Iraj Abedian
The title of this year’s World Economic Forum (WEF), held last week in Durban, was “Acting on Realities, Confronting Perceptions”.
Ostensibly, it was an attempt to confront and deal with the widely held view in South and Southern Africa that the rest of the world, and the Western world in particular, retains a confused and biased perception of this region. This, it was argued, leads to negative sentiments, culminating in an unwillingness to commit resources and investment to the region.
The analyses and exchanges around “realities” in the region, however, were of more direct relevance than discussions of investor perceptions. Circumstances in Zimbabwe received focused and prominent attention.
In the debate on whether the harsh route for example, an embargo or political engagement would be in the best national interests of Zimbabwe, both the Zimbabwe finance minister and the leader of the Movement for Democratic Change confirmed that President Thabo Mbeki’s strategy towards Zimbabwe may well prove to have been the most prudent course.
But the WEF went beyond politics. For the first time, it was dominated by a pervasive concern for social issues related to health and nutrition, women’s empowerment, educational disparities linked to information and communication technologies, land redistribution, and the positioning of labour in private/public partnerships.
As expected, HIV/Aids featured prominently and continuously in the proceedings. After all, this region is reported to have more than three-quarters of the world’s cases of HIV/Aids. The potential human tragedy involved and its socio-economic consequences are so enormous as to deserve collective attention. Nowhere was the need for an integrated and coordinated regional partnership across public and private sectors so clear as in the case of health care in general, and HIV/Aids in particular.
Delegates agreed on an urgent need for unconventional and innovative approaches towards: health education; achieving affordable access to treatment of communicable diseases in Southern Africa; developing an integrated infrastructure to fight the spread of disease; and implementing best practices in the corporate world to manage the consequences of HIV/Aids, tuberculosis, and malaria.
What became abundantly clear from discussions among ministers, business, labour and NGOs from a number of countries in the region is the inability of any single stakeholder to tackle successfully the multi-faceted challenges involved.
It also became obvious that without clear and committed leadership on the part of governments, corporations, labour organisations indeed, civil society at large it is unlikely that the region can avert a human catastrophe. Focused and effective intra- and inter-government coordination is an additional challenge in this regard.
Not only in the field of health care, but also in the broader aspects of regional economy, the need for coordination and integration, at present elusive, was evident. There remain far too many barriers to trade and business activities in the region; and currency volatility is relatively high.
Speakers noted that economies of scale and scope suggest an integrated Southern African Development Community (SADC) economy would offer a larger market, more viable business opportunities, a superior investment environment and a complementary industrial and sectoral mix conducive to higher levels of job creation.
Regional problems persistent instability, civil wars, general vulnerability of human resources are clearly not insurmountable, yet they require decisive and coordinated leadership and solutions, something that the SADC in its current configuration has proved unable to deal with.
The history of the SADC may offer much explanation for its current state of tardiness towards integration. This places South Africa in an invidious position. Given the relative size and sophistication of its economy, South Africa should take the lead in economic integration, yet it remains wary of being accused of arrogance and heavy-handedness.
The emergence of regional economies is a defining feature of economic globalisation, making the SADC’s procrastination in accelerating integration costly. To this end, it was agreed that a consistent and sustainable framework needs to be put in place significantly, with clear criteria for membership. Common global prerequisites for successful regional integration include coordinated fiscal, monetary and foreign exchange regimes, as well as compliance with democratic and accountable governance.
Clearly, such a framework would exclude some SADC members, but would leave the remaining members in a much stronger position to accelerate economic, trade and financial integration for the benefit of their societies. The excluded states could of course rejoin if and when they comply with the membership criteria. This will go a long way to redress the pervasive negative perception of the region both locally and globally.
Likewise, initial discussions around the Millennium African Recovery Plan (MAP), which provides a framework to counter Afro-pessimism and set in motion a meaningful modernisation and development of the continent, highlighted the tensions between progressive and democratic governments, and the rest. Arguably, an all-inclusive approach in MAP’s initial phase is bound to ensure its failure.
A component of WEF each year is the section dealing with “foreign investors’ expectations” and South Africa’s immigration policy came under the spotlight.
The prevailing shortage of skills combined with an outdated immigration policy were put forward as effective obstacles to the country’s economic growth.
Speakers highlighted the fact that accelerating economic growth in the region would require not only macroeconomic stability and prudent fiscal management, but also credible social policies, particularly with regard to a business-friendly regulatory environment, a streamlined and globally competitive taxation regime and effective human resource development.
The irreversibility of globalisation was reaffirmed. For all its shortcomings and negative short-term side effects, globalisation has intensified trans-national interdependencies and, in the process, has highlighted the indisputable dichotomies, contradictions and ironies of the existing global socio-economic order: a case in point being the inequitable international trade regime.
After “Durban 2001”, South Africa is crucially placed to play a significant role in bringing about meaningful reform of this vital element of the international economic system by, inter alia, accelerating SADC integration, continuing to champion the resumption of the World Trade Organisation and mobilising progressive regional leaders to declare a coordinated war on HIV/Aids and diseases in general.
Dr Iraj Abedian is group economist at Standard Bank of South Africa