SADC in the Global Year of Elections [EN]

The Southern African Development Community (SADC) held its 43rd Ordinary Summit of the Heads of State and Government on the 17th August 2023, in Luanda, Angola. The Summit was held under the theme Human and Financial Capital: The Key Drivers for Sustainable Industrialisation of the SADC Region because the region seeks to address two of the most critical enablers to support regional industrialisation in the context of climate change and 4th Industrial Revolution. The region needs to step its efforts to empower women and encourage women involvement in science, technology, engineering, and mathematics (STEM) fields. In addition, SADC needs to focus on providing training and technical-vocational skills for young people to ensure that they are prepared to face the challenges of the 4th Industrial Revolution and the digitalisation of SADC economies in future.

As the region prepares for the 44^th Ordinary Summary to be held in Harare, Zimbabwe, the region is facing a new challenge – the cost-of-living crisis due to the ongoing Russia-Ukraine and Israel-Gaza conflicts in the context of higher cost of borrowing due to the global monetary tightening and geopolitical uncertainty. The Russia-Ukraine and Israeli-Gaza conflicts are politically divisive and the diplomatic space for a middle-ground continues to face pressure in an increasingly isolationist geopolitical environment. The unsuccessful African Peace Mission on the Russia-Ukraine Conflict is a clear illustration of the increasingly belligerent and isolationist geopolitical environment characterised by a false dichotomy of “East/Global South” versus “the West” akin to the Cold War (a Cold War 2.0 if you like). The non-aligned SADC stance is a strong diplomatic tool enabling individual member states to take their own national position without contradicting the region. However, regardless of the national position with respect these conflicts, the common suffering from the higher cost of living will remain the central political issue in 2024 – especially since many SADC countries will have elections.

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SADC in the Global Year of Elections

This year (2024) has already sparked global interest because at least 64 countries representing almost half of the world’s population are planning to hold, or have already held, general or presidential elections. SADC is no different since 9 out of the 16 countries, representing approximately 40% of the region’s population, are holding elections in 2024. But only 6 SADC countries are expected to hold presidential elections. The regional political discourse, as in the rest of the world, will be heavily influenced by the cost-of-living crisis and the fallout from policy responses to the inflationary pressure in the context of slow economic growth throughout the world. This means the political discourse will be primarily driven by “bread and butter” issues.

Table 1: SADC Member States Holding Presidential Elections in 2024

In addition to the cost-of-living crisis, there are fears that the wave of coups or unconstitutional changes in power affecting mostly the Francophone West African countries will spread throughout the continent. There have been many reasons advanced for the coups including poor economic conditions, endemic corruption, interference of the military in political matters and absence of institutional reforms[1]. However, further analysis also points to the fact that these conditions are largely caused by the neo-colonial relations between post-independence African regimes and their former colonisers. This has been a major driver for coups in Burkina Faso, Mali, and Niger (BFMN) who have threatened to leave the Economic Community of West African States (ECOWAS) and establishing a separate common currency outside the CFA West African Franc Zone as a first step towards ending the post-independence neo-colonial relations with France[2]. Therefore, the wave of coups mostly affecting francophone African countries including Chad, Guinea, and Gabon in addition to BFMN has the potential to spark a wave of coups linked to “a second decolonisation” in the rest of the continent. The neo-colonial reintegration of African countries post-independence is not limited to former French colonies, but the neo-colonial relations have been most pernicious in francophone Africa. The risk of contagion or the spreading of the wave of coups is worsened by the currently divisive geopolitics and the potential for proxy conflicts in the Cold War 2.0 geopolitical environment.

At the onset of the Israeli-Gaza conflict, SADC Chairperson, President Lourenco issued a statement on behalf of SADC condemning all acts of violence and calling for all parties to exercise restraint because escalation undermines efforts for sustainable peace and security in the Middle East; and expressed deep concerns over the loss of hundreds of innocent civilian lives on both sides and the destruction of property. The non-aligned SADC stance is a strong diplomatic tool enabling individual member states to take their own national position without contradicting the region. This should also allow the SADC region to trade-off external economic and political interests in favour of what’s in the long-term interest of SADC and deepening regional integration. However, contradictory stances taken by the African Union, such as its unilateral decision to grant the State of Israel Observer Status which SADC Summit condemned, present cracks in the African unity that could be exploited by either side in the skirmishes between Russia and China versus the West.

Take Advantage of Geopolitical Shifts

This presents an opportunity for SADC member states to play off the dichotomous competing interests against each other for SADC’s own benefit. The common foreign policy view tries to force African countries to choose a side between the rising Global South versus the traditional partners in the West. However, it is incumbent on SADC Heads of State and Government to continue taking a non-aligned stance that prioritises the needs of their domestic populations. In this regard, SADC member states need to use this opportunity to resolve the energy crisis to enable regional industrialisation.

Investment in energy has been heavily politicised and weaponised against African nations in the current era of the global energy transition away from carbon. This is not a denial of climate change or its impact of SADC and African livelihoods. Instead, this is an acknowledgement of the negligible of Africa in terms of the continental contribution to global greenhouses gases. Africa contributes 2 to 3% of global emissions but the impact of climate change threatens already constrained livelihoods and affects food security due to droughts, floods, and extreme weather conditions. Therefore, in the African context the more immediate need is for climate resilience and climate mitigation instead of the much-touted demands for the global transition from carbon. In addition, SADC and African Heads of State and Government need to understand the private interest hiding in plain sight in the global transition from carbon which won’t allow African countries to chart their own part to net zero. These interests are actively engaged in campaigns to delegitimise the just transition to net zero through transition fuels like natural gas.

For example, the Children’s Investment Fund Foundation (CIFF) commissioned a study to delegitimise efforts to use investments in transitional fuels in the just transition to net zero in South Africa and Australia. The terms of reference for the CIFF study included “a digital campaign aimed at tarnishing gas in South Africa, supported by new voices that want a renewable – not a gas – plan for South Africa”[3]. The SADC region should continue to update its stance on such issues as the global geopolitics shifts away from policing energy investment and the economic conditions change enabling renewable energy options that were historically impossible. Ultimately, the availability of sufficient and reliable energy and well-maintained transportation and logistics systems are central area that will unlock SADC regional industrialisation. Resolving the energy constraints is one of the most critical issues facing the SADC region in the context of uncertainty about the future of climate financing for renewable energy investment. Really, to put the situation as “uncertain” is very mild. The unnecessary constraints put upon African countries in terms of investment in carbon-based and transition sources of energy is also reflected in the availability of financial resources.

Figure 1: CIFF Terms of Reference – Global Recovery Collective Campaigns

In 2016, the African Development Bank launched the New Deal on Energy for Africa (NDEA), a partnership-driven effort with the aspirational goal of achieving universal access to electricity in Africa by 2025[4]. The same programme estimates that Africa requires USD 100 billion annually to meet demand and SDGs by 2040 but has only approved USD 8.3 billion towards the energy sector, of which USD 7.2 billion went to renewable energy[5]. The resources being mobilised for the continent’s energy sector are paling in comparison to the estimated need, and the biggest development bank in Africa is barely meeting 10% of the financing gap. This is the primary constraint that will affect the regional industrialisation ambitions. However, SADC and African Heads of State and Government need to take advantage of the geopolitical shifts to align their national investment needs with whatever side that will enable climate resilience and their national plans for a just transition to net zero instead of solely relying on the resources availed for renewable energy investment.

In addition to taking advantage of the geopolitical shifts to resolve the energy crisis, SADC member states need to take more informed approach to policymaking. Mainstream and conventional policy responses to the current economic challenges will not be effective to solving the cause of current inflationary pressures and the cost-of-living crisis. Although tighter monetary policy may be necessary to stem some inflation, this policy response will not end the conflict constraining global fertiliser, food and fuel production and the conflict choking major trade routes – which are the primary cause of inflation and the current cost-of-living crisis. Government officials and monetary policy authorities in the SADC region need to find ways to support household livelihoods that are being severely affected by rising inflation and higher food and fuel prices. The most efficient policy response to this source of inflation requires “unorthodox” policy response to the current global and regional inflation challenges. Even though raising policy rates might be unavoidable, monetary policy tightening needs to be implemented alongside policy measures targeted at easing the cost-of-living burden for vulnerable households. This ultimately raises the demands on economy policy cooperation between state officials and central bank authorities, to complement monetary policy with fiscal policy aimed at providing social safety-nets.

Social safety nets can be provided through various means like targeted cash-transfers, industrial policy support for transporting and logistics-related industries, and investment support. Short of providing contentious fuel subsidies, there are many alternative long-term focused responses that are sure to yield medium-term impact on inflation in addition to the short-term effectiveness of rates hikes. Regional initiatives like the Lobito Corridor are a much-needed investment towards SADC’s prosperity and industrialisation. These projects need to also connect to and find expression in the continental dream of an African Continental Free Trade Area. This requires fiscal officials and central bank authorities to focus on policy interventions targeting short- and long-term relief from inflation and rising cost of living. When it comes to this, food security needs to be a central cooperative objective for fiscal and monetary policy.

Regional industrial and competition policy is the last area that SADC member states need to focus on to enable regional industrialisation. In the last three decades China and the Southeast Asian Nation States have proven the importance of industrial policy for late industrialisation. This is not a novel discovery since Japan had proven the important of industrial policy in the post-World War 2 period. Advanced economies like the United States have also woken up to the reality and implemented their own industrial policy like the Inflation Reduction Act (IRA) aimed at near- and re-shoring industries that were outsourced to Asia in the past three decades. The IRA is one of the largest investments instruments in the United States’s history, targeted at energy security and the transition to net zero. The most important lesson here is to acknowledge the return of industrial policy in the global economy and the monumental change from the free-market tradition of the West. SADC Heads of State and Government need to take advantage of these changes to position their economies to take advantage of the opportunities presented by the IRA in addition the historical Africa Growth and Opportunities Act (AGOA). SADC countries are also endowed with some of the precious metals needed in the global transition to net zero which presents an opportunity to exploit the IRA for investment in local beneficiation of these minerals before being exported to the United States and other advanced economies.

Conclusion

SADC Heads of State and Government need take advantage of the current global economic and political climate for their own benefit. It is incumbent on SADC Heads of State and Government to continue taking a non-aligned stance that prioritises the needs of their domestic populations. The SADC region should continue to update its stance on such issues as the global geopolitics shifts away from policing energy investment and the economic conditions change enabling renewable energy options that were historically impossible. SADC and African Heads of State and Government need to take advantage of the geopolitical shifts to align their national investment needs with whatever side that will enable climate resilience and their national plans for a just transition to net zero instead of solely relying on the resources availed for renewable energy investment.

SADC member states need to take more informed approach to policymaking. Mainstream and conventional policy responses to the current economic challenges will not be effective to solving the cause of current inflationary pressures and the cost-of-living crisis. The most efficient policy response to this source of inflation requires “unorthodox” policy response to the current global and regional inflation challenges. The demands on economy policy require greater cooperation between state officials and central bank authorities, to complement monetary policy with fiscal policy aimed at providing social safety-nets. This requires fiscal officials and central bank authorities to focus on policy interventions targeting short- and long-term relief from inflation and rising cost of living. When it comes to this, food security needs to be a central cooperative objective for fiscal and monetary policy. Lastly, SADC member states need to focus on regional industrial and competition policy to enable regional industrialisation.

[1] https://reliefweb.int/report/guinea-bissau/ecowas-and-recent-coups-west-africa-which-way-forward

[2] https://www.france24.com/en/video/20240213-niger-hints-at-new-currency-in-step-out-of-colonialisation

[3] See Figure 1.

[4] https://www.afdb.org/fileadmin/uploads/afdb/Documents/Generic-Documents/Bank_s_strategy_for_New_Energy_on_Energy_for_Africa_EN.pdf

[5] https://www.deik.org.tr/contents-fileaction-33882

PESA Regional Integration Monitor, Apr 2024

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