T Manuel: University of Namibia Alumni Association

20 September 2007

Honourable Minister of Finance, Ms Saara Kuugongelwa-Amadhila
Vice Chancellor of the University of Namibia, Professor Lazarus Hangula
Chairperson of the Alumni Association, Mr Tylvas Amunjela
Distinguished guests
Ladies and gentlemen

Economic integration, the idea that prosperity rests in part on institutions
and markets that are shared across national borders is far more than a
technical economic construct. It is not just about the industrial and trade
ties that bind us together. It goes to the heart of what it means to be human,
what it means to confront loneliness and despair, what it means to build a
future that is better than the past.

In rests on an idea expressed eloquently by Nigerian novelist and Booker
prize winner, Ben Okri:

"The most authentic thing about us is our capacity to create, to overcome,
to endure, to transform, to love and to be greater than our suffering." We turn
to our authentic capacity to create, to endure, to be greater than our
suffering we turn to our authenticity as a source of inspiration in overcoming
our domestic and regional challenges and the added complexities brought on by
globalisation.

And if there's any doubt about the impact of global events on national and
regional agendas, then we only need to refer to the numbers. World trade in
2006 totalled US$12,7 trillion, of which Africa's portion was just over US$300
billion, or 2,3 percent. And although Namibia's trade with the world is
somewhere around 0,02 percent of total global trade, the goods and services
that this country exports represent about 54,5 percent of its Gross Domestic
Product (GDP). But this phenomenon is not restricted to those activities that
take the produce of two million Namibians to the markets of the world.

Globalisation also permeates our domestic policies on environmental matters,
land reform, human rights, energy and finance. Many of the procedures that we
now follow to open a bank account came about as a result of 9/11, an event that
took place on the other side of the Atlantic Ocean. As individual countries we
need the world more than the world needs us. The realisation of this forces us
into regional economic communities and agreements and all types of
international arrangements. Southern African Customs Union (SACU), South
African Development Community (SADC) and Common Market for Southern Africa
(Comesa) are the products of this realisation. So too is the World Trade
Organisation (WTO) and others.

Globalisation is a feature of life. The Former United Nations Secretary
General,
Mr Kofi Annan said," Arguing against globalisation is like arguing against the
laws of gravity." But, in recognising this, we should also be mindful of the
fact that there is nothing self-evident about its outcomes which guarantees an
improved quality of life for the people of the poorest countries and regions.
Indeed, global links heighten the risks and vulnerability associated with poor
policies or strategic mistakes.

It is up to us to develop a response that addresses our needs and interests,
as individual countries, as a region, and as Africans. We have to be able to
connect the dots between our domestic agendas, the regional integration
programme and events unfolding in China, Europe, the Americas and India. In the
same way that we are required to forge the linkages between the upswing in
commodity prices and our policy choices and the way we govern our countries. It
is then that we start to recognise that a compelling opportunity exist now to
turn the tide on poverty and all manner of human suffering.

How well we draw together our policy choices, the resources at our disposal
and the form of our neighbourliness will draw heavily on our capacity to
create, to transform and to be greater than our suffering. We have a real
chance to make a difference this is not only due to the upswing in commodity
prices, or because of better policy choices and improved governance, or because
we recognise that greater integration of our economies hold long-term benefit.
Sustainable outcomes that lead to the future we desire is dependent on all of
the above and many more.

Let me share some thoughts on the upswing in commodity prices. Why, because
primary commodities make up the largest part of the basket of African exports.
So, how we respond during the boom phase does have a regional impact. If we
respect the truth, then we need to admit that commodity boom phases have not
been managed well in the past, and we are at risk of making the same mistakes
again. The suggestion that commodity price upswings might be a curse and not a
blessing is an uncomfortable reminder of our responsibility, now, to act wisely
and prudently in the interests of future growth and not just present
consumption.

The current commodity super-cycle and boom phase has lasted for some seven
years, and we cannot predict when the trend will be reversed. An understanding
of the drivers behind the upswing, Chinese demand, platinum and the
autocatalytic industry, the concordance between gold and oil, the bond between
diamonds and vanity, and high emerging market demand suggest that the good
times are here to stay in the short-to-medium term. But, to assume that current
prices and the current boom phase reflects a permanent shift, rather than a
temporary opportunity, would be a naive and risky approach to adopt. And if our
analysis is correct, then the slump will come and it will bring with it a
significant decline in commodity prices. This could potentially spell disaster
for many developing countries, if our choices ignore the authentic thing about
us that is our capacity to create, to transform and to be greater than those
that caused our suffering.

Africans have been confronted with choices and challenges before.
Globalisation has been around for a very long time Jim Wolfensohn, former
President of The World Bank said, "Globalisation in the sense of the world
becoming smaller has been going on, since Adam and Eve." And so, too, there is
a long history of African responses to external opportunities. It is now a
matter of historical fact that between 1200 AD and 1300 AD, the region known as
Mapungubwe, at the meeting of the Shasha and Limpopo Rivers and where the
international borders of Botswana, Zimbabwe and South Africa meet, the
ancestors of the Shona people of Zimbabwe were prosperous.

They created objects of iron, copper and gold for practical and decorative
purpose for local use and trade with East Africa, Persia, Egypt, India and
China. Economic systems and trade which bring prosperity to Africa's people are
not new or foreign concepts. But prosperity does not follow automatically from
opportunity. Policy choices and good governance matter. They matter because the
political stability and economic wellbeing of Southern African states are tied
together.

They were bound together in pre-colonial times, and they will remain linked
in diverse ways long after all of us here retire and are gone. But the
institutions we construct today and the investment choices we make, will
outlive us; future generations will build on these foundations, they may have
to correct our mistakes, they will no doubt create things beyond our present
imagining, but we need to have the courage and the vision to break the barriers
that hold back progress today.

Modern day Mapungubwe takes the form of free-trade areas and customs unions.
In the case of the latter, our two countries, along with Botswana, Lesotho and
Swaziland, belong to one of the oldest customs union in the world. Of course
the countries of SACU differ considerably and the linkages between them are
complex. Herein is contained our regional challenge, but also an opportunity to
use our capacity to create, to overcome. Professor Paul Collier, director of
the Centre for the Study of African Economies, offers a simple classification
matrix that assists in thinking about how countries are economically linked
with each other. He points out that transport and trade connections matter
landlocked countries have different opportunities from those that have
sea-trade links with the rest of the world.

Having mineral or other natural resources makes a difference. Governance and
institutional arrangements are also important. He gives the example of
Switzerland: "a landlocked resource-scarce country has been able to develop
because Germany, France and Italy are not in the way of Switzerland's market,
they are Switzerland's market." He goes on to state that "globally, landlocked
economies indeed structure their economies so as to make the most of their
neighbours' growth.

If neighbours grow at an extra one percentage point, the typical costal
economy gains a 0,4 percent spill-over, whereas the typical landlocked economy
gains a 0,7 percent spill-over." Lesotho and Swaziland are landlocked and
resource-poor, and their economic linkages with South Africa from Botswana's or
Namibia's. For the record Namibia is coastal has abundant resources and has a
well established democratic government.

Blessings on all three fronts, but of course they are accompanied by their
risks and complications. You also have resource rich neighbours to the north
and east, more or less well governed, and Botswana is landlocked and
resource-rich. What does this mean? It is simply the starting point for
considering regional opportunities and economic linkages, in all their
complexity and manifold permutations, the beginning of a discourse on what it
might mean to build a better, shared, future. And beyond the discourse, there
is hard work to do in negotiating agreements, building institutions,
constructing infrastructure and supporting investment and trade.

When we negotiated the current SACU agreement, two issues featured
prominently. The first was to bring about a more equitable distribution of
customs revenue collected by the common revenue pool, and secondly, to design a
redistributive and developmental component in the formula. And it was this
developmental component that was intended to facilitate trade between our
countries to ensure that we build the roads and modernise the ports, put in
place one stop border posts, and develop common systems and procedures.

Unfortunately, we have not made much progress in this regard and the revenue
sharing formula needs to be reviewed again. But I am convinced that the finance
and trade ministers of Botswana, Lesotho, Namibia, South Africa and Swaziland
all agree that steps need to be taken to transform SACU and build on its
successes as we transition to a broader integration agenda under the umbrella
of SADC. We also need to ensure that we take into the SADC Customs Union:

* respect for the importance of macroeconomic stability and sound economic
management
* the need to put in place critical infrastructure and standardisation of
systems and procedures
* the protection of property rights
• the need to maintain strong economic, social and cultural ties across the
region
* the creation of appropriate governance structure.

Let me conclude with a few remarks on the investment and policy challenges
we face the basic building blocks of a developmental regional economic
strategy. We can borrow ideas, of course, from other contexts. The approach
that underpinned the success of the European Union (EU) was the adoption of
common institutions for governance, democratic principles, macroeconomic
stabilisation and convergence policies, and legally enforceable competition
policies.

This approach has enabled the EU to project cohesion, unity in purpose and
influence in international affairs. The success of this approach is founded in
the arrangement that no single country was a dominant power with imposition of
its preferences. No, deals have to be forged and the process of reaching
consensus was often far more important than the final policy resolution or
decision. Those processes take a lot of time, a lot of paper, a lot of
language, and the eventual consensus frequently relies on layers of
qualification and tortuous translations that keep bureaucrats over-employed and
leave the rest of us somewhat bewildered.
8
So yes, we can borrow ideas, but we must also create something better tuned to
our needs and circumstances. Although SADC's Regional Indicative Strategic
Development Plan draws from the lessons of regional economic communities around
the world, it also presents us with a unique set of challenges. As its ultimate
goal, the plan aims to deepen the integration agenda of SADC with a view to
accelerating poverty eradication and the attainment of other economic and
non-economic development goals. It also sets out the enablers that underpin the
success of regional integration and development.

In line with article five of the SADC Treaty, the indicative strategic plan
acknowledges that economic growth and development will not be realised in
conditions of political intolerance, the absence of the rule of law,
corruption, civil strife and war. The plan recognises that poverty is likely to
deepen under such conditions; conditions that nurture further political
instability and conflict, creating a destructive repetitive cycle, which
perpetuates under-development and extreme deprivation.

Good economic and corporate governance is therefore recognised by the
Regional Indicative Strategic Development Plan (RISDP) as essential for the
realisation of deeper integration and poverty eradication in the SADC region.
There are other basic, developmental, building blocks. We need to accelerate
our investment in shared and jointly-funded infrastructure like transport
links, telecommunications, energy and water resource networks. We need rapid
growth in a common pool of technically skilled people engineers, accountants,
managers, agriculturists, metallurgists and we need better institutions for
translating technology and research into industrial and commercial
opportunities.

We need a concerted focus on those industries and activities that can create
jobs for more people on farms, in taking advantage of mineral resources, but
also in building better communities and social services. We need to raise our
shared environmental concerns to a higher level of political engagement and
joint action. There are many components of this challenge a common approach to
restoring depleted coastal and offshore fish stocks, how we respond to climate
change, better approaches to dealing with food security, what kinds of power
generation technologies we adopt, managing trans-frontier parks and their role
in tourism and conserving our natural heritage, amongst others.

In taking forward these issues, we need better analysis and a deeper
understanding of the dynamics of social and economic development. For those of
us whose work is political or administrative, perhaps we need to listen a
little more to our scientists and engage more carefully with the business
sector and international partners while recognising that we have trusteeship
responsibilities that stand above narrow commercial or other special interests.
We share the enormous privilege of building better regional institutions in a
context of comparatively favourable international opportunities.

Whether these opportunities turn out to be a blessing or a curse depends on
us: what priorities we set, how we work together, how we manage our budgets and
spending programmes, how we encourage investment and job creation. It took the
EU 50 years to achieve what they currently have. This is a luxury we do not
have. And so it is right that Ben Okri should remind us of our capacity to
create, to overcome, to endure, to transform. And if it helps sometimes to
think in terms of a competition between nations, even as we search for better
ways of working together, the recent passion displayed by the Namibian rugby
team in a titanic battle with the Irish is surely a sign that astonishing
things can come from the south. We can be greater than our suffering.

Thank you.

Issued by: National Treasury
20 September 2007
Source: National Treasury (http://www.treasury.gov.za)