WINDHOEK – Economic performance in the Southern African Customs Union (SACU) remains subdued, with most countries projected to grow by between 0.5 percent and 4.2 percent in 2019. However, Finance Minister Calle Schlettwein yesterday cautioned that some SACU member states are expected to experience contraction, largely due to weak domestic demand, sluggish investment and declining exports.
Speaking during the opening of the 38th Meeting of SACU Council of Ministers in Windhoek, Schlettwein noted that the gathering takes place at a time when the global economy remains weak, with the outlook having been revised by the IMF in its October 2019 World Economic Outlook.
“The forecast for 2019 is 3.0 percent, which is the lowest since 2008/09. Even though growth is expected to improve to 3.4 percent in 2020, such optimism is at risk due to various factors. Some of these risks include, inter alia, the impact of the ongoing trade spat between the US and China on global trade and financial markets, the geopolitical tensions mainly in the Middle East region, and policy uncertainty across many countries, including Brexit,” Schlettwein noted.
He continued that while economic performance in Sub-Saharan Africa is projected at 3.2 percent in 2019, such relatively high growth is not broadly shared across country groups in the sub-region.
Said Schlettwein: “Growth for oil and other non-oil commodity producers remains subdued, as commodity prices have not been the most robust in recent months, given the weak global demand. Growth is projected to remain strong in non-resource intensive countries but slower in resource-intensive countries at 2½ percent”.
According to finance minister, it is crucial for SACU to continue with the implementation of measures or programs that seek to promote domestic resilience and long-term inclusive economic growth, particularly in light of the challenging economic environment.
“I noted with admiration that our national budgets and national development plans frontload the implementation of policy intervention measures and structural policy reforms to support inclusive and sustainable growth,” Schlettwein added.
On the trade front, Schlettwein said he is pleased to note that the inaugural meeting of the African Continental Free Trade Area (AfCFTA) Council of Ministers responsible for Trade was held on 24 and 25 October 2019 in Addis Ababa, Ethiopia. This, he stated, signalled a key milestone towards the operationalisation of AfCFTA, which will provide the business community with an increase in markets across the continent.
During the opening remarks for yesterday’s meeting, Schlettwein congratulated SACU Trade Ministers for the successful negotiations with the recently concluded economic partnership agreement between and amongst United Kingdom, SACU member states and Mozambique.
“This agreement will ensure there is continuity in terms of trade between the UK and SACU, and avert potential disruptions of trade with the SACU region. In this regard, I commend you, honourable ministers, for providing the political leadership and support to this process. I urge you to continue providing such collective leadership for SACU to be ready for the commencement of the implementation,” said Schlettwein.
With respect to the implementation of the ministerial work programme, the Extra-Ordinary Summit of Heads of States and Government that was planned for November 2018 could not materialise due to other parallel engagements and the need to undertake bilateral consultations among the heads of states and government. The non-conclusion of the bilateral consultations has delayed the convening of the 7th Summit that was initially planned for April 2019.
Said Schlettwein: “Considering the above developments, there has been only limited activities taking place under the ministerial work programme. There is, therefore, an urgency to create the momentum to advance the work of the task teams, noting the need to conclude the set of work program activities that was extended to December 2019. I, therefore, invite the council to deliberate on this matter and to provide the required guidance on the way forward”.
The agenda for yesterday’s meeting called on the SACU council of ministers to consider the report of the 54th Meeting of the Commission, the Report of the Executive Secretary, as well as issues related to Finance and Trade.
The participating ministers will also consider and approve the member states’ revenue shares for the 2020/21 financial year, and to further consider human resource-related matters and an update on the consultations regarding the EU-SACU poultry safeguard measure in a restricted session.