REGIONAL INDIC ATIVE STRATEGIC DEVELOPMENT PL AN 2 7 Under the Macroeconomic Convergence MOU, more competitive. The main features of these reforms Member States have agreed that to achieve and maintain have been liberalization of entry into the banking macroeconomic stability, all countries should converge on industry, removal of official controls on deposit and stability-oriented economic policies, which include, lending interest rates, and strengthening of central bank restricting inflation to low and stable levels, maintaining regulatory and supervisory functions to improve prudent fiscal stance that eschews large fiscal deficits, prudence. The adoption of these financial reforms has and high debt servicing ratios, and minimize market permitted new financial institutions to enter the banking distortions. A macroeconomic surveillance mechanism industry and facilitated the introduction of new financial will be established to monitor the move towards products. These reforms have however not been sufficient convergence on selected indicators. to increase competition or stimulate increased savings The MOU on Cooperation in Taxation and Related mobilization and intermediation services in all countries. Matters underscores the need for cooperation on capacity Access to credit and capital remains an area of concern for building in the area of taxation with the aim of harmon- small to medium enterprises and the vulnerable groups ising tax regimes, the application and treatment of tax such as the disabled and women. Most SADC members incentives, direct and indirect taxes and treaties to avoid are operating effective stock exchanges, which have an double taxation. important role in mobilizing savings, facilitating privatisation and attracting foreign capital. 3.2.5.2 However, except for the Multilateral Monetary Area Evaluation of Current Policies and Strategies (MMA) countries (Lesotho, Namibia, South Africa and The policies and strategies are generally consistent with Swaziland) there is no substantial integration in the the SADC Common Agenda and they conform to the monetary sector within SADC. As SADC approaches the overall strategic priorities of the region as they relate to Common Market, there will be need to coordinate and to achieving complementarity between national and some extent harmonize monetary policies in order to regional strategies and programmes, creating appropriate achieve balanced development of the region. institutions and mechanisms for mobilization of requisite Seven SADC Member States have investment acts resources and progressive elimination of obstacles to the whose main aim is to attract foreign investment by free movement of capital. offering low corporate and personal income tax rates; tax There has been substantial liberalization of the holidays and exemptions on profits, dividends, interest banking, finance and capital markets as well as invest- and royalties; exemptions from import duties and sales ment services in SADC unilaterally and through a number tax on inputs and capital equipment; tax rebates and of agreements and memoranda of understanding. Apart drawbacks; and other allowances. In many respects these from the ongoing initiative of developing the Finance and investment laws are similar and hence very competitive. Investment Protocol, the sector has already implemented Therefore, there is need for coordination of policies and a number of activities to promote investment, such as the activities for promoting investment in the region including investment forums in the region and outside and the acceptance by Member States to credit rating, which annual Southern African Economic Summit. The SADC would give investors confidence in the region. Committee of Central Bank Governors has developed a monetary and financial statistical database, developed an 3.2.5.3 information bank on the policies and structures of SADC Challenges in Current Policies and Strategies Central Banks, improved the national clearance, The main challenge for SADC is to intensify the pace of payments and settlement systems and facilitated integration and harmonisation in this sector and to repatriation of bank notes and coin among SADC increase domestic savings and investment in the region. countries, among others. SADC also has to implement sound macroeconomic and Financial reforms in Southern Africa have largely prudent fiscal and monetary policies that will facilitate focused on the banking sector with a view to making them the reduction of inflation and interest rates, deficits,