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Is Lesotho ready to join a common market?


Hlasoa Molapo

IT has long been the aim of the Southern African Development Community (SADC) to create a unified economic climate within the region. Inspiration for this vision has been drawn from regions such as the European Union, where all countries within the bloc have unified their economies and given common economic rights to their citizens. These rights range from free movement of goods, persons and services as envisioned by the Treaty for the Functioning of the European Union (TFEU). This arrangement has several economic advantages for persons and businesses in any area within Europe as it facilitates convenient trade from one country to another without any barriers to trade. This is known as a common market.

A common market is usually conceived from one stage to the next, beginning with aspects of the economic climate that may need urgent attention, with a view to unifying the entire region. SADC had a vision that by 2015, all of its members would constitute a common market where, as envisaged in the European Community (EC), goods, services and even persons or establishments would move freely within the region, without any tariffs, quotas, or need for citizenship.

The method of achieving this stage of economic unity in Southern Africa has been a step by step approach beginning with the free trade area created within the SADC region in 2008. This was created to make way for free movement of goods within the SADC region, where there would be no tariffs charged on imports from participating members. Therefore, if any goods are imported into Lesotho from any SADC country, or exported from Lesotho to such a country, then there would be no tariffs paid for such goods when crossing borders within the SADC region.

However, there is a question mark as to whether there will be a swift change from the current SADC free trade area to the envisioned common market, given the differing policies within each SADC country. Will it be easy to harmonize policies from different countries into one, especially in the short space of time given? Currently, the major sector to be harmonized within the SADC region is finance and investment. The legal framework for harmonizing finance and investment policies within the SADC region is the SADC Finance and Investment Protocol. This helps member states of SADC to achieve the preparation, co-operation and harmonization needed for financial integration. If realized to its full potential, SADC believes that the Financial Investment Protocol will ensure economic stability and facilitate a vibrant trading environment within the region.

But the real question is whether the umbrella term “finance and investment” would do justice to all the economic aspects that need to be addressed before integrating an entire region’s economy. When looking at Lesotho’s progress in meeting the target set by the Finance and Investment Protocol, it is found that strides are made in areas solely concerned with finance and investment. These include co-operation in taxation and related matters, co operation and coordination in the area of banking and in respect of development finance institutions. A common market not only includes areas for finance and investment, but also aspects that affect people, their movement and human rights in general. The ideal common market to look to is  the EC, but it was not build in only a couple of years. It was gradually created through various agreements which dealt with various sectors with a bearing on member states’ economies. The road to establishing the EC began in 1952 through establishment of the  European Coal and Steel Community. This agreement was aimed at lifting restrictions on trade in coal and steel between participating members. It expired in 2002. The members that formed the Coal and Steel Community also formed the European Atomic Energy Treaty in 1957, whose aim was to establish co-operation on the economic and peaceful development of atomic energy.

During the formation of the EC, not only were member states concerned about financial and investment opportunities within Europe, but also the people within the region and their freedom of movement, as well as police co-operation , judicial co-operation in criminal matters and the prevention and combating of racism and xenophobia. All these aspects were contained in the Treaty on European Union or the Maastricht Treaty. In order to ensure a commitment to the deadline for achievement of the common market, which was 1992, the member states of the EC further signed The Single European Act in 1986. Voting in the EC as well as membership to the European Commission and Parliament are ensured through the Treaty of Nice.

It is evident that there is a shortcoming in SADC’s method of development into a common market. The methods set to achieve the agreement are too short term and may need revision in order to ensure a fully fledged common market that caters for all stakeholders. SADC has identified three key stakeholders in the transition to a common market, which are the SADC Secretariat, SADC member states and representatives of the private sector. Each sector needs to fully graduate to attain a relationship with other similar sectors within the SADC region. In order to achieve this, a gradual method of transitioning into a common market is required, just as in the case of the EC where various treaties were signed in order for countries to have a common understanding on their national policies. Further an essential agreement should be made in pursuit of a common market; one containing a commitment by member states to meet a deadline for the achievement of a common market. In short, it is still too soon for SADC to create a common market, given the various elements required to harmonize an entire region’s national policies.

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