REGIONAL INDIC ATIVE STRATEGIC DEVELOPMENT PL AN 1 3 Within Southern Africa, South Africa's intra-regional 2.2.2.6 Fiscal Balances trade is concentrated in the SACU countries due to the Despite efforts made during 1990-2000 to bring negative existence of a customs union and a common monetary fiscal balances to sustainable levels, most SADC Member- area. Of South Africa's exports to the Southern African States continued to experience relatively high budget region, which amount to 19 percent of total exports, 13 deficits. However, with only a few exceptions, all SADC percent go to other SACU member countries. Five out of 7 Member States improved their fiscal positions during the percent of South Africa's imports from Southern Africa 1990s. On average, budget deficits have been reduced in come from other SACU member countries. a significant number of SADC Member-States. Among other Southern African countries, Lesotho is The control of current and capital expenditures, tax overwhelmingly dependent on South Africa for its export reforms (including the improvement of tax collection and market. A significant proportion of Zimbabwe's and to some the broadening of the tax base) and privatisation of state- extent Malawi's exports also find markets in Southern owned enterprises have been the underlying reasons for Africa, mainly in South Africa. Otherwise, for the majority of these improvements. the countries in Southern Africa, the OECD is the major Further reductions in budget deficits have proved export market. Asian export destinations are significant for Member-States Angola, Mauritius, Mozambique, South Africa, Tanzania and commitment to eradicate poverty through increased public Zambia. The bulk of imports of SADC Member States provision of health and education facilities and services. originate in the OECD. For the DRC, Mauritius, Seychelles difficult to achieve, given SADC and Tanzania, Asian sources account for significant 2.2.2.7 External Trade and the Terms of Trade Foreign trade plays an important role in the economies of SADC Member States. Trade data on SADC Member-States reveal a number of features. Firstly, trade is relatively a more important component of GDP in small countries like Lesotho and Swaziland than in large countries like South Africa. Total merchandise trade of the SADC increased between 1991 and 1998. The export trade for Angola, Botswana, Democratic Republic of Congo (DRC), Namibia South Africa and Zambia is dominated by oil or mineral exports. The oil and mining industry play significant roles as major foreign exchange earners and are sources of inputs for industrial development. While oil and mining ventures are capital intensive, they still generate substantial employment proportions of their imports; while for Angola and South Africa NAFTA is a significant source of their imports. Intra-regional trade in SADC is influenced by both the SADC Trade Protocol and bilateral trade agreements, which Member States have negotiated prior to entry into force of the Trade Protocol. The Trade protocol provides for the continuation of existing bilateral arrangements as long as they do not contradict the protocol. Intra-SADC trade is estimated at 24%, which means that the major share of trade is still with the rest of the world. 2.2.2.8 Current Account Balance The SADC overall annual average current account balance for the period 1990-2000 is - 7.0%. However, an analysis of the underlying country trends during this period reveals three categories of countries. The first category opportunities directly and indirectly through linkages with represented by Botswana, Namibia, and to a certain other supply and input sectors. In other countries, extent Mauritius, enjoyed rising current account agriculture commodities dominate export trade. The bulk surpluses throughout the period of analysis. of imports of SADC Member-States are intermediate and The second category includes South Africa, capital goods. Only South Africa and Zimbabwe have Swaziland, Seychelles, and Zimbabwe. These countries significant capacity to produce such goods. have experienced a modest level of current account Available data on the terms of trade show that most SADC Member States alongside with the majority of other deficits, which do not exceed, on average, 5 percent of GDP during the period of analysis. African States have been experiencing a long-term decline The third category of countries, with high and in their terms of trade. This trend has been particularly deteriorating current account deficits include Angola, persistent between 1980 and 2000. Lesotho, Malawi, Mozambique, Tanzania, and Zambia.