SADC - Macroeconomic Policy Convergence

Important milestones in terms of strengthening SADC’s regional integration agenda include macroeconomic convergence. The Memorandum of Understanding on Macroeconomic Convergence that was signed in 2002, and is annexed to the Protocol on Finance and Investment signed in 2006, stipulates that member States should converge and cooperate on economic policies to promote stability and economic growth[1]. Furthermore, the SADC Protocol on Finance and Investment came into force in 2010 to foster harmonisation of the financial and investment policies of member States in order to make them consistent with objectives of SADC and ensure that any changes to financial and investment policies in one member State do not necessitate undesirable adjustments in other member States’ investment policies and laws. [2]

In the RISDP, SADC member States agree to restrict inflation to stable levels, maintain prudent fiscal stances with minimal deficits, maintain sustainable balances in current accounts, and minimize market distortions. More precisely, SADC has set itself macroeconomic convergence benchmarks of 3 per cent inflation rate by 2018, a budget balance deficit of 3 per cent as an anchor within a band of 1 per cent of GDP, public debt less than 60 per cent of GDP, the imports cover to be less than 6 months and a GDP level not less than 7 per cent.[3] These benchmarks are used to assess macroeconomic convergence for member States. Assessments made for 2010–2013 indicated that member States were slightly below the GDP growth level of 7 per cent, apart from that, most member States were aligned with the set macroeconomic targets.[4] In this context, the SADC Secretariat created a Macroeconomic Surveillance and Performance Unit to support implementation of the RISDP through provision of policy guidance and advice to member States in the areas of macroeconomic policy. In specific, to plan, facilitate, coordinate and monitor macroeconomic policies, including monetary and fiscal policies, with a view to promote economic liberalization and development.