By Deputy Minister Pahad on the Occasion
of the 2nd SADC/MERCOSUR Conference held in Sao Paulo,
Brazil - 25 & 26 October 2000.
Ladies and Gentlemen,
I wish to thank the organizers for inviting me to participate
in this 2nd SADC/MERCUSUR conference.
Travelling to Sao Paulo it struck me, once again, that
the flight time from South Africa to Brazil is less
than that of a flight from South Africa to Europe. Southern
Africa and MERCOSUL are therefore neighbours.
It is exciting and challenging to be here because not
only are we close in a geographical sense, but we are
bound together first and foremost by our shared values,
commitment to democracy, social responsibility, the
creation of employment, transparency, sustainable economic
growth and the eradication of poverty. Values that are
increasingly important in an ever faster evolving world.
Values, that need to be actively pursued, not only by
our political leaders and governments, but also by civil
society and the business community.
Our common belief in progressive governance in the
twenty first century further binds us as southern neighbours
and entrenches the principles of South-South Cooperation
The demise of the Cold War, together with the process
of globalisation resulted in the rapid dismantling of
political, economic, cultural and ideological barriers.
However, the reality is that while globalisation represents
an opportunity to fast-track development, it has also
resulted in the increasing marginalisation and underdevelopment
of many countries.
President Cardoso encapsulated these challenges presented
by globalisation when he said : " We must make
the globalisation process more symmetrical by making
capital movements and access to the market into effective
development tools. Only thus will we be able to prevent
the crystallisation of hegemonies and the aggravation
President Cardoso was referring to the dynamics of
Globalisation which pose a major challenge to humanity.
A casual consideration of some statistics reveal a startling
According to the 1999 UN Human Development Report,
more than 80 countries have per capita incomes that
are lower than they were a decade or more ago.
Since 1990, 55 countries, mostly in Sub-Saharan Africa,
Eastern Europe and the former Soviet Union have had
declining per capita incomes.
The income gap between the fifth of world's people
living in the richest countries and the fifth in the
poorest was 74 to 1 in 1997, up from 60 to 1 in 1990.
The richest fifth accounted for 86% of the World's
GDP while the bottom fifth shared 1%.
Koffi Anan's Millenium report states that : "Nearly
half the world's population still has to make do on
less than $2 a day.
Approximately 1.2 billion people - 500 million in South
Asia and 300 million in Africa struggle on less than
$1 a day. People living in Africa - south of the Sahara
are almost as poor today as they were 20 years ago.
Africa's share of world trade has plummmeted since
1960. It now accounts for less than 2% of world trade
and if SA is taken out of the equation, the figure for
Africa is a mere 1.2%. Africa is the only region to
see investments and savings decline after 1970. Savings
rate in many African countries are the lowest in the
world. Tax revenue declined in poor countries from 18%
of the GDP in early 1980's to 16% in 1990's.
Africa is burdened with severe debt problems. In 1997
Africa's debt was estimated to be $159 billion and in
1999 this increased to $201 billion. We are faced with
the reality that outstanding external debts in many
African countries exceed the entire GDP, and debt service
requirements exceed 25% of total export earnings. No
HIPC country can achieve sustainable development if
the debt issue is not resolved.
Overseas development assistance has dropped moer than
one fifth in real terms since 1992.
Many of our countries have taken steps to create a
climate conducive to direct foreign investment. They
have either through structural adjustment programs or
as country programs put in place trade liberalization
policies; the strengthening of the rule of law; improvements
in legal and other instruments; greater investment in
infrastructure development, privatization, greater accountability
and transparency, greater degree of financial and budgetary
discipline and the creation and consolidation of multi-party
democracies. However foreign direct investment has not
flowed sufficiently to Africa. In 1999 Africa received
$10 billion in FDI. Although this was an increase from
the $8 billion in 1998, it represented only 1,2% of
global FDI inflow. South Africa received the largest
share of this. South Africa, Angola, Nigeria, Egypt
and Morocco accounted for 70% of the FDI to Africa.
Diseases such as HIV/AIDS, Malaria and Tuberculosis
are causing havoc. This is also a new world order in
which we are experiencing an unprecedented scientific
technological revolution. In 1993 there were 50 pages
on the World Wide Web, today there are more than 50
million. In 1993 143 million people used the Internet,
by 2001 there will be 700 million users. In 1996 the
e-commerce market was $2.6 billion and it is expected
to grow to $300 billion by 2002.
There are more computers in the Us than in the rest
of the world put together. However, electrical power
consumption per person in Africa is the lowest in the
world; Africa has 14 telephone lines per 1000 persons.
Tokyo has more telephones than the whole of Africa;
less than half of 1% of all Africans have used the Internet.
Why are we faced with such a reality? Some of the answers
can be found in the World Bank and other studies, inter
alia, that Africas economies are generally characterized
by narrow commodity exports with little benefaction
or diversification, therefore highly vulnerable to market
fluctuations and commodity prices; primary markets are
limited to the North, to which African countries are
highly dependent for their imports; large rurally based
agricultural population, engaged in subsistence economy,
alongside a weakly developed large urban based economy;
weak macro-economic policies and management principles
combined with low skills, low productivity, corruption
and lack of regulatory framework, lack of reliable socio-economic
data. Why is this so? The legacy of slavery, colonialism,
imperialism, neo-colonialism and the Cold War contributed
much to Africas under-development.
Will regional integration help us to overcome this
It is increasingly accepted that regionalisation and
regional integration can not be explained solely with
economic formulas, such as economic stabilization, tariffs
or fiscal and monetary harmonization.
The Declaration of the Millennium summit stated that
: "The central challenge we face today is to ensure
that globalization becomes a positive force for all
the worlds people. While globalisation offers
great opportunities, at present its benefits are very
unevenly shared, while its costs are unevenly distributed.
We recognize that the developing countries and countries
with economies in transition face special difficulties
in responding to this central challenge.
Thus only through broad and sustained efforts to create
a shared future, based upon our common humanity in all
its diversity, can globalization be made fully inclusive
The Summit identified certain fundamental values which
are essential to international relations in the twenty-first
century. These include:
Freedom. Men and women have the right to live their
lives and raise their children in dignity, free from
the fear of violence, oppression or injustice. Democratic
and participatory governance based on the will of the
people best assures these rights.
Equality. No individual and no nation must be denied
the opportunity to benefit from development. The equal
rights and opportunities of women and men must be assured.
Solidarity. Global challenges must be managed in a
way that distributes the costs and burdens fairly in
accordance with basic principles of equity and social
justice. Those who suffer, or who benefit least, deserve
help from those who benefit most.
Tolerance. Human beings must respect each other, in
all their diversity of belief, culture and language.
Differences within and between societies should be neither
feared nor repressed, but cherished as a precious asset
of humanity. A culture of peace and dialogue among all
civilizations should be actively promoted.
Respect for nature. Prudence must be shown in the management
of all living species and natural resources, in accordance
with the precepts of sustainable development. Only in
this way can the immeasurable riches provided to us
by nature be preserved and passed on to our descendants.
The current unsustainable patterns of production and
consumption must be changed, in the interest of our
future welfare and that of our descendants.
Shared responsibility. Responsibility for managing
worldwide economic and social development, as well as
threats to international peace and security, must be
shared among the nations of the world and should be
exercised multilaterally. As the most universal and
most representative organization in the world, the United
Nations must play the central role.
These are values that we share.
We are therefore under an obligation to guarantee these
rights and values against human frailties and greed.
Mechanisms that could provide such guarantees include,
-a participative, accountable and transparent constitution
-human rights watchdog bodies, etc.,
Ladies and Gentlemen
The process of globalisation is sustained by, and produces,
national and regional inter-dependencies. By contrast
to the Cold War focus on regionalism as a means of collective
security arrangements, there is a new emphasis on political
and economic regional groupings committed to people-centered
economic development, to democratic consolidation, transparency,
efficiency, social responsibility, equity, scholarship,
peaceful resolution of conflicts and protection of our
This Conference's stated aims are to focus on the perspectives
of developing inter-regional forms of association, specifically
in the commercial and economic fields with a view to
advancing an agenda of co-operation between the two
regional blocs (SADC and MERCOSUR). This may eventually
lead to a free and more intense trade and investment
flow across the South Atlantic.
Regional co-operation/integration and intra-regional
integration should be perceived broadly beyond the backdrop
of economic and trade concerns.
We believe that regional associations or integration
must be based on a sense of belonging, a shared value
system of like- minded associates. In this shared vision
of peace and stability, democracy, human rights, equity
and social responsibility lie the roots of economic
growth and prosperity and the improvement of the quality
of life of our peoples.
We in Africa, who represent the poorest of the poor
are seeking to learn from the experiences of others
in the South.
Ladies and Gentlemen,
Regional integration and intra-regional cooperation
will provide a rich crop of rewards, such as the promotion
of economies of scale, the development of comparative
and competitive advantages, the creation of a climate
conducive to investment, and the efficient utilisation
and joint management of resources and infrastructure
to the benefit of all.
Regional integration is a sine qua non for the continents
renewal. Therefore SADC is the foundation on which we
seek to achieve economic growth, prosperity, peace and
stability and improve the quality of life of the masses
of our people.
The aim of SADC is to create a Community providing
for regional peace and security, sector cooperation
and an integrated regional economy. As a regional institution
it has laid the basis for regional planning and development
in Southern Africa.
It could not be otherwise:
The countries of the Southern Africa region can achieve
their full potential only through close cooperation
in the exploitation of natural resources in a co-ordinated
fashion, the pooling of technical expertise, the harmonization
of trade practices and the promotion of economies of
Increased regional trade, sectoral cooperation programs
[SDIs] and joint development of regional resources
and infrastructure has to be achieved. However as we
strive to achieve regional integration, we are acutely
conscious that the region is characterized by acute
imbalances, unevenness and inequities. Not only
are the sizes and levels of development of the economies
of the various countries very different [see annexure
1 and 2]. Also the historical pattern of economic relations
in the regional economy has been very uneven. Essentially,
the main poles of accumulation were located in SA, while
the economies of the other countries were incorporated
in roles as providers of migrant labour, services and
as captive markets for higher priced South
African exports. These imbalances were exacerbated in
the years of conflict and destabilization that characterized
the late apartheid period."
During the 1990s the distribution of consumption in
the SADC countries, for which data is available has
been relatively skew. In SA the wealthiest 20% of the
population had a 64,8% share of total consumption, followed
by Zimbabwe with 62,3%. Lesotho with 60% and Zambia
with 54,8%. Southern Africa is also grappling with the
problem of limited fixed capital formation. The generally
accepted international standard for gross domestic fixed
capital formation in developing countries is around
25% of GDP. In 1998, only four SADC countries exceeded
this standard namely Lesotho (49,4%), Zambia (37,4%),
the Seychelles (35,2%) and Swaziland (33%).
We also have to deal with the consequences of insufficient
In 1998 total foreign direct investment in the SADC
countries amounted to 22,5% ($821 million) of the total
of Sub-Saharan Africa ($3,6 billion) in that year.
Inter-Regional trade is also minimal and uneven. Currently
this is 10% of total exports, as compared to 24% for
MERCOSUR, 70% for APEC, 55% for the EU and 52% for NAFTA.
(see annexure 5). Some 86% of intra-regional imports
are supplied by South Africa.
In terms of the Southern African Custom Unions
(SACU, which comprises Botswana, Lesotho, Namibia, South
Africa and Swaziland) trade with the SADC region, Zimbabwe
is the most important trading partner. In 1998, SACUs
exports to Zimbabwe amounted 34,6% of total exports
to SADC countries, followed by Mozambique (16,4%), Zambia
(13,4%), Malawi (7,6%), Tanzania (7.0%), the DRC (6,7%),
Angola (6,6%), Mauritius (6,5%) and the Seychelles (1.1%).
With regards to imports, 60,8% of total SACU imports
from the SADC region came from Zimbabwe in 1998, followed
by 17,5% from Malawi, 9,6% from Zambia, 8,2% from Mozambique,
1,3% from Mauritius, 1,0% from both the DRC and Tanzania,
and 0,3% from the Seychelles. The major products exported
by SACU to the SADC region in 1998 were machinery and
equipment (12,6% of the total), mineral fuels and products
(9,0%) and vehicles, parts and accessories(8,3%). SACU
imports from SADC in 1998 consisted mainly of cotton
(14,3% of the total), tobacco and tobacco products (8,4%)
and certain apparel and clothing articles (6,8%). Despite
these problems there has been some progress towards
building a regional community. Most encouraging, notwithstanding
the conflicts in Angola and the DRC and the tensions
in Zimbabwe, is the growing sense of political will,
determination and urgency which SADC members are displaying
in tackling the difficult challenges that confront us.
Slowly but surely, the SADC region is developing into
a regional economic entity. Far-reaching economic reforms
are being implemented by SADC Member States, in pursuance
of their shared vision of creating a single economic
space through deeper economic integration. Through the
implementation of appropriate macro-economic policies,
a number of SADC countries have managed to put themselves
on a sustainable economic growth path.
There is a strong trend to move beyond functional
integration to embrace a program of development
integration. Development integration is the appropriate
approach in a region in which, there are countries with
economies of very different sizes and levels of development.
In these circumstances it is argued that trade integration
measures should be complemented by:
- Efforts to promote coordinated regional industrial
development, through the establishment of regional industrial
- Measures to give less developed members greater preference
in access to regional markets and facilities and a longer
period to reduce tariffs through asymmetrical trade
- Some coordination of macro-policies at a relatively
early stage, particularly in relation to fiscal incentives
A practical consideration of these measures have been,
1. Since 1994 SA has championed Spatial
Development Initiatives (SDIs). The Spatial Development
Initiatives (SDIs) are concerned with unlocking the
inherent under- and unutilized potential of economic
development of specific spatial locations and corridors
within certain sectors. SDIs in the SADC region are
specifically designed to enhance economic integration
and cooperation between the various countries and different
sectors (see annexure 8).
An SDI may be executed on a bilateral basis, a multilateral
basis (eg, SDIs which span more than five states. It
could even be restricted to one country only, with the
eventual option of crossing into neighbouring states.
The key to the success of an SDI includes access to
labour, transport, innovative economic and product development,
competent government support on a local and national
level as well as access to technology.
It is a partnership between governments, developmental
institutions and the private sector.
-The Maputo Development Corridor (MDC) is one of the
most ambitious and exciting development initiatives
undertaken within the Southern African region. [see
annexure 9]. The vision is to rehabilitate the core
infrastructure in the corridor (notably road, rail,
port and dredging, and border post, through public/private
partnerships thereby re-establishing key linkages and
opening up inherent under utilized economic development
opportunities. Common to both countries was the importance
of the initiative to the respective reconstruction and
development programs (specifically to achieving GDP
and employment growth targets, increasing local and
foreign fixed investment and improving exports). Underlying
this vision was the desire to see this initiative contributing
to other key policy areas
notably regional economic integration international
competitiveness and a broadening of the ownership base
in the economy of the corridor.
There is a continual process of project identification
and preparation in the MDC. There are currently 180
projects under consideration, in all economic sectors,
with a total value of US$7bn and a potential to create
an estimated 35 000 permanent new jobs. Potential contributions
to foreign exchange earnings are also substantial. Of
the above, approximately US$4bn has now been committed,
with the creation of 12 000 jobs. Beyond these very
tangible/visible impacts, the MDC has also had a strong
bridge-building function stimulating new bilateral
agreements, restoring trust and addressing trade imbalances.
The MDC is also playing a significant role in the regional
economic integration debate - demonstrating through
projects the nuts and bolts of integration.
2. On the structuring of a new regional trading relationship
that promotes equitable and mutually beneficial development
integration, South Africas policy is to work towards
a multilateral, regional agreement with flexibility
to take into account bilateral specifics.
As Davies said in the first SADC-Mercosur seminar "The
draft protocol prepared by international consultants
commissioned by the SADC secretariat envisaged a rather
mechanical timetable for tariff phase-downs, leading
to the establishment of a free trade area. Those with
higher incidences of overall protection were to phase
down more rapidly than the others. This formula was
criticized as taking no account of the variations in
capacity of the individual countries, nor of concrete
conditions in specific industries or sectors.
We were concerned about the consultants approach
because other studies suggested that the introduction
of literal free trade would exacerbate rather than reduce
polarization. Therefore we argued that South African
access to the markets of other SADC countries would
need to be carefully structured and phased, we needed
an asymmetrical arrangement (which could nevertheless
qualify as a WTO-legal FTA), in which South Africa opened
up its market to a greater extent than would be required
by other countries, and which operated on a somewhat
differentiated basis country by country.
South Africa also argued that the other SADC members
should identify products for which they wanted better
access into the South African market, and that we
should stop the futile debate about the comparative
tariff levels. This was, however, seen by several other
countries, as South African
The negotiations became protracted and it was only
years later in September 2000 that the Southern
community Free Trade Agreement was signed by all SADC
members [excepting Angola and DRC].
which 7 have entered into force.
The signing of the Trade Protocol marked an important
milestone in our region's history. It will increase
regional trade through the removal of tariff and non-tariff
barriers and discard other restrictions that block entry
or increase the cost of doing business in the region.
Given our commitment to mutual beneficial economic
development that entails more than trade, we have taken
steps to encourage joint partnerships and SA investments
In this regard we have taken several concrete measures,
inter alia, SA investors have been given a higher threshold
for capital export to SADC; Institutions such as the
Industrial Development Corporation and the Development
Bank of Southern Africa are undertaking developmental
projects in other SADC countries.
This is only the beginning, we still have to grapple
with many challenges.
The Agreement is very complex and aims to achieve regional
cooperation by asymmetrical reduction of trade barriers,
over a 12 year period, and by achieving harmonization,
inter alia, in the financial institutions, customs and
excise systems, investment policies, capacity building
and macro-economic strategy.
Given the vast imbalance in trade between SA and other
SADC members it was agreed that SA would meet 96.7%
of its obligations within 5 years, while the others
will drop tariffs on 97.6% of SA imports within 8 years.
Like any other regional grouping, SADC will have to
deal with issues such as border control, duty evasion,
tariff abuse, falsified certificates of origin, subsidies,
potential job losses and corruption.
All these factors indicate that we are realistically
conscious of the problems that the SADC regional integration
program will have to confront, and therefore have strengthened
the dispute resolution mechanisms.
Ladies and Gentlemen
The next phase, and challenge, for SADC will be the
implementation of the Protocols in order to make regional
integration a reality. This demands that the existing
SADC structures need to be strengthened in order to
have the capacity to assist member states with implementation.
If the Review Committee's recommendations are accepted
by SADC members, the organization is poised to become
a catalyst for the stabilization of the region, effectively
dealing with political, security and socio-economic
challenges allowing economic growth and development.
Prime Minister Blair speaking at the Millennium Summit
said: "There is a dismal record of failure in Africa
on the part of the developed world that shocks and shames
our civilization ¼
Nowhere are more people being left behind on the wrong
side of growing digital and economic divide. 30 years
ago the same depressing analysis might have been made
of parts of Asia or Africa ¼
There can be hope for Africa. There is political leadership,
business opportunity and above all the will of the people
for a better future in Africa. We must be partners in
the search for change and hope."
We accept that conflicts are inextricably linked to
underdevelopment. Regional integration and the African
developmental Agenda cannot be achieved if there is
no peace and stability on our continent.
Kofi Annan said: "In intra-state conflicts in
Africa, the main aim increasingly, is the destruction
not only of armies but of civilians and entire ethnic
Preventing such wars is no longer a matter of defending
states or protecting allies, it is a matter of defending
He was referring to the shocking reality that from
Sierra Leone to Angola, from the streets of the DRC
to Sudan, from the killing fields of Ethiopia and Eritrea,
to the killing fields of Rwanda and Somalia, violent
conflicts have become the scourge of our continent.
Over the past three decades over 8 million Africans
have perished in the fires of ethnic and racial hatred,
religious intolerance, political ambition and material
greed. Over 15 million refugees and displaced persons
live in terrible conditions. This is the highest number
of refugees anywhere in the world. We cannot accept
the fact that landmines are indiscriminately planted,
injuring and killing innocent citizens and that the
infrastructure of many countries is systematically destroyed
and their agricultural land laid to waste.
The "Report of the Panel on UN Peace Operations
(Brahimi report) and the UN Secretary Generals
Millennium Report categorically underscore the need
for all who are involved in Conflict Prevention and
Development the UN, The Bretton Woods Institutions,
Governments and Civil Society Organizations to address
these challenges in a integrative comprehensive and
To give meaning to this conclusion, we should look
at some of the root causes of conflict. This, inter
alia, includes the legacies of the past which has resulted
in weak and dependent civil society; weak institutions
of governments and civil society; ethnisation of politics;
imposition of models of governments by former colonial
powers; corruption; "privatization of conflicts"
[people in Africa and internationally are profiting
from the conflict.]
The African Renaissance envisages a continent whose
peoples are finally free from need, poverty, violence
and disease; a region with a culture of human rights,
good governance and respect for the rule of law; a region
that has people and stability; a region with investment
flows and trade that sustains economic growth and development.
In essence this demands that we do not diverge from
the values and vision we share with our MERCOSUR neighbours.
Africa alone cannot achieve regional integration or
renewal. We call on our neighbours in Mercosur to deepen
and strengthen existing South-South relations in order
to re-align and restructure South-North relations.
The similarity of development challenges between Southern
Africa and South America, and indeed among other countries
of the south, makes it imperative for our countries
to adopt and present common positions in multilateral
fora, including the democratization of the United Nations,
the Bretton Woods Institutions and the reform of the
global political and economic order.
Both the Southern African and South American regions
have commodity-based developing economies, with large
and growing populations. Strong mining sectors in both
regions offer not only the possibilities of investment,
but also the sale of specialist knowledge and equipment.
The agro-economies of South America and Southern Africa
serve to draw the regions together in co-operating in
multilateral forums, with shared membership of initiatives
such as the Valdivia and Cairns Groups.
Our common national and international approaches further
provide fertile ground for co-operation in jointly combating
globalizes threats to human security such as drug trafficking,
trans-national crime, terrorism, environmental degradation,
poverty, disease etc. Governments can, however, not
contribute to this end alone. Civil society and specifically
the private sector, need to join Governments in their
endeavors. I am heartened by the fact that the private
sector supports this Conference, thereby stimulating
co-operation between our two regions.
Ladies and Gentlemen
Regional integration and the increased prominence of
multilateralism represent two major global trends. Regional
and continental integration and cooperation is essential
in making us more competitive globally. Further alliances
and relationships need to be developed with regions,
states and organisations in the South, as well as in
the North. In this way, understanding, acceptance and
support can be generated for a common agenda of the
South, while support and material backing can be generated
for the issues under this common agenda in the developed
This Conference is held at an opportune moment. President
Thabo Mbeki will address the MERCOSUR Presidential Summit,
to be held in Brazil on 15 December this year.
It is envisaged that negotiations for a Framework Trade
Agreement with MERCOSUR will have been finalised for
signature during the December MERCOSUR Presidential
Meeting. As political and economic groupings, SADC and
MERCOSUR will be better positioned to tackle the negative
effects of globalisation while reaping the advantage
of its positive aspects.
THE SOUTH SUMMIT PROGRAMME OF ACTION SHOULD GUIDE US:
"We the Heads of State and Government of the developing
countries which account for almost four-fifths of the
worlds population, have assembled here in Havana
for the first South Summit at a truly historic moment
in the evolution of human society. At the dawn of a
new millennium, our countries and people stand at the
crossroads of history poised between the achievements
of the past and the hope and expectations of a yet uncharted
future. Rather than be passive witnesses of a history
not of our own making, we in the South will exert every
effort to shape the future through the establishment
of a World Order that will reflect our needs and interests
while also laying the foundations for a more effective
system of international development co-operation.