The Southern African Development Community (SADC) is a major regional economic community (REC) in Africa. SADC was formally established in 1992 to replace its predecessor, the Southern African Development Coordination Conference (SADCC). SADCC was established in 1980 after the Frontline States (Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland, Zambia, and Zimbabwe) and representatives from Lesotho, Malawi, and Swaziland signed the Lusaka Declaration “Towards Economic Liberation” in Lusaka, Zambia[1]. South Africa and Namibia, which was a colony of South Africa known as South-West Africa at the time, were not members of SADCC or signatories to the Lusaka Declaration. Following Namibia’s independence from South Africa in 1990, SADCC member states signed the SADC Declaration and Treaty which transformed SADCC into SADC at a Summit held in Windhoek. After the end of Apartheid in 1994, South Africa became the 11th member state to join SADC at a Summit held in Gaborone[2]. SADC has always sought to play a central role in the region’s political and economic transition and this brief historical summary illustrates the linkages between political developments and economic integration in region.
SADC has been at the centre of political and economic developments in Southern Africa and a crucial champion for regional integration efforts in Africa. SADC has made significant progress towards fostering economic cooperation, political stability, and social development among its member states. Today, the region has 16 member states and continues to play a central role in the economic and political transition of its members and integration in the region. But the REC has faced some challenges with low levels of intra-regional trade, slow deepening of regional integration, and recurring and rising political instability. The process of regional integration is complex. Although the political process of signing agreements lays the foundation for private and public economic endeavours that ultimately bring about the regional integration, the process is seldom linear. This issue of the PESA Regional Integration Monitor provides an update on the current state of regional integration in SADC by evaluating the challenges, achievements, and prospects for the future.
Challenges for Regional Integration in SADC
The state of African regional integration has often been described as a “spaghetti bowl” due to the number of multiple memberships in different RECs and the overlapping geographic regions different RECs on the continent[3]. For instance, the Southern Africa region is host to several RECs including SADC, the Southern African Customs Union (SACU) which is the oldest customs union in the world having been established in 1910, and the Common Market for East and Southern Africa (COMESA) that was established 1994 and stretches from Libya and Egypt the way to Eswatini. The archetypical illustrative example of the spaghetti bowl is Eswatini which is a member of SADC, SACU, and COMESA. Often the overlapping RECs are also at different stages of integration ranging from preferential trade areas all the way to customs and monetary unions, which sometimes have competing and contradictory objectives. The objectives of COMESA establishing a customs union competes and contradicts with Eswatini’s membership in SACU, even though the COMESA customs union was launched in June 2009 but remains non-operational[4]. According to the World Trade Organisation, a country may only be a member to one customs union because membership to multiple customs would by default result in an expansion and consolidation of the customs unions into one customs union due to the application of the Most Favoured Nation (MFN) principle[5].
African governments have tried to resolve this issue of multiple membership through consolidating the regional integration process. This has taken place at a continental level with the launching of the African Continental Free Trade Area (AfCFTA) and the consolidation of overlapping memberships through processes like the Tripartite Free Trade Area (TFTA) which aims to consolidate COMESA, SADC, and the East African Community (EAC) as a solitary block[6]. In fact, during the negotiations for the establishment of the AfCFTA, SADC countries had to consolidate their position through the TFTA and the same applied to EAC and COMESA member states[7]. However, the process of consolidating African regional integration has not been as simple as consolidating overlapping RECs into one consistent body.
Most common models of regional integration highlight varying stages of integration according to levels and complexity of integration, which ranges from free trade areas all the way to a political union[8]. However, regional integration is also not a linear process. This is clearly illustrated by the many delayed and postponed REC targets at achieving certain levels. In addition, not all member states may ascend to the highest level of integration, even if a REC can sign and enter into agreements or establish the relevant institutions to deepen regional integration. For example, Botswana is a member of the SACU customs union but not the monetary union. Similarly, the Democratic Republic of Congo (DRC) is a member of SADC but has not ascended to the free trade area. This can be explained by the complex cost-benefit analysis that countries must account for when deciding to trade off their sovereignty in return for the gains of regional integration. Therefore, it may not be in its interest to ascend to the maximal levels even if that country has the desire to deepen its integration within the REC. Moreover, countries also tend to trade-off memberships to multiple RECs to serve their national interest as opposed to regional interests. Despite the overlapping memberships and complexities of competing and contradictory interests, the central aim of regional integration remains integrating vast geographies through the common vehicle of trade.
Achievements for Regional Integration
Intraregional trade is often seen as the common interest that can be the central driver for regional integration. Therefore, most RECs have programmes that aim to promote intraregional trade as the backbone or baseline for integration. Trade and economic integration have always been central to SADC’s regional integration agenda. SADC has made substantial progress in promoting intraregional trade through the reduction of tariffs and non-tariff barriers. In addition, RECs often promote intraregional trade through easing trade and customs procedures, improving regional infrastructure and interconnectivity, promoting cultural exchange, and easing the movement of people and capital across the region.
SADC recognises the critical role of infrastructure in fostering regional integration. To enhance connectivity and boost economic growth, the organisation has invested in several major infrastructure projects. Notable examples include the North-South Corridor, which aims to improve transportation links, and the Kazungula Bridge, which facilitates cross-border movement and trade[9]. Although commendable progress has been made, ongoing efforts are required to address funding gaps and ensure the completion of infrastructure projects on time. The SADC Trade Protocol, signed in 1996, laid the foundation for creating a free trade area, and since then, intra-regional trade has steadily increased. However, there is still room for improvement in harmonising trade policies and addressing lingering challenges related to trade facilitation and customs procedures. In terms of intraregional trade SADC has been slow and reversed regional integration in recent years. SADC has begun lagging when it comes to intraregional and interregional (intra-Africa) trade.
SADC has performed the best amongst most of the prominent African RECs when it comes to intraregional trade, until 2021. Intraregional imports have been just above 20% for about a decade in SADC which means that member states rely on each other imports. Similarly, with respect to intraregional exports, SADC member states rely on each for export markets given that intraregional exports have fluctuated around 20% for the same period. This compares favourably against other African RECs such as the Arab Maghreb Union (AMU), the Economic and Monetary Community of Central Africa (CEMAC), EAC and the Economic Community of West African States (ECOWAS). These RECs have intraregional exports and imports ranging from 5% to 10%, except for the EAC. In 2021, SADC intraregional imports remained decreased to 17.5% (2020: 20.6) and intraregional exports decreased by almost half to 10.6% (2020: 19.6%).
Figure 1: Africa Intraregional Trade (2012-2021)[10]
The slightly high level of intraregional imports across the RECs may represent some level of re-exports as good a transported to third-party final destinations through the region. Alternatively, the RECs may be trading higher or lower value-added goods within the REC as opposed to the rest of the world. In the case of the EAC, it seems like a combination of the re-exports and difference in value-added traded. The total amount of intraregional imports was USD 3.2 billion and the top five products were gold (USD 790.4 million), rice (USD 216.8 million), rolled iron and steel (USD 138.6 million), crude oil (USD 128.6 million), and soaps and cleaning products (USD 119.9 million) which accounted for 33.5% of total intraregional imports. Meanwhile, the total amount of intraregional exports was USD 6.2 billion and the top five products were copper (USD 1.0 billion), rice (USD 382.8 million), cement and limestone (USD 257.3 million), crude oil (USD 190.3 million), and vegetable oils (USD 186.9 million) which accounted for 33.1% of total intraregional exports. This illustrates the higher value-added products in terms intraregional exports despite some level of re-exports in terms of rice, crude oil and other raw minerals that are refined or beneficiated outside the REC.
Similarly, in SADC, the total amount of intraregional imports was USD 5.2 billion and the top five products were crude oil (USD 2.9 billion), cosmetics and toiletries (USD 108.9 million), flour (USD 88.8 million), ships and boats (USD 87.4 million), and soaps and cleaning products (USD 81.1 million) which accounted for 62.8% of total intraregional imports. Meanwhile, the total amount of SADC intraregional exports was USD 38.2 billion and the top five products were copper (USD 2.2 billion), petrochemicals (USD 1.9 billion), crude oil (USD 1.7 billion), electrical current (USD 1.5 billion), and nickel (USD 1.3 billion) which accounted for 22.5% of total intraregional exports. This illustrates the higher value-added products in terms intraregional exports despite some level of re-exports in terms of crude oil and other raw minerals that are refined or beneficiated outside the REC. SADC’s industrialisation strategy seeks to promote value addition and the development of regional value chains. By encouraging member states to process raw materials within the region, SADC aims to reduce dependence on primary commodity exports and enhance economic diversification. However, progress towards industrialisation has been uneven among member states, reflecting differences in capabilities, regulatory environments, and access to finance.
Table 1: SADC Intraregional Imports (2022)[11]
South Africa is the main beneficiary of intraregional trade in SADC due to the inequality amongst member states and its advanced manufacturing capability and deep financial markets. Majority of SADC member states’ intraregional trade is with South Africa. In terms of intraregional imports, South Africa account for most of the intraregional imports for all SADC member states except for the Comoros, the DRC and Tanzania. There is a sliding scale from 58.7% of intraregional imports for Malawi all the way to 97.5% of intraregional imports in Lesotho, which all come from South Africa. The trend seems to increase with geographic proximity as neighbour countries like Eswatini (96.3%), Botswana (88.0%), Mozambique (84.1%), Zimbabwe (77.8%) and Namibia (69.4%) seem to be increasingly reliant on South African intraregional imports. The only anomaly to the geographic proximity trend is Angola which relies on South Africa for 83.6% of intraregional imports. Meanwhile, South Africa seem mostly reliant on the DRC (23.0%), Zimbabwe (12.9%), Eswatini (12.2%) and Namibia (10.4%) for its intraregional imports. Nevertheless, the real champions of intraregional imports in SADC are Lesotho, Eswatini, Botswana, Zimbabwe, Zambia, and Namibia who rely on SADC for most of their imports as opposed to the rest of the world (RoW). It appears, outside of SACU, SADC regional integration has most been successfully for increasing intraregional imports for Zimbabwe and Zambia. This might be a matter of necessity given that these countries are also landlocked.
Table 2: SADC Intraregional Exports (2022)[12]
In terms of intraregional exports, South Africa account for most of the intraregional exports for all SADC member states except for the DRC, Tanzania, Malawi, Zambia, the Comoros, and the Seychelles. There is a sliding scale from 54.0% of intraregional exports for Namibia all the way to 96.1% of intraregional exports in Lesotho, which all go to South Africa. The trend also seems to increase with geographic proximity as neighbour countries like Eswatini (86.1%), Zimbabwe (79.3%), Botswana (75.2) and Mozambique (62.1%) seem to be increasingly reliant on South Africa for their intraregional exports. Meanwhile, South Africa seem mostly reliant on the DRC (23.0%), Zimbabwe (12.9%), Eswatini (12.2%) and Namibia (10.4%) for its intraregional imports. Nevertheless, the real champions of intraregional exports in SADC are Eswatini and Zimbabwe who rely on SADC markets for majority of their exports as opposed to the RoW. It appears that this might be a matter of necessity given that these countries are also landlocked neighbours of South Africa. In terms of exports, most SADC countries seemingly rely on the RoW’s markets. This may be due to the SADC region’s reliance on primary commodity exports to traditional markets in Europe, North America, and China. So, what are the prospects of intra-Africa trade for SADC member states?
Figure 2: Africa Intraregional Trade (2012-2021)[13]
SADC countries do not rely on the rest of Africa for their trade as they rely on the rest of the world for most of their trade. SADC has performed the worst amongst most of the prominent African RECs when it comes to interregional trade (intra-Africa trade). Interregional imports have been below 20% for almost a decade in SADC which means that the REC does not rely on Africa for more than 80% of its imports. Similarly, with respect to interregional exports, SADC member states do not rely on African countries for export markets given that interregional exports have also been below 20% for almost a decade. This compares poorly against other African RECs such as the AMU, CEMAC, EAC and ECOWAS. These RECs have intraregional exports and imports ranging from 30% to 60%. In 2021, SADC interregional imports remained unchanged at 13.9% and interregional exports increased to 15.7% (2020: 14.3%).
Prospects for the Future of Regional Integration in SADC
Despite significant achievements, SADC faces several challenges in its pursuit of deeper regional integration, particularly with respect to integrating with the rest of Africa. Economic disparities are a major impediment to deepening regional integration within SADC. Economic disparities among member states create imbalances in trade and investment opportunities, hindering a more equitable and inclusive integration process. As a result, the only beneficiary of intraregional trade in SADC seems like South Africa. This needs to be considered when policymakers try to encourage regional integration and policies need to be designed with this disparity in mind, in order to encourage equitable gains from trade. Regional value-chains can be used to increase intra-regional trade but disparity in economic gains and bargaining power between lead- and follower firms will last contribute towards maintaining these disparities. On the other hand, the disparities can be used to integrate the rest of the region to economic nodes with advanced manufacturing capacity like South Africa while utilising competition policy to insure more equitable distribution of gains from trade.
There are also geographic trends that are unavoidable since landlocked countries are likely to rely on their neighbours. To encourage and deepen regional integration, SADC member states need to deal with the problem of lacking infrastructure and limited connectivity. Insufficient infrastructure and connectivity gaps impede the seamless movement of goods and people, affecting trade efficiency and economic integration. The importance of connecting physical infrastructure cannot be understated as this becomes the arteries that enable trade to flow thus encouraging deepening regional integration and resolving capacity constraints. The chief example of this is the Southern African Power Pool which has enable intraregional trade in electrical current but also enables countries with limited generation capacity to import their deficit power that they need for industrial production.
Investing in regional infrastructure and connectivity is crucial for growing intra and interregional trade, which is the most important way to encourage deepening integration through policy cooperation and harmonising regulatory environments. Improving connectivity will also enhance cultural exchange allowing for further deepening of regional integration. Fortunately, cultural diversity is not a major impediment to intraregional integration in SADC given that most member states are Anglophone with majority of the population connected through the common heritage of Nguni languages spoken across the region. However, cultural exchange will be crucial to growing SADC’s integration to the rest of Africa where majority of the population is Francophone with diverse indigenous languages spoken across the continent.
SADC has significant prospects for deeper regional integration. In the currently divided geopolitical environmental and global economic uncertainty, there is a greater need for deepening regional integration. Deepening regional integration will encourage diversifying economies. SADC’s focus on industrialisation and value addition will lead to more diversified and resilient economies. Deepening regional integration will strengthening political and social institutions. Investing in institutional capacity and coordination will enhance the efficiency and effectiveness of integration initiatives.
SADC needs to continue emphasising human development in addition to trade and economic development. Prioritising social development, education, and healthcare will improve the well-being of citizens and promote inclusive growth. This is crucially important given the disparity amongst economies and the expected unequal gains from trade. Therefore, it is encouraging that the 43rd Ordinary SADC Summit of Heads State and Government held in Luanda, Angola, is focused on the theme: “Human and financial capital: The key drivers for sustainable industrialisation of the SADC Region”.
Lastly, political cooperation and conflict resolution are fundamental to maintaining peace and stability in the region. SADC has played an essential role in mediating conflicts and facilitating political transitions in several member states. Successful interventions in countries like Lesotho, Zimbabwe, and the DRC demonstrate SADC’s commitment to peacebuilding. However, challenges persist in addressing underlying political tensions and ensuring consistent adherence to democratic principles. The ongoing SADC Mission in Mozambique needs to continue playing a role in maintaining peace and stability in Cabo Delgado given that the unrest and conflict have disrupted mega projects which have a potential to enable economic development in the country and the region. The state of regional integration in the SADC reflects both achievements and challenges. SADC’s efforts in promoting trade, infrastructure development, industrialisation, and political cooperation have laid a strong foundation for deeper integration. However, disparities among member states, capacity constraints, and other obstacles must be addressed to realise SADC’s full potential. By leveraging collective strengths and pursuing inclusive and sustainable development, SADC can continue to play a pivotal role in fostering economic prosperity, political stability, and social welfare in the Southern African region.
[1] SADC 2022a. History and Treaty, on the Southern African Development Community Website, viewed on 12 August 2023, from https://www.sadc.int/pages/history-and-treaty.
[2] SADC 1994. Southern African Development Community Record of Summit Held in Gaborone Republic of Botswana 29th August 1994, Southern African Development Community: Gaborone. Available At: https://www.sadc.int/sites/default/files/2021-08/SummitRecord-August1994.pdf [Last Accessed: 12 August 2023].
[3] UNCTAD 2021. Reaping the Potential Benefits of the African Continental Free Trade Area for Inclusive Growth, United Nations Conference on Trade and Development: Geneva. Available At: https://unctad.org/system/files/official-document/aldcafrica2021_en.pdf [Last Accessed: 12 August 2023].
[4] COMESA 2023. COMESA Customs Union, on the Common Market for East and Southern Africa Website, viewed on 12 August 2023, from https://www.comesa.int/comesa-customs-union/.
[5] WTO 2023. Principles of the Trading System, on the World Trade Organisation Website, viewed on 12 August 2023, from https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm.
[6] Onyango, C. 2020. Why the COMESA-EAC-SADC Tripartite Free Trade Area is Ideal for Strengthening African Continental Integration, Common Market for East and Southern Africa: Lusaka. Available At: https://www.comesa.int/wp-content/uploads/2020/09/Tripartite-FTA-is-ideal-for-strengthening-AfCFTA.pdf [Last Accessed: 12 August 2023].
[7] SADC 2022b. Tripartite Cooperation, on the Southern African Development Community Website, viewed on 12 August 2023, from https://www.sadc.int/pages/tripartite-cooperation.
[8] Rodrigue, J.P. 2020. ‘Chapter 7: Trade, Logistics and Freight Distribution’, in The Geography of Transport Systems, Routledge: London.
[9] SADC 2021. US$259m Kazungula Bridge and One Stop Border Post Commissioned, Paving way for Enhanced SADC Integration and Development, on the Southern African Development Community Website, viewed on 12 August 2023, from https://www.sadc.int/latest-news/us259m-kazungula-bridge-and-one-stop-border-post-commissioned-paving-way-enhanced-sadc.
[10] UNCTAD 2023. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/EN/ [Last Accessed: 12 August 2023].
[11] UNCTAD 2023. UNCTADStat Database, supra.
[12] UNCTAD 2023. UNCTADStat Database, supra.
[13] UNCTAD 2023. UNCTADStat Database, supra.
