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4. Improve economic management and performance through regional cooperation.
5. Secure international understanding, cooperation and support, and mobilise the inflow of public and private resources into the Region (SADC: 2015a).
These objectives defined SADC’s integration roadmap and they appear to embrace the old regionalism and new regionalism.
3.3 Regional Economic Integration and the African Economic Ethic of Indigenisation
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motivated by the acceptance that the region did not have enough capital, resources and technology to drive economic development or, more specifically, to industrialise the region.
However, most countries had expressed their desire to have greater participation of the indigenous people in their national economies through the African economic ethic of indigenisation. It is not clear how the region was to balance the arrival of non-indigenous businesses into the regional economy without further marginalising the already disadvantaged poor black Africans.
Bach (1999) noted that there was broad consensus that regional integration in Africa had not been successful on the whole especially as a way of promoting regional capitalism. Bach acknowledged achievements in some areas but questioned the limited successes. He identified lack of potential to increase intra-regional trade within Africa (Bach, 1999:16-29). For the SADC, the challenge of limited intra-regional trade has also been cited as one of the possible sources of limited success. Nathan made similar observations pointing at the absence of common values (Nathan, 2004:1). However, Nathan did not explain why, even in the absence of common values, the African economic ethic of indigenisation was popular in many SADC countries.
There are some ethics and values which are common in the SADC, but what differs is how countries interpret and respect some of these values. Being a region that evolved from a collaborative struggle against colonialism and apartheid and a region with strong bonds of solidarity, the SADC shares a common political history and one expects related political values to be shared in the region with small margins of variance (Olusoji, 2003: 272). The values that inform the African economic ethic of indigenisation or simply the black economic empowerment or affirmative action should be commonly shared. What might vary is the approach or implementation of the ethic as shown by the different ways by which it is called.
Though the SADC region has strong historical ties, it still remains with challenges in the integration process. Some of the challenges arise from different levels of economic development and the expected benefits from integration. Article 4 of the SADC treaty spells out the principles which the region upholds. These include sovereign equality of all members and the need to ensure equity, balance and mutual benefit (SADC, 2015a). The upholding of these principles possibly is one source of the retarded integration. SADC has big economic differences between member states. South Africa is by far the largest economy in the region. South Africa is also the
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most industrialised state in the region contributing seventy one per cent to the region’s gross domestic product (GDP). This makes South Africa a key member of the region (Lee, 2002: 62).
The Council of ministers approved a formula for the 2003/4 SADC budget contributions by member states. The formula requires that a member state contributes to the budget an equal proportion of the SADC budget as the proportion the member state’s contributions to the regional gross domestic product. A maximum of twenty per cent and a minimum of 5 per cent were introduced. Though South Africa had a regional GDP contribution of seventy one per cent it would contribute twenty per cent of the budget. Only Seychelles was exempted and required to bring in two per cent of the regional budget (Isaksen, 2002: iii). It seems the region agrees on unequal contribution to the SADC budget while upholding a rather contracting principle of equal benefits from integration.
The unequal levels of economic development in the region have caused smaller economies in the region to feel threatened by the bigger and more powerful economies in that they would not easily accept investments from the stronger economies like South Africa for fear of being dominated. Furthermore, the smaller economies would feel short-changed as the powerful economies would likely benefit from deeper integration. The movement of capital in the region therefore remains subdued because of such fears of unequal benefits. This undermines the development of regional capitalism and the regional indigenisation drive despite the common values aimed at empowering the poor black people. South Africa’s investments in the region are viewed with suspicion and yet it can be a source of capacity to industrialise the region and hence promote indigenous regional capitalism. The fears are based on the understanding that the South African economy is still dominated and effectively controlled by the former apartheid white owned businesses which cannot be trusted. Perhaps the starting point is to define what and who is indigenous to the region.
The old regionalism where states offer preferential trade conditions to goods and services provided by member states consolidates the thinking in the African economic ethic of indigenisation. In the old regionalism there is greater promotion of local and regional capitalism since trade with countries outside the region would meet higher and prohibitive tariffs. By promoting regional trade, the old regionalism helps in domesticating capitalism in Africa.
Promotion and support for local and regional wealth creation would aid the development and
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strengthening of the capitalist capacity of indigenous Africans in the region. If indigenisation at the regional level is properly implemented in a transparent way which is not corrupted to favour a few who are well connected, it would benefit the poor black people who had been marginalised by colonialism. For regional indigenisation, capitalists who are citizens of the region would be given opportunities to invest in the region on favourable terms compared to non-citizen to the region. A regional integration model which favours this approach to regional indigenisation is the old regionalism which is rather closed and screens out non-member competition. One could argue that even when the politically connected benefit from regional indigenisation, the wealth created would through some spill-over effect benefit the black people because the greater part of the wealth created would remain in the region but condoning such corrupt practices should not be accepted as they violate the basics of rule utilitarianism (Little, 2002:40).
Unlike the old regionalism, the new regionalism, over and above the conditions of the old regionalism, calls for a liberal approach to regional integration. Regions in an integration arrangement are expected to allow members to belong to multiple regional groupings. This thinking suggests a motive to weaken a single region’s influence on global trade and the neo- liberal global capitalist market. It can be argued that new regionalism is a way by which developed western capitalist countries seek to maintain a liberal global capitalist market. This in a way would counter the efforts of economic approaches such as the African economic ethic of indigenisation which aims at creating domestic capitalists or simply domesticating capitalism in a country or region. In domesticating capitalism, indigenous people would be supported through deliberate policies to establish and own the means of value creation. The development of capitalists in Africa in general or the SADC in particular has several feared implications for the developed western capitalist economies. Such feared effects are likely to be the source of the sustained efforts to weaken the growth and development of African capitalism.
Firstly, the traditional advantage held by the developed former colonial states in which they imported cheap raw material and add value by producing products for resale to the developing countries at huge profits would face competition (Saul and Leys, 2005:18). By creating capitalists in Africa an industrial capacity would be established from which products are likely to be put on the market at lower and competitive prices, given the lower costs of labour in Africa and cheaper transportation costs compared to what could be met in the developed countries’
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industries. Secondly, Africa is endowed with many resources which are critical for the survival of the capitalist industries in the developed western world. Such resources would then be availed to African industries at lower costs compared to western industries mainly because of transport costs and regional integration preferential treatment. This would once again make the African products better priced and competitive in the global market. Furthermore, the increase in industrialisation in Africa would imply an increase in the consumption of raw materials and primary commodities by indigenous industries. The competition for resources is likely not to favour non-regional industries. It would make sense for local indigenous industries to add value and export higher value products. The African economic ethic of indigenisation, if taken to a regional level in a region operating on old regionalism, is in the long-run likely to promote the development of local capitalists in that region. This would benefit the poor black people as argued by the utilitarianism in ethics. Saul (2005) argued that people-centred development and market-oriented economies are not mutually compatible. The new regionalism would not benefit the majority poor people in SADC (Saul, 2005:259). There is however a need to ensure that the implementation does not lead to only a few connected benefitting as this would erode the ethical benefits of indigenisation.