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South Africa’s role in entrenching integrated economies in Africa compromised

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Picture: Shayne Robinson/SAPA – Nigeria’s former President Olusegun Obasanjo and SA’s former President Thabo Mbeki at the opening of the New Partnership for Africa’s Development (Nepad) stakeholders dialogue in Sandton. Initiated by Mbeki, Nepad championed three key elements – to boost trade, attract Foreign Direct Investments (FDIs) and reduce poverty. Such organs are intended to provide African solutions for African problems, yet the reluctance of African leaders to fully commit to these solutions undermines the efforts to consolidate economic development on the Continent, the writers say.

By Brilliant Ngobeni and Keaobaka Tsholo

South Africa is one of the three biggest economies in Africa, the other two being Nigeria and Egypt. This has positioned South Africa to be considered a “big brother” to other African states.

However, with the ever-increasing inflation, loadshedding and socio-economic issues pertaining to high unemployment, poverty and crime, South Africa’s role as a big brother in Africa is compromised in terms of stabilising Africa’s economic development.

The African Continental Free Trade agreement (AfCFTA) that was established on March 21, 2018, is a successor to various free trade agreements such as the Lagos Plan of Action, which aimed to develop Africa’s economy and establish Regional Economic Communities (RECs).

The vision of an integrated Africa dates to the independence era, the first attempt of realising this vision was in 1963 when the Organisation of African Unity (OAU) was formed. In 1991, the Abuja Treaty was signed to further realise this dream of an integrated Africa where states were encouraged to consolidate their economies into RECs. The process of economic integration is initiated by an establishment of a customs system followed by a common market system and a monetary union, therefore, ensuing an economically integrated system.

As part of the African Union’s Agenda 2063, the AfCTA forms part of the AU’s long-term strategy to make Africa into a global powerhouse through economic development. Regional integration removes trade barriers among countries in a region or subregions. Owing to this agreement, South Africa has been able to trade in other Southern African Development Community (SADC) countries such as Botswana, Zambia, and Mozambique.

South African companies such as MTN and Shoprite can trade freely in these mentioned countries, inter alia. This is because of South Africa’s ascension to a hegemonic role on the Continent using soft power. Further, the South African electricity entity, Eskom Holdings, exports electricity to Botswana, Zambia, Namibia, Ghana, Zimbabwe, and Uganda. From these countries Zambia has recently experienced up to eight hours of loadshedding, which also affected the export of poultry from South Africa to Zambia. The introduction of loadshedding is affecting businesses not only in South Africa but the SADC region as well. It also affects businesses in the Economic Communities, thereby, having negative impacts for the trade agreement.

For South Africa to play a resounding role in Africa’s economic development, it first needs to get its house in order. This goes to say, South Africa cannot help Africa if it fails to first minimise its socio-economic woes internally.

On February 24, 2023, South Africa, and another big economy (Nigeria), was put on a denoting list of nations with “shortcomings in tackling illicit financial flows, a move that scars their international reputations and may raise costs for banks and asset managers”, Bloomberg reported.

There is a saying “charity begins at home” – South Africa is unable to reach its full potential in helping the rest of Africa develop economically due to the compromising factors the country faces today. Part of the AfCTA mandate is to contribute to establishing regional value chains in Africa by enabling investments and job creation. Statistics South Africa shows that in the third quarter of 2022, South Africa had a 32.9 percent unemployment rate and over 66 percent of youth unemployment. Economists Saifaddin Galal (2022) stated that,

As of the third quarter of 2022, the majority of the unemployed individuals in South Africa had an education level below matric (Grade 12). Unemployed individuals who have finished their matric year represented 38 percent, while graduates made up almost three percent of the total unemployed.

Moreover, the patronage that encapsulates corruption in government structures and the mismanagement of public funds puts investors at bay. The investment rates have significantly dropped not only in other African states turmoiled with similar or worse socio-economic issues, but South Africa as well because we are indifferent to how the lack of integrity, selflessness and bona fides, rots leaders everywhere.

Initiated by South African former President Thabo Mbeki, the New Partnership for Africa’s Development (NEPAD) is an economic programme that was created to strategise the objectives of the trade agreement based on pure Pan-African thought, solutions, and approaches. The development programme outlines the three key elements, which are to boost trade, attract Foreign Direct Investments (FDIs) and reduce poverty.

In the past, South Africa has been used as a gateway investment region for Multi-National Corporations (MNCs) such as Woolworths whose headquarters are in Australia and has expanded to Zambia and Botswana.

These treaties and agreement are attempts to provide African solutions for African problems, essentially. Conversely, the reluctance from African leaders to fully commit to these solutions undermines the efforts to consolidate economic development on the Continent. The correlating weakness that other member states have in common is having constant political, economic and social instabilities in their backyards.

The “big brother” phenomenon cannot be fully effective because of this, and South Africa’s status quo posits this. In the growing neoliberal political and economic climate, the Pan-African approach is less implemented. Pan-Africanism in South Africa has been a fluctuating term used in political settings, especially en route to democracy.

However, the liberal democracy that South Africa chose to subscribe came with terms and conditions for Pan-Africanism. The implementation of neoliberal policies in pursuit of Pan-African solutions in South Africa is contradictory and has no effectiveness.

The drenching socio-economic woes with excruciating stains of corruption and patronage in South Africa are proof of it. Africa is rich in natural resources and should not be desperate for FDIs to boost the GDP and ultimately develop the economy. The balance of power from these FDI policies is uneven, and as if that is not unreasonable enough, the FDIs are not effectively implemented.

The exploitative nature of the West – and Eastern global powers – and the lack of good governance of South African politicians impedes the development of the country albeit fertile conditions for economic growth.

Consequently, this goes to state that the lack of good governance and loadshedding threaten asset drain and FDIs, thereby affecting the competitive Index of the country and ultimately the African economy at large. The unavailability of cheap and reliable electricity hinders industrialisation and development of the SADC region due to the crisis the poster child is facing. A study conducted by the National Association of Automotive Competent and Allied Manufacturers reported that the prolonged loadshedding the country is facing affects the turnover of manufacturing.

The severe power cuts put South Africa in a compromising situation with investment, infrastructure, and continental trade. The tough operating conditions of loadshedding have led multinational telecommunication company MTN whose headquarters are in South Africa to grow the stakes in Nigeria and Ghana, which came second and third to South Africa in more stable situations.

Ideologically, morally and consciously, South Africa needs to seriously figure out what she stands for, especially in the third decade of the 21st century going forward. The growing tensions from affected civilians of this status quo is erupting very fast.

This should also hint to us that this eruption ignites reactions such as xenophobia (a constant concern in Africa) which are misdirected solutions from deep psychological imprints of political indoctrination such as nationalism and ethnicity.

This eruption is a culmination of not only the present, but also the unfulfilled promises of what democracy would be like for people who were previously economically and politically marginalised in the most heinous way possible. As it stands, South Africa is betraying its promises to redress atrocities of the past colonial and apartheid eras in the country.

The standard of living for the majority of South Africans is contradicted by reality and what was promised at the dawn of democracy. If it continues to do that, South Africa risks not having the Continent’s back when push comes to shove because its own back is naked.

As states relate to each other through foreign policy, South Africa needs to strengthen its domestic policy (which foreign policy is an extension of in the international plateau). This needs to be done in prioritising a bottom-up approach using agents of political socialisation to understand genuine problems in the country by its societies from different backgrounds. Problems are only problems because they have solutions. South Africa should understand that all the political, economic, and social decisions she takes affects South Africans (Africans too) one way or another.

It is better that it affects the majority of South Africans who need it most in the best positive and progressive way because the solutions are with the people all the time. Investing in good education, health, security, and utilities for the general public has always proven to work out better for the entirety of the state’s status internationally.

Brilliant Ngobeni is a junior researcher at the Institute for Pan African Thought and Conversation – University of Johannesburg. Keaobaka Tsholo is a junior researcher at the Institute Pan African for Thought and Conversation – University of Johannesburg.