Major challenges for regional economic integration

Addressing the G20 leadership summit in South Korea last week, South Africa’s president Jacob Zuma strongly punted Africa as “the third-fastest growing region after China and India". Saying there is still much to do for the continent to reach its full potential he pointed out that regional economic integration “is the lifeblood for investment and trade in Africa". In its own domestic region of Southern Africa, however, major challenges are at hand for the South African government.

Two of the members of the Southern African Customs Union (SACU), Swaziland and Lesotho, are on the verge of becoming failed states. In global terms they are both tiny – Swaziland has a populatioin of only 1.2 million and Lesotho 2 million – but their apparent imminent collapse could prove extremely disruptive to South Africa, SACU (the world’s oldest surviving customs union) and the wider Southern African Development  Community (SADC) --  SA, Angola, Botswana, Democratic Republic of the Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Tanzania, Zambia, Zimbabwe and Madagascar.

Seychelles  also rejoined SADC in 2008. It left the Community in July 2004 after it originally becoming a member in 1997. Madagascar is presently subjected to suspension of its membership following the coup d'état led by the former mayor of Antananarivo Andry Rajoelina.

South Africa as the dominant power of the region, the largest economy in Africa, with Lesotho being landlocked by it and Swaziland largely surrounded by it, bar a short border with Mozambique, SA will have to bear the brunt of the disruption should these two countries collapse.

While there are talks afoot of a restructuring of the SACU, there is an escalation in reports of economic decay in these two countries. There is also increasing speculation that these two countries will struggle to continue to exist as viable states if the current trend continues. Swaziland is especially gripped by a grim struggle for survival.

In an interesting development from within both countries, there have been suggestions and demands in both that they should be incorporated into South Africa. While both are kingdoms, with Swaziland the world’s oldest surviving absolute monarchy, it is not a foreign concept for SA to accommodate kingdoms within its boarders, with the Zulu kingdom most prominent  and  sharing a genetic pool, border, and cultural ties with Swaziland. President Zuma himself has close, including the royal house, ties with Swaziland.

Coupled with the socio-economic problems in Mozambique, which recently led to riots, the fact that the Swazi government is by its own acknowledgement under severe financial pressure, the fact that both are heavily reliant on revenue from the SACU – in the case of Swaziland to the tune of 60% of its budget – on which the global meltdown has significantly impacted and growing political resistance to the exploitive feudal system facilitating a lavish life style by  king Mswati in Swaziland while the majority of his subjects struggle to survive, a bleak picture is increasingly emerging.

Swaziland is also finding it more and more difficult to get international assistance to keep it afloat. When it recently went knocking on the doors of the International Monetary Fund (IMF) and World Bank it came under severe pressure to curtail government spending while it is running an unsustainable budget deficit in the order of at least 13%. An initial submission by the Swazi government was rejected by the two institutions. The EU has, in the face of its own austerity measures, also rejected a request from the Swazi-government to finance the shortfall on its budget. There is growing reluctance by foreign donors to continue providing funds that are not earmarked for specific , closely monitored, programmes.

The demand that Swaziland must reduce its civil service and the IMF’s insistence that the entire 4.5% recent pay increase for civil servants should be reversed, could prove politically and from a social stability perspective extremely difficult if not impossible to implement. At the same time it is said that the Swazi government can soon run out of money to pay those salaries anyway, unless it can lay its hands on assistance of about $70 million or almost R500 million.

It is estimated that around 70% of  the country’s revenue comes from the SACU. During the 2009 financial year, SA contributed 98% (or R45 billion) to SACU’s revenue pool. With its own growing  social demands and regular service delivery protests, the SA government might find it increasingly difficult to justify large amounts of money going to Swaziland, which by many accounts gets squandered by a spendthrift king and his entourage.

In the meantime there is ongoing support from the SA trade union federation Cosatu to the Swaziland Federation of Trade Unions and the recently established Swaziland Democracy Campaign, an umbrella group set up to press for a peaceful transition to multiparty democracy.

Both the SA Communist Party  and the ANC’s Youth League  have declared their support for the demand to expose and isolate the Swaziland monarchist dictatorship on an international level. Sue van der Merwe, chairperson of the ANC committee on international relations also recently said that more and more leading ANC members had strong feelings about the deteriorating human situation in the kingdom and that the ANC would  engage in a full discussion on the situation.

For a number of reasons, most importantly the potential influx of Swazis into the country should Swaziland's economy collapse, the SA government cannot ignore developments in the kingdom. However  without careful consideration of the impact it might have on both Swaziland and Lesotho, with Botswana not far behind them it cannot push through reforms of the SACU.

At the same time it gives the SA government a strong lever to exert pressure for political an social reform.