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Editor’s Memo

Partying a trifle too early

By Vincent Kahiya

PRESIDENT Mugabe has finally signed the Sadc Protocol on Trade, Finance and Investment and government spin doctors were immediately unleashed to convince us that the protocol

would increase investment and end our misery.

Government could have celebrated too soon because convergence does not occur at the drop of a hat. It is a painful process that requires governments to look beyond their borders when they make policies. This is easier said than done.

Regional leaders have a lot to learn from the steps taken by Europe towards the introduction of the euro. EU members adopted a set of criteria agreed to in the Maastricht Treaty. The shift towards a common currency implied that a set of credible measures had to be agreed and implemented by all countries in order to coordinate policy and achieve economic convergence in the bloc. This was a long-drawn process which worked in the end because member-states were committed to reform to align their policies with the Maastricht Treaty.

In the mid-1990s the Common Market for Eastern and Southern Africa (Comesa) excitedly flirted with the idea of a common currency to be used as legal tender in an envisaged free trade area. The initiative was dead in the cot as a number of factors militated against the thrust; mainly failure by member-states to achieve convergence in stability indicators such as inflation, debt servicing ratio of forex earnings, budget deficits, broad money supply growth and levels of central bank funding to the central government.

Achieving convergence in these key indicators remained a dream as member-states were involved in wars and many were at various stages of implementing structural reforms or dropping them. The quest by the region to establish a free trade area and monetary harmonisation failed because the implementation of the plan was largely premised on the fiction that holding conferences and authoring voluminous papers on the subject would provide the glue to bind the states together.

The same kind of naivety could be befalling the Sadc region, most of whose members are very familiar with the Comesa flop because they were active participants in the slow death of the plan. The regional leaders have given themselves until 2008 to come up with a free trade area, a customs union by 2010 and a common market by 2015.

The idea of the Sadc protocol is to raise the profile of the region as an attractive investment destination and to harmonise trade.

Leaders meeting in Midrand, South Africa, this week said their mini-summit was to map the way forward in achieving this evidently arduous task. Missing in their roadmap to achieve real regional integration and bringing down barriers to trade is a key ingredient—political stability in individual member-states.

Chances of real economic convergence in Sadc can be enhanced if Zimbabwe, which currently sits in the centre of the region like a failing heart, is committed to reform which will put right the current regime of shameful indicators.

The indicators are out of kilter with regional standards. The region also appears powerless to address poor policies in Zimbabwe. There are price controls on basic commodities and government is pushing for damaging indigenisation laws in which it wants to expropriate mines and industry. The state has a monopoly on the trade of grain and other agro-products.

The land reform programme, the genesis of dissonance in Zimbabwe, is far from being concluded even when government has maintained the ruinous plan is over. Worse still, there is a concerted attempt by Zimbabwe to export its version of land reform to the region.

The current protectionist mindset of the Zimbabwean government is at variance with the spirit of free trade. As is the case with Zimbabwe’s “participation” in the Nepad initiative, the country would very willingly tag along with others for the purposes of solidarity with no real benefits accruing to us.

If anything, Zimbabwe has worked to diverge from the grouping economically. There is no evidence to suggest that Zimbabwe belongs to any convergence club in the region and President Mugabe’s colleagues are well aware of that.

Sadc chair and Lesotho premier Pakalitha Mosisili at the summit almost told us what we already know about the contagion effect Zimbabwe has in the region.

“… We should not be seen in the light of just the one member state out of 14 (so) that people will use that as a pretext not to invest in our region because one member of the family is ‘unacceptable’ to them,” he told reporters.

“That is unacceptable to us. We are saying we need to be seen in total as a region, instead of the outside world singling out the one member and saying because of member X we will not invest in Sadc.”

Then what PM? Those uncomfortable questions about Zimbabwe will be raised by any would-be investor. So the attitude of the region is to tell investors that “Zimbabwe is one of our not-so-well-behaved cousins and there is nothing we can do to reform him. As investors you have to put up with his attitude.”

Somehow, we don’t think that response will prove sufficiently alluring!

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