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Deepening Integration in SADC - Macroeconomic Policies and Their Impact. South African Country Study 3rd – 6th April 2006 Zambezi Sun Hotel, Livingstone, Zambia. Target Indicators on Macroeconomic Stability and Convergence (1). Target Indicators on Macroeconomic Stability and Convergence (2).

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deepening integration in sadc macroeconomic policies and their impact

Deepening Integration in SADC- Macroeconomic Policies and Their Impact

South African Country Study

3rd – 6th April 2006

Zambezi Sun Hotel, Livingstone, Zambia

target indicators on macroeconomic stability and convergence 2
Target Indicators on Macroeconomic Stability and Convergence (2)
  • SA is on track for most of 2008 targets
  • Main challenges -growth rates, current account deficit and domestic savings
  • On growth rates 7% appears too ambitious
  • Current account, strength of the currency
macroeconomic policies 1
Macroeconomic Policies (1)
  • Broad Policy Approach (GEAR)
    • Main areas were fiscal, monetary, trade and labour market.
    • to link fiscal prudence with the ability to ease monetary policy
    • encourage private local and foreign investment

- clear goals and objectives to benchmark the economic performance

macroeconomic policies 2
Macroeconomic Policies (2)
  • Origin of Policies
    • Mainly National,
    • Very little alignment to SADC Policies, but the trade aspect had regional context
    • Lack of consideration for regional issues has direct impact on the failure of the policy in some areas
    • However, under GEAR, SADC tariffs were lower than any other trading partner
    • Main disappointments: investment and job creation
impacts of the macroeconomic policy approach 1
Impacts of the Macroeconomic Policy Approach (1)
  • Linkages with Social Impacts
    • No significant impact on unemployment, income distribution and poverty
    • Increase in social security expenditure
    • Increase in health expenditure - HIV/AIDS
    • The EPWP - national initiative to create temporary jobs
    • increase the uptake of candidates and participants in other skills development programme
    • Improve investment in technical colleges
    • Facilitate completion of immigration regulations
impacts of the macroeconomic policy approach 2
Impacts of the Macroeconomic Policy Approach (2)
  • Institutional and legal reforms
    • Labour market reforms, enhancement of job skills
    • The introduction of a MTEF
    • PFMA was passed -establishes strict transparency
    • Transformation of the health system
    • Most departments were strengthened to focus on regional and continental agenda, i.e. SADC, NEPAD and AU
other issues that impact on sa s ri process in sadc
Other Issues that impact on SA’s RI process in SADC
  • The accession to the WTO
  • South Africa has a trade agreement with the EU
  • SA’s SACU membership
  • Investment in the region
  • Capacity constraints, immigration laws and relatively high wages
  • Relatively developed manufacturing sector
  • Infrastructure (transport, financial and telecommunications)
  • Diplomatic and peace-keeping role
conclusions recommendations 1
Conclusions / Recommendations (1)
  • Main Constraints
    • Lack of Human Capital,
    • HIV/AIDS,
    • Inadequate infrastructure,
    • Low Savings rates
  • Critical Policy Issues
    • Investment in education to close the skills gap that exists in the economy
    • Upgrade of personnel, facilities and management, especially with the ARV roll out.
    • Addressing rigidities, skills deficiencies and relatively high costs of labour
    • Strengthen skills development programs
conclusions recommendations 2
Conclusions / Recommendations (2)
  • Effects on Policy Approach
    • Long term growth
    • Regional spillover effects
    • Drive harmonization with SADC policies
    • employment of non-citizens, labour migration
  • Social Impact Consideration
    • business, labour, government and community representatives are involved.
    • consensus on issues of social and economic policy
    • engages in research and information
conclusions recommendations 3
Conclusions / Recommendations (3)
  • General Recommendations
    • Movement of labour in the region
    • Facilitate harmonisation of trade codes
    • The need for adjustment of SADC trade, economic and environmental policies
    • Efficient institutional framework/institutional capacity
    • Possibility of SADC manufacturing hub
    • Political will
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