Deepening integration in sadc macroeconomic policies and their impact
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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

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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 1

Target Indicators on Macroeconomic Stability and Convergence (1)


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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