The Peer Review Panel (The Panel) comprising the SADC Ministers responsible for Finance and Investment and the SADC Central Bank Governors, met in Lilongwe, Malawi on 28 July 2022.
The purpose of the Panel’s Meeting was to review progress made by individual Member States towards the achievement of agreed SADC Macroeconomic Convergence (MEC) targets as well as to identify risks to the Region’s economic outlook and devise policy measures to mitigate the risks. The Panel also considered the Peer Review Reports on the Kingdom of Eswatini, Republic of Mauritius, Republic of Mozambique, Republic of South Africa and Republic of Zambia undertaken during the fourth quarter of 2021/2022.
The Panel noted that, over the review period, 2016–2021, Member States continued to implement policies and measures aimed at meeting or staying on course to meeting the Macroeconomic Convergence (MEC) Criteria. Member States also continued making progress towards implementing the recommendations of the previous Panel meetings which include structural adjustments and macroeconomic policies.
The reviewed Member States’ progress towards achieving the MEC targets was however hampered by a harsh economic environment which impacted their economic outcomes. This includes weak global economic activity, reduced global trade and rising commodity prices, coupled with policy uncertainty and rising protectionism through non-tariff barriers, as well as the impact of the COVID-19 pandemic. Domestically, Member States experienced adverse weather conditions including recurring drought, cyclones and floods.
In spite of signs of recovery and improved performance in 2021, all the five Member States continued to be off-target with regard to some of the MEC targets.
Kingdom of Eswatini
Over 2018 and 2021, Eswatini met the inflation and public debt targets amongst the three primary indicators. Only the current account balance was met for the secondary indicators.
Notwithstanding the current macroeconomic risks and vulnerabilities, the Panel noted important milestones that the authorities in Eswatini have put in place to steer the economy back to its growth path. In particular, the Panel recommended concerted effort in the implementation of the post COVID-19 Economic Recovery Strategy and Fiscal Adjustment Plan to improve economic prospects and provide the much-needed fiscal space.
Republic of Mauritius
The Republic of Mauritius has consistently met the inflation target in the primary indicator category as well as external reserves and central bank lending to Government targets in the secondary indicator category; but missed the fiscal deficit to GDP and public debt to GDP targets.
The Panel urged the Mauritian Authorities to closely monitor public debt and the current account balance as they pose a risk of further diverging from the MEC targets; diversify the services sector which is heavily dependent on the tourism industry; improve the ease of doing business reforms to attract new investment to restore growth potential of the economy; and continue enhancing disaster preparedness to mitigate climate change and other natural disasters.
Republic of Mozambique
Since 2018, the Republic of Mozambique had met only the inflation target for the primary indicators. In terms of the secondary indicators the country met the domestic investment and central bank credit to government.
The Panel encouraged the Republic of Mozambique to, amongst other things, diversify its economy by particularly investing more into the agriculture sector and agro-processing industry; and to allocate more resources for the electricity, gas and water sector development.
Republic of South Africa
For the primary indicators, South Africa consistently met the inflation target but missed the fiscal deficit and public debt targets. The country also met the current account and import cover targets but missed the rest on GDP growth, domestic savings and domestic investment for the secondary indicators.
The Panel encouraged the South African Authorities to implement the proposed reforms; improve energy security by leveraging cooperation with other Member States to jointly develop projects aimed at enhancing the energy security in South Africa and in the region as a whole, as part of the broader regional collaboration on joint value chain development; fast-track the attainment of the goals of Operation Vulindlela to improve on execution and monitoring of growth enhancing plans; and ensure a stable and predictable regulatory and policy framework essential for the economic transformation agenda.
.Republic of Zambia
Zambia has consistently missed the primary indicator targets on inflation, fiscal deficit and public debt from 2019 to 2021 but met the targets in the secondary indicators of current account, central bank credit to Government and domestic investment.
The Panel encouraged the Zambian Authorities to implement policies to diversify the economy; invest more in infrastructure development especially electricity generation and provision; monitoring and evaluation of social welfare protection programmes; implement programmes to create employment opportunities; and improve statistical compilation and dissemination.
The Panel considered and approved the Mission Review Reports and recommended policy proposals for the Kingdom of Eswatini, Republic of Mauritius, Republic of Mozambique, Republic of South Africa and Republic of Zambia. It welcomed the commitment by the authorities of the five Member States to implement the recommendations.
The Panel commended the Republic of Angola, Republic of Botswana, Kingdom of Lesotho, the Republic of Namibia and the Republic of Zimbabwe for undertaking the peer reviews of the Kingdom of Eswatini, Republic of Mauritius, Republic of Mozambique, Republic of South Africa and Republic of Zambia, respectively.
The Panel commended Republic of Angola, Republic of Botswana, Democratic Republic of Congo, Kingdom of Lesotho, Republic of Madagascar, Republic of Malawi, Republic of Namibia, United Republic of Tanzania, and Republic of Zimbabwe for continued implementation of the Macroeconomic Convergence Framework and recommendations of the previous peer reviews.
The Panel approved that the Republic of Madagascar, Kingdom of Lesotho and Republic of Malawi shall be the next Member States to be peer reviewed during 2022/23 by the Republic of Mauritius, United Republic of Tanzania and Republic of South Africa, respectively.
The Panel expressed its gratitude to the Republic of Malawi, the SADC Chairperson, for their warm reception and hospitality extended during the course of the Peer Review Panel meeting.
