Zimbabwe is ranked a distant 14 out of 15 South African Development Community (SADC) nations and is one of the countries seriously lagging behind in the country-level implementation of the Finance and Investment Protocol (FIP), latest findings of a baseline study carried out by Genesis Analysis have discovered.
The baseline study whose purpose was to document the status of FIP implementation across member states and to design a measurement framework of indicators to measure progress in the implementation of FIP among other objectives, concluded that generally, there has been good progress in most countries with respect to the country-level commitments, with an average of 54 % of the country level FIP commitments having been implemented across the region, while 8.4 % of commitments are in progress and 21.4 % commitments are still unachieved.
The Protocol on Finance and Investment is one of the protocols entered into by the SADC member states to give legal and practical effect to their commitments under the SADC Treaty.
Seven countries which include South Africa, Mauritius, Zambia, Namibia, Botswana and Tanzania have implemented more than half of the country’s level commitments. South Africa tops the list of those countries that have achieved more than 50 % percent of the country level commitments with 77.1 % compliance score while the Democratic Republic of the Congo and Zimbabwe are last and second from last respectively at 30 % and 40.4 %.
In Zimbabwe, the baseline study identified a number of deficiencies that were constraining the effective implementation of FIP in the country and chief among them has been the silo implementation of the Protocol, a characteristic common not only in Zimbabwe but other member states as well.
A comparative analysis of the country level vs regional commitments showed that although progress has been made beyond the halfway mark for seven countries only 14.3 % of regional commitments have been achieved.
The study said comparing the level of achievement of country level commitments (preparation and cooperation) to regional commitments (harmonization); it is obvious that increased efforts need to be made at the regional level in order to further implement financial integration in SADC.
“It is clear that the pace of overall FIP implementation is hindered by regional level commitments more than country level commitments,” the baseline study established.
The FIP has two overarching objectives which are to improve the investment climate in each member state and thus catalyse foreign and international investment flows and to enhance cooperation, coordination, and harmonization in domestic financial sectors in the region.
It (FIP) is supported by the content of the SADC Regional Indicative Strategic Plan which articulates the broader level goals that underpin the FIP including full regional integration, the formation of a monetary union and the adoption of a single currency.
The FIP was signed in August 2006 by 14 SADC member states and was ratified by a two thirds majority in 2010 and came into force on April 2010. The SADC Secretariat is facilitating the implementation of the FIP by member states while member states are beginning the initial stages of domestication.
The baseline study said while 50 % of the SADC member states have achieved at least of the country–level commitments and some of those have reached even higher levels including reaching levels of international best practices, the progress should not be overstated. This is so because the FIP has been in the process of implementation for a long time, and that many of the achieved commitments relate only to cooperation which is easier to achieve.
“Where compliance has been made, it is not driven by compliance with FIP. During this early stage of national preparatory activities reforms have been driven primarily by direct national interests, in response to exogenous shocks or in compliance with strong international standards. Traction is noticeable where there are clear international standards which are in the national interests to adopt and where the sanction for no-compliance with international standards is severe,” said Genesis Analysis.
In Zimbabwe, all hope is not lost, as the country has come up with an FIP coordination structure for effective implementation of the protocol after a long time of implementing the FIP in silos. The coordination structure is aimed at fostering ownership and involvement amongst all key stakeholders so that they drive the overall FIP agenda in Zimbabwe.
Speaking at a recent SADC FIP awareness meeting which formally introduced the country’s national FIP coordination structures, Acting Secretary in the Ministry of Finance Judith Madzorera said the entering into force of the protocol required that member states develop effective coordination mechanisms involving all critical stakeholders that include government, the private sector, labour unions amongst others.
A two tier coordination structure has been adopted that takes into account the mandates of various involved stakeholders and their relevance to the provisions of FIP. At the apex, is a National FIP Coordinating Committee (NFCC) whose members include representatives of subcommittees. The second tier of the mechanism comprises national subcommittees which will be organized around sets of related annexes. The subcommittees will report to the NFCC and the latter will, in turn, table its reports and recommendations to the National FIP Contact Point in the Ministry of Finance, who will report to the SADC Secretariat.
“Beyond this meeting, a lot of work still needs to be done in the areas of developing communication strategy, prioritization and roadmap in the implementation of FIP, for which SADC support will be critical. The prioritization is important to assist member states in decision making and provide guidance in the ranking of FIP indicators,” Madzorera added.
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