon Member States to critically analyze these disturbing developments, and take timely corrective measures.
SADC Member States continue to be confronted with a number of challenges that need urgent attention in order to effectively steer the SADC integration agenda in various sectors including those that are under the mandate of Ministers of Finance and investments, namely Finance, Investment and Micro-economic policy. Our people are still faced with abject poverty due to inability to access resources and financial services, that would facilitate their meaningful participation in the SADC industrialization program, which has been prioritized to drive the technological and economic transformation of our economies. This cannot continue unchecked, SADC needs an intensive program that promotes the full participation of the SADC citizens in the integration agenda, particularly the youth and women. The SADC Financial Inclusion Strategy is one instrument that provides a benchmark for the inclusion of Small and Medium Enterprises (SMEs). I would like to encourage Member States that have not yet developed their Strategies to take advantage of the SADC Financial Inclusion Strategy, to do so expeditiously.