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INITIATIVE FOR SOUTHERN AFRICA
Activity Data Sheet
>> AFR Regional Overview >> ISA Overview PROGRAM: Initiative for Southern Africa
TITLE AND NUMBER: A More Integrated Regional Market, 690-002
STATUS: Continuing
PLANNED FY 2001 OBLIGATION AND FUNDING SOURCE: $9,000,000 DA
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $9,000,000 DA
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2004Summary: USAID's program enhances southern Africa's prospects for economic growth by supporting removal of trade barriers. This strategic objective supports the establishment of the Southern Africa Development Community (SADC) free trade area, as well as the improvement of telecommunications, transport and electric power infrastructure efficiency among the countries in the region. Historically, the region's economic potential has been hampered with each country operating as a separate fragmented market. An integrated regional market will allow for economies of scale and lower infrastructure costs through shared systems, as well as the freer movement of goods and services, all of which will boost economic activity, employment and incomes. In FY 2001 USAID will use $9,000,000 of Economic Growth funds from the Development Assistance account to support this program.
Key Results: During FY 2000 the regional market integration program contributed to several key improvements including: 1) the launching of the regional free trade area; 2) further import tariff reductions among countries in the region; 3) support for private sector input into the debate on trade policy reform; 4) improvement in telecommunications services; 5) the establishment of a coordination center at the Southern African Power Pool to promote short-term electricity trade in the region; 6) policy changes in road and rail transport that will allow the private sector to compete with public sector monopolies in these areas, thus creating a more competitive environment in the region; and 7) further progress in establishing a region-wide rail cargo tracking system.
As a result of USAID direct support, the Southern African Development Community launched its free trade area in September 2000. This new trade regime will be fully implemented over the next several years. USAID's continuing commitment to supporting both governments and the private sector in their deliberations and analysis of the implications of the new trade arrangements has been instrumental in reaching agreement among all parties. The initial impact of the free trade area is evident in tariff reductions which took place in 2000. Botswana, Lesotho, Mauritius, South Africa, and Swaziland have already submitted the required documentation and have effectively begun operating as a free trade area. Further increases in trade among the SADC members are expected in the next fiscal year.
The establishment of a short-term, electricity trading market in southern Africa was also a key development in FY 2000. USAID support was essential as the Southern African Power Pool's (SAPP) coordination center began operations and developed a framework and rules for an electricity trading system. As a result of USAID's collaboration in the legal, financial, and information aspects of launching this center, the short-term electricity market will begin actual trading of electricity by mid-2001. This signals the transition from cooperation to competitive electricity markets. Progressive upgrades, thereafter, will ultimately result in a real-time electricity spot market for the region.
Performance and Prospects: Based on the overall progress southern Africa is making toward an integrated regional market and the emergence of a free trade area, long-term prospects for this objective are excellent. USAID supports southern Africa's market integration by helping to develop and implement trade, finance and investment policies, as well as regional infrastructure reforms that promote the free flow of goods and services across national borders. USAID will continue to support integration by encouraging public-private sector partnerships in the development and maintenance of regional infrastructures.
USAID will extend further support to SADC to implement its regional trade protocol following the establishment of free trade area last year. USAID will work both with regional organizations and individual southern African countries to advance the concrete steps and changes necessary under these key trade agreements. In addition, USAID will assist southern Africans in their efforts to develop a more effective finance and investment sector through a regional framework. This type of agreement will facilitate the investment and movement of funds across national borders in the region. Support for increased investment in the region through continued funding of the Southern Africa Enterprise Development Fund will continue. The Fund makes loans to emerging, medium-size enterprises to enhance economic development in the region.
USAID assistance to the Southern African Power Pool coordination center will continue to develop, test and put in operation a real-time electricity market in the region. This will allow regional electricity trading to shift from the current ad-hoc arrangements to market-driven agreements. USAID will also continue working with governments in the region to promote power sector reforms that will advocate market-oriented business operations and enable the entry of independent producers into the electricity industry in the region.
FY 2002 activities will focus on areas critical to the region's economic integration and growth, such as implementation of a regional free trade area, and development of a finance and investment framework for the region to facilitate foreign investment. The Southern Africa Enterprise Development Fund will continue to address the financial constraints faced by previously disadvantaged enterprises in the region, although no additional monies are requested for the Fund.
Possible Adjustments to Plans: None.
Other Donor Programs: The World Bank's Cross-Border Initiative and policy reforms supported by the International Monetary Fund, the African Development Bank and the European Union (E.U.) complement USAID efforts to reduce trade barriers in the region. In cooperation with USAID, the E.U. is also assisting SADC with the implementation of its key frameworks for trade, finance and investment. The United Kingdom and the World Bank are active in promoting power sector reforms throughout the region. The E.U. and the Nordic countries provide support to SADC for infrastructure policy reform. Japan is active in road construction and rehabilitation.
Principal Contractors, Grantees or Agencies: Key U.S. implementing organizations are: Nathan Associates; Price Waterhouse Coopers; and Science Applications International Corporation. Other partners and grantees include: the Southern African Enterprise Development Fund, the International Telecommunications Union, the Telecommunication Regulators Association of Southern Africa, and the Common Market for Eastern and Southern Africa.
FY 2002 Performance Tables
Performance Measures:
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY00 (Plan) FY01 (Plan) FY02 (Plan) Indicator 1: Extent of telecommunications service provision 3.63 4.13 4.47 4.9 4.75 5.22 5.74 Indicator 2: Value of Intra-SADC Trade 9,179 9,732 9375 NA 9,465 9,938 10,435 Indicator 3: Costs of transporting imports - Durban to Ndola 3,100 2898 2,521 2592 2,518 2,266 2,040 Indicator 4: Costs of transporting imports - Beira to Ndola 2676 2520 2475 2142 2,174 1,956 1,761 Indicator Information:
Indicator Level (S) or (IR) Unit of Measure Source Indicator Description Indicator 1: IR Tele-density. Measured as the average number of lines per 100 inhabitants. Year-end data. Giersing-Rose Consultancy Reports. Data in reports taken from the International Telecommunications Union publication of global telecommunications indicators and from USTDA reports. Tele-density is a standard measurement used in the telecommunications industry to measure the extent of development and the reach of a telecommunications network. It measures the density of the service relative to the population. Projections are based on a 10% annual growth rate in tele-density, which is considered reasonable given the significant impact the introduction of cellular phones has, and based on the expected impact of more liberal telecommunications legislation. Indicator 2: IR US$ million (CY) General sources are statistics offices, customs and revenue authorities, SADC sector and consultancy reports. 1997 data based on 1998 consultancy report by Imani Development (Pvt.) Ltd. of Zimbabwe and on own calculations. 1998 data based on 1999 consultancy report by Botswana Institute of Development Policy Analysis Total exports (from each of the SADC countries to the other eleven). 1995 is the base year. Figures for 1996 and 1997 are adjusted for inflation - using average GDP deflators. In 1998, data are deflated with a trade weighted GDP deflator. PROJECTIONS/TARGETS are guided by assumptions with regards real GDP growth and the beneficial impact of trade liberalization; and are given as a real increase of 2% per year through 1999 and 5% thereafter. These projections could still be refined further as more data becomes available Indicator 3: IR US$ deflated prices Giersing Rose Subcontractor Reports with quotations from railway and major road transporters Minimum cost (in US$ by either road or rail) of transportation for an inbound full twelve-meter container. The least of the quotes is taken as the cost of transportation. Cost is taken as the most important long-term indicator of operational efficiency. The two routes shown were selected on the grounds that they currently represent the backbone of the SADC transport system with each traversing three or four key countries in intra-SADC trade. *The data have been deflated using a rough 10% trade-weighted regional inflation estimate Indicator 4: IR US$ deflated prices Giersing Rose Subcontractor Reports with quotations from railway and major road transporters Minimum cost (in US$ by either road or rail) of transportation for an inbound full twelve-meter container. The least of the quotes is taken as the cost of transportation. Cost is taken as the most important long-term indicator of operational efficiency. The two routes shown were selected on the grounds that they currently represent the backbone of the SADC transport system with each traversing three or four key countries in intra-SADC trade. *The data have been deflated using a rough 10% trade-weighted regional inflation estimate
U.S. Financing
(In thousands of dollars)
Obligations Expenditures Unliquidated Through September 30, 1999 74,289 DA 15,316 DA 58,973 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 6,946 DFA 6,419 DFA 527 DFA Fiscal Year 2000 9,103 DA 8,544 DA 0 CSD 0 CSD 0 ESF 0 ESF 0 SEED 0 SEED 0 FSA 0 FSA 0 DFA 435 DFA Through September 30, 2000 83,392 DA 23,860 DA 59,532 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 6,946 DFA 6,854 DFA 92 DFA Prior Year Unobligated Funds 0 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Planned Fiscal Year 2001 NOA 9,000 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Total Planned Fiscal Year 2001 9,000 DA 0 CSD 0 ESF 0 SEED 0 FSA 0 DFA Future Obligations Est. Total Cost Proposed Fiscal Year 2002 NOA 9,000 DA 0 DA 101,392 DA 0 CSD 0 CSD 0 CSD 0 ESF 0 ESF 0 ESF 0 SEED 0 SEED 0 SEED 0 FSA 0 FSA 0 FSA 0 DFA 0 DFA 6,946 DFA
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Last Updated on: May 29, 2002 |
