By Timo Shihepo
Windhoek - The Southern African Development Community (SADC) Secretariat faces a daunting task in internationalising the SADC Regional Development Fund as member states continue to slow down the process aimed at establishing one big SADC regional fund by 2020.
The SADC Regional Development Fund is a financial mechanism intended to mobilise resources from member states, the private sector and development partners to finance programmes and projects to deepen regional integration.
The fund seeks to have a start-up capital of R16.8 billion of which R8.5 billion is to be sourced from the member states’ budgets, while R6.2 billion is expected from the private sector, and the remaining R2 billion from international cooperating partners (ICPs). This means that member states will own 51% shares in the facility, 37% for the private sector and 14% for the ICPs.
Despite this agreement, however, some member states are not happy with the proposed format. The other issue delaying the process is also the negotiations regarding the country that is going to host the fund. Namibia is even accused of totally opposing the idea of establishing a regional fund.
“It is not true that we don’t want the fund. That’s a big lie because the SADC Regional Development Fund is part of the SADC Treaty and we cannot oppose something in the treaty. What we are saying is that we are not happy with how the money is to be sourced,” Namibia’s finance minister Calle Schlettwein told The Southern Times without elaborating.
Information seen by The Southern Times shows that only seven member states so far have signed the agreement. These are Angola, THE Democratic Republic of Congo (DRC), eSwatini, Lesotho, Mozambique, Tanzania and Mozambique, although none of the countries has yet submitted instruments of ratification to the SADC Secretariat.
During the meeting of Ministers of Finance held in July 2018 in Johannesburg, South Africa, the ministers observed that since their last meeting in July 2017, the status of the signature and ratification of the of the agreement on the operationalisation of the fund has not changed.
Only Angola, Mozambique and Tanzania are thought to be at an advanced stage to complete internal processes to ratify the agreement on the operationalisation of the fund.
A two-thirds majority is required to sign and ratify the agreement for it to enter into force.
In order to speed up the process, the SADC Secretariat roped in the African Development Bank (AfDB) for the latter to help facilitate the operationalisation of the fund. A meeting held between the two institutions culminated in the signing of an agreement outlining the technical support to be provided to the SADC Secretariat with regard to the operationalisation of the fund.
Phase one will involve the development and agreement on a plan to encourage and support SADC member states in signing and ratifying the agreement. It will review the current status of operationalisation of the fund, including an analysis of current country-specific obstacles to signature and ratification of the agreement, underlining why it is imperative for SADC member states to finalise the process of operationalising the fund.
Phase two will focus on the operationalisation of financing mechanisms of bankable projects from both infrastructure and industrial sectors.
The SADC Council of Ministers has directed the Secretariat to assess the reasons for the slow progress and review the roadmap towards the operationalisation of the SADC Regional Development Fund and provide realistic timelines.
It also urged member states that have not signed the agreement to do so and those that have signed the agreement to ratify it in order for member states to make their first subscriptions.