Source: FAO Yearbook, 1999
E = SRDC-SA Preliminary estimates

The main crops affected by the above market forces were tobacco, tea, coffee and cotton. Cotton prices, for example, fell by 11 per cent from their 1998 level. On a brighter note, sugar producers were cheered with the good news of a rise in prices of the commodity, which went up by 8.3 per cent. This could be a reflection of the reduced output due to the drought, which hit some of the main sugar producing countries such as Mauritius during the 1998/1999 season. In contrast beef production, particularly in Botswana, was mainly affected by drought, although this situation did not influence increased release of animals by farmers, contrary to expectations.

Deteriorating food condition continued to be a matter of concern in Angola, where the continued conflict affected food crop production negatively in 1999/2000. The Total cereal crop production for 1999/2000 was estimated at 33,000 tonnes representing a drop of 11 per cent over the 1998/1999 production. This reflected the impact of renewed displacement of the rural populations in the country. Maize, the dominant crop representing 80 per cent of the country's cereal production, dropped by 15 percent from the 1997/1998 production levels, while beans was the most affected with a drop of 20 per cent. On the other hand, cassava was affected least with a drop of only 2 per cent. By contrast, millet and sorghum increased by 12 per cent.

Transport and Communications

Effort continued to be made in developing the transport, communications and meteorology systems of Southern African member States in order to meet the economic, social, and political objectives of the Community in the Twenty-first Century. The unprecedented floods, which affected infrastructure especially in Mozambique (worst hit), Botswana, South Africa, Zimbabwe, Swaziland and parts of Zambia, Malawi and Namibia, have however had a negative impact on infrastructure and services.

An overview of the sectors shows that, despite the current shortcomings of the region's transport, communications and meteorological services systems, there are three reasons for being optimistic about these systems becoming adequate in the short-to-medium term:

• The basic transport system, communications and meteorological systems are in place. The Community has an elaborate road network, an extensive interconnected railway network, and well-spaced principal seaport system, the majority of which are natural, deep-water ports. There is a basic telecommunications, postal and meteorological network to build on.
• Needed policy, legal, and institutional reforms are well underway, and the region is committed to their completion within the timespan of a few years.
• The region's transport, communications, and meteorological services subsectors have established effective working relations with world organizations dealing with transport, communications and meteorology, and these are assisting the region to upgrade its systems and services to international standards.

The ongoing reforms are founded on the SADC Protocol on Transport, Communications and Meteorology that came into force in July 1998. The Protocol sets forth the objectives of the Community in regard to transport, communications and meteorology, and specifies the policies and strategies by which these objectives are to be attained. The Protocol also allows for the incorporation within it of annexes, which will elaborate on and define methodology of implementing these policies and strategies, and further commit Member States to take whatever actions are necessary to achieve the stated objectives.

In terms of implementation, policy reform is far advanced in most Member States and in most subsectors. The legislative reform, which of necessity must follow policy reform, is also underway. Furthermore, institutional reform is also proceeding, although it is not yet far advanced in some subsectors.

The remaining challenge is for Southern African member States to bring all transport, communications and meteorological services systems up to international standards, in order that they fully support the achievement of all of the region's economic, social and political goals.

• The arterial roads are generally in satisfactory condition in the southern tier of SADC countries, while those in Mozambique and the northern tier nations require major network rehabilitation programs. Some of these programs are ongoing, except in Angola. The secondary and tertiary roads throughout the region require improvement and the assurance of adequate and timely maintenance. The widespread problem of heavy goods vehicle overloading increases the task of keeping the road network in satisfactory condition, however.
• Road transport services are generally responsive to market demand, and entry into the provision of cross-border services is currently being liberalized. Road accidents are increasing at alarming rates and cross-border movements, particularly of large goods vehicles, are still hampered by long delays at some of the region's border posts.
• The maritime subsector, by contrast, is most nearly adequate to meet the current and immediate future needs of the subregion. Although a few ports require maintenance dredging of the entrance channels, ports are generally adequate in terms of capacity and characteristics. The exceptions are ports of Durban and Maputo, which have reached or are approaching their capacity limits for handling containers. A number of specialized terminals are being efficiently operated by the private sector. Shipping services to the region are varied, reliable, and generally adequate. It is mainly in regard to maritime safety and protection of the marine environment where the region is still lagging in the maritime subsector.
• The railway network in the southern tier of Southern African countries is generally in fairly good condition, while that in Mozambique and the northern tier nations is in an unsatisfactory condition due to deferred maintenance. The governments of these member States are pursuing programs for private sector involvement in the rehabilitation and operations of these railways.
• Air transport infrastructure serviceability is being improved and requires further development to cope with the current and expected rapid growth of air traffic within the globalization process. Institutional reforms are well underway in the subsector, and a regional, integrated air traffic safety system is under development. Most airports, however, still do not have adequate air cargo terminals.
• Entry into the air transport services market is in the early stages of liberalization, and many potentially viable services are not yet being performed or are being under-provided, in some cases at high service prices.
• Telephone density is low in most of the region, and service standards are generally poor. There is, however, ongoing expansion of both mobile telephone and Internet service providers, and actions are being taken in a number of member States to effect rapid expansion and improvement of basic telephone services through private sector participation.
• Postal services are being significantly improved in a few Member States, and the business sector is being aided by the growing availability of satisfactory and competitive courier services. The introduction of Internet services has, however, paused a serious challenge to the sub-sector.
• The following sections examine the reform process and performance in the provision of transport and communications infrastructure and services.

The approach to ensuring that the region will have a good road network has been agreed upon and implementation is underway in the following four areas:

• Road users must pay fully for maintenance of the entire public road network and progressively for the expansion of network capacity, and revenues from road user charges must be channeled directly to a dedicated road fund for network maintenance and construction.
• The road fund must be overseen and administered by a road fund board, or road board, a majority of the members of which should be from the private sector and road network user representatives.
• Autonomous, streamlined roads agencies must be created to manage the road network in a cost-effective manner, using funds allocated to them by the road fund board.
• Road network construction and maintenance costs should be minimized by selecting contractors for road construction and maintenance contracts through fair, transparent, and easy to understand processes of competitive bidding, bid evaluation, and contract negotiation and management.

The Southern African Regional Trunk Route Network (RTRN) was agreed upon and incorporated into the SADC Protocol in 1999. The principal outstanding matter in regard to the regional road network is whether or not the regional routes not included in the RTRN should be designed to accommodate the same upper limits of axle-load and gross vehicle weight (GVW) throughout the region.

However, some bottlenecks still exist, which arise from institutional aspects and financing policies. The Protocol and World Bank/ECA-coordinated Road Management Initiative (RMI) prescribe management of road assets in a commercial way, like any other business. After the understanding by all relevant players, an institutional reform process has been completed or is taking place in almost all the Member States leading to the creation of Roads Board, Autonomous Road Authority and the Road Fund.

Specific guidelines on the way these bodies should be created and how they should interact is elaborated by the Model Legislative Provisions on road management and financing approved by the Committee of Ministers in July 1999. Table 2 summarizes the progress achieved so far by member States in the reforms. It shows that 8 countries (Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa and Zambia) have established road funds and road boards with different levels of effectiveness and strength of legislation. Plans are underway to do so in other countries. Four member States (Malawi, Mozambique, Namibia and South Africa) have established autonomous road agencies other countries are still in the process to do so.

After a long process of debate and negotiations, the Southern African Member States agreed to implement country specific charges in 1999. Traffic counting on the regional trunk routes is underway to update the current transit charges and plans are to draft the implementation manual which will include aspects of the charging system (including coupon system), on the basis of the previous proposals by a SATCC/SACU joint review team.

Harmonized Road Design Standards

Road design standards and specifications have been produced and consultants and design engineers in member States have been instructed to use the design standards, which will be reviewed in two years to check on progress. The design standards and specifications produced are: SATCC Standards Specifications for Road and Bridge works; SATCC Code of Practice for the Design of Roads, Bridges and Culverts; and SATCC Code of Practice for the Design of Pavements; SATCC Code of Practice for the Geometric Design of Trunk Roads; and, SATCC Code of Practice for Pavement Rehabilitation.

TABLE 2
PROGRESS OF INSTITUTIONAL REFORMS IN SADC, 2000

lang=EN-US style='tab-interval:.5in'

Road Transport Services

Road transport services are generally adequate in the region, as there are large numbers of small and medium-sized operators competing to serve domestic transport demand. In long-distance cross-border services however, there are still some constraints to market responsiveness, transport service standards, and service charges. These include restrictions to market entry, delays at border posts and operating limitation, especially for small operators who do not have facilities across borders or on long distance routes.

As regards delays at borders, the region has agreed in principle on the package of "Border Post Legal Reform". This is a package comprising a regional memorandum of understanding (MOU) on reducing vehicle and freight consignment delays at border posts; model legislative provisions (MLP) to enable Member States to implement the MOU; and a model bilateral agreement on the operation and management of border posts along a common border. The MOU calls for the introduction of private sector management at border posts and the adoption of "one-stop operations." This operating scheme would require that all vehicles and persons stop only at facilities in the country of entry, with all exit and entrance processing being done at that location, by respective authorities of the two countries concerned.

Border post delays are also caused by the manner in which Customs deals with freight vehicles and consignments. The region has agreed on harmonized and standardized customs documentation. Agreement has also been reached on improved procedures, structures and operational environment at the borders. SATCC and SITCD, in conjunction with COMESA, have designed projects and are negotiating with cooperating partners to secure assistance to pursue these freight transit facilitation objectives.

Road Traffic

The technical work for harmonization of road traffic signs has been finalized and will be incorporated into the SADC Protocol as an annex. The incorporation of this instrument into the protocol, which was done under the SADC Transport Efficiency Project, is in its final stages. Member States are now using the harmonized signs in their road rehabilitation projects as well as for new construction.

Southern Africa is facing a serious problem on the high incidence of heavy goods vehicle overloading in most areas, and high levels of road accidents. In an effort to redress the situation, the region has reached agreement on an "Enabling Legal Reform for Vehicle Overloading Control". The adopted approach to effectively control vehicle overloading entails "decriminalization" of overloading, with administrative adjudication of infringements of the legal load limits (with imposition of "stiff" on-the-spot fines), and operation of weigh-bridges by the private sector. In order to intensify the process, three pilot projects have been designed for testing the effectiveness of private sector operation of weigh-bridges to be carried out in South Africa's KwaZulu Natal Province, and in Botswana and Namibia.

The road safety situation in Southern Africa has continued to deteriorate despite actions by member States to reverse the trend. ECA, in its continued endeavor to assist member States, has launched a Pan-African Road Safety Initiative, whose overall objective is to substantially improve the road safety situation in Africa through the implementation of short, medium and long-term targeted programs in a holistic manner. Under this initiative, a SADC regional project has been designed. Discussions are ongoing with AfDB and EC to secure financial support for the project.

Railways

The Southern African railway network, comprising 14 railways, has been divided into 12 railway corridors. The establishment of these corridors is a requirement of the Protocol. An assessment of corridor performance indicates that the shorter Corridors (e.g. Swazi Rail /Richards Bay, Ressano Garcia, etc) seem to be picking up quite well on the concept of Corridor based Operations. The longer Corridors, on the other hand, (e.g. DRC/Zambia/Zimbabwe/South Africa) need to make concerted efforts to improve the establishment of seamless service. Total corridor coordination is visibly absent in the latter, thereby adversely affecting the efficiency of service delivery.

To correct this state of affairs, Corridor Management Groups (CMG) for each railway corridor were formed to monitor the performance. The CMG is coordinated by one of the railways in the corridor. This is in an effort to ensure the achievement of the Protocol provisions, which are encompassed in the railway Regional Action Plan, whose key elements are that the railways should provide a seamless and predictable service.

A significant development in the sector has been the introduction of the Corridor Performance Indicators and Statistics by the Corridor Management Groups (CMGs). 36 indices were selected covering the key areas of Business Performance; Operations Efficiency; Safety of Operations; Infrastructure and Equipment; Finance and Accounting; and Human Resource Development. These were deemed pertinent for the initial and immediate kick-start to the new reporting format.

A review of the corridor performance was undertaken for the last six months of 1999 and the results on the Namibian corridor are given below as an example:

TransNamib/Spoornet (Namibian Corridor) Coordinated by TransNamib Rail

Business showed an upward trend compared to the last reporting period. 322,611 gross tones were moved into Namibia and 150,365 gross tones were moved into South Africa, registering a total of 287.1 million net tonne-kilometres (NTKM), 4.5 per cent more than the previous 6-month period. The corridor has more capacity than the traffic on offer.

Operations: Overall performance was good. Trainloads averaged 90per cent of the maximum tractive capacity. Locomotive (loco) kms per month was 7776, 77.8per cent of the target of 10,000. Wagon turnaround was 9.6 days against a target of 12 days. The corridor transit time was 2.4 days against a target of 2 days. Time keeping of trains was 97.5per cent on time, better than the target of 95per cent. Safety: record of this corridor was good. Yard derailments were 0.8 per 100 trains dispatched. Mainline accidents were 0.2 per 100 gross tonne-kilometres (GTKM).

Infrastructure and Equipment: Loco availability was good. On TransNamib side an average of 41 Locos were available against a requirement of 38 Locos.

Corridor Performance Assessment: The indicators suggest very high levels of efficiency and other corridors would be urged to emulate this example. If the targets were set to the preference of the customers then the fact that most of the performance is better than targets is a good marketing tool. In fact the CMG would be advised to revisit the customer preferences with a view to revise the targets to more efficient and challenging levels.

As can be seen from the foregone, the corridor performance indicators offer a very effective way of monitoring the corridor performance.

Maritime Ports and Shipping

In Southern Africa there are a system of 14 ports, which are classified as "regional." Mauritius is served by Port Louis while Continental SADC is served by eight regional ports along the Indian Ocean coast, and six along the Atlantic coast. The Indian Ocean ports are Nacala, Beira, Maputo, Richards Bay, Durban, East London and Port Elizabeth. The Atlantic coast ports are Cape Town, Saldanha Bay, Luanda, Lobito and Namibe.

The principal transit ports are Nacala, Beira, Maputo and Durban along the Indian Ocean. During the period under review, these regional ports performed satisfactorily. The Angolan ports of Namibe, Lobito and Luanda, which could potentially serve other countries of the subregion, are not operational owing to the prevailing internal strife in that country.

The combined throughput of all the 14 Southern African ports declined slightly from 203.29 million tons in 1998 to 201.32 million tons in 1999; a decline of some 1.97 million tons or 1.0 per cent. A substantial drop in the volume of containerized cargo at the ports of Beira, Durban and Port Elizabeth was a major contributor to this decline.

Restructuring of the port industry is ongoing in nearly all the member States. This entails creating adequate monitoring and regulatory capability to promote and oversee enhanced private sector financing, management and operation of port terminals and facilities as well as provision of port services. The emerging public/private sector partnership in the port industry means that the region's port authorities will, as landlord port authorities, be now responsible for the promotional, monitoring and aspects of regulatory functions.

Port restructuring is proceeding in most of the coastal States of the subregion. In Mozambique, most terminals in the port of Maputo have now been concessioned out while the process to concession the remaining port functions are due to be finalized later this year. Meanwhile in South Africa PORTNET was split into two autonomous divisions: a landlord port authority division and a port operations division.

The subregion has not yet dealt adequately with concerns of maritime safety and protection of the marine environment. Several IMO Conventions were identified for ratification by the individual member States through the study completed in February 1998. Further, Member States are yet to ratify all IMO Conventions that are instruments for the implementation of the two memorandum of Understanding on Port State Control: the Indian Ocean MOU on Port State Control signed in June 1998 and the West and Central Africa MOU on Port State Control signed in October 1999.

As regards further port development, Durban and Maputo require immediate attention as they are already operating either close or above their nominal container handling capacities. The Angolan ports, though currently underutilized, also require urgent attention because of the prolonged periods of neglect and deterioration. Although the remaining ports may not be in need of urgent attention in terms of additional handling facilities, there is need in all ports for efficiency improvements.

Inland Waterways

The subregional navigable waterways are the Zambezi and Congo River systems and Lake Victoria, Lake Tanganyika, and Lake Malawi/Nyasa/Niassa. Shipping operations between Malawi and Tanzania on Lake Malawi/Niassa/Nyasa is presently governed by a "Lake Shipping and Port Services Agreement" which the two countries signed in 1995. The main service providers are the Malawi Lake Services Company and the Tanzania Marine Services Company, which are both public enterprises, but are being processed for privatization. The study on the navigability of the Zambezi and Shire rivers is still outstanding. Meanwhile, Mozambique has undertaken a preliminary survey of some 600 km. of the Zambezi River, which has shown that navigation along the river is possible up to the level undertaken in the 80's when 200 ton-barges were operated.

Civil Aviation

Information on commercial air traffic is incomplete and not up-to-date, and therefore it is not possible to present a comprehensive and accurate assessment of traffic trends or adequacy to meet market demand for services. It is nevertheless possible to arrive at general conclusions on the status of the civil aviation subsector. These general conclusions are:

• Good progress is being made in the legislative and institutional reform towards for separation of the government overseer and regulatory role from the role of system development and operation.
• Related to the foregoing, good progress is being made in promoting private sector participation in air transport infrastructure investment, management and operation.
• Regarding air traffic safety the region is making satisfactory progress toward reducing air traffic accident risk.
• Principal airports of the region generally have adequate capacity for current levels of passenger traffic, and development programs are underway at some airports
• The air cargo industry has been slow to develop due to a combination of factors, including particularly inadequate airport cargo terminals and general failure to liberalize market entry into the air cargo service industry.
• Intra-regional air passenger services do not respond to market demand, largely due to restricted market entry but also because some "early entries" into the private airline industry have performed poorly or have even failed to commence operations.

In terms of aviation policy liberalization initiatives, there is growing support and requirement from private sector airlines that national airlines wishing to participate in liberalized air transport policies should be privatized. There is need to establish a competitive environment where commercial principles and regulations are effectively enforced.

Airline co-operation in Southern Africa is more prevalent than alliance. Alliance Air, the only multilaterally owned airline within the Southern African subregion is reported to be making huge losses. There are co-operation successes in terms of code sharing and franchising involving regional and foreign partners but there is not much change from the code sharing arrangements reported last year. Some of these arrangements are transforming to ownership where, for example, British Airways has bought shares into Comair and Swissair Group has bought into South African Airways.

Linhas Aéreas de Angola (TAAG) continues with its code-share arrangement with Air Namibia between Windhoek, Luanda and Lubango. It also has a code-share arrangement with Air Portugal on the Luanda - Lisbon route. Linhas Aereas de Mocambique (LAM) code shares with TAP between Maputo and Lisbon. Air Namibia also code-shares a flight with (LTU) to Frankfurt and has a blocked space arrangement on flights between Namibia and South Africa with BA-Comair. It intends to enter into a strategic alliance with South African Airways and stop its partnership with both LTU and BA. Zimbabwe Express and Sun Air, which had concluded partnership agreements last year, both terminated operations. Air Zimbabwe (UM) continues with its code-sharing arrangement with Quantas, Air Malawi and Air Botswana.

The commercial agreements between Aero Zambia with Ethiopian Airlines and Air Zimbabwe did not go far since Aero Zambia stopped its operations. The Air Zimbabwe/Air Malawi code share arrangement for flights to London using the UM B767 has been scrapped. Similarly the Air Tanzania/Air Malawi joint ventures for the Dar Es Salaam-Johannesburg and Dar Es Salaam-Dubai routes have stopped. For the Dubai route Air Tanzania code shares with Gulf Air using the later airline's aircraft. The expected partnerships between LAM, Air Malawi and Air Zimbabwe did not materialise. Air Zimbabwe's intention to reestablish its partnership with Uganda Airlines and find a partner in Tanzania is no where near fruition.

Most of Air Mauritius partnership with other carriers is on code share basis. It has code share ventures with Air India, Air Madagascar, Air Seychelles, Malaysian Airlines, Condor, Austrian Airlines, Singapore Airlines, Swiss Air and Air France. It has commercial bilateral agreements with British Airways, South African Airways, Air Austral and Singapore Airlines. The airline has started to fly between Mauritius and Maputo.

In addition to its code-sharing partnership with Air Mauritius on the Mauritius/Mahe route, Air Seychelles code shares with Air France to Paris and with British Airways on the Nairobi/Mahe route continue. It also code-shares with Avianova, on flights from Milan and Rome.

South African Airways (SAA) and its subsidiary, South African Express (SAX), and Alliance Air share the same SA code. SAA terminated its code sharing arrangement with American Airlines in favor of its partnership with Swissair alliance group. Other SAA partners include Lufthansa, South African Airlink, Emirates, Scandinavian Airline System, Thai Airways International, Lufthansa and Ghana Airways. In the African scene SAA has a strategy to establish hubs at Lagos and Entebbe airports in addition to its existing hub at Johannesburg airport.

The status of regional airline co-operation shows clearly that as competition establishes roots, the airlines are moving farther apart from each other with clear hostility between some carriers. There are attempts by some airlines that have already established partnerships with foreign carriers to stop others from doing so by demanding that the other airlines should be sold to them in the name of African renaissance. While there is a growing realization among Southern African airlines that they need to come together to benefit from the unveiling global strategies and trends, the lack of success in their approaches means that they are not appropriate. The attempts made by the airlines of Malawi, Mozambique, Zambia and Zimbabwe reveal that proximity and interlining are some of the prerequisites for more cooperation and possible voluntary mergers. Such efforts should be encouraged to form a nucleus for strengthening the regional airline industry. Unfortunately, most of the time these attempts are short-lived.

Regarding air traffic safety, the subregion is in the process of developing an integrated Communications Navigation Surveillance/Air Traffic Management (CNS/ATM) system, and of integrating SADC air space in line with system design. VSAT terminals were established in the remaining member States and this has improved communication tremendously among flight information centres. A SADC Upper Airspace Control Centre is being considered for establishment. Institutional issues associated with this arrangement include legislation, multinational recruitment on merit, creation of one regional organization, identification of the location of the Area Control Centre and setting and overseeing standards and safety oversight mechanisms.

Telecommunications

Good progress has been made in the telecommunications subsector in a number of areas, including the following:

• Most exciting, perhaps, is the developing relationship between the information and telecommunications industries. The number of Internet Service Providers (ISPs) is increasing in the region, and the use of electronic mail (e-mail) is growing at a fast pace as a direct result. In 1998, this service grew by 30 percent. In order to determine policies and strategies that will further accelerate development and use of information technology, the SATCC-TU has prepared a discussion paper that will be considered in the SATCC/SADC structures.
• Equally important, the number of mobile telephone providers is increasing, and use of cellular phones is growing rapidly as a direct result. In 1998, the growth was 60 percent.
• Regional agreement has been reached on telecommunications policy and model legislation, and on the need for legislative reform to permit implementation of policy. Legislative reform is complete in several Member States and is anticipated to be complete in all before the year 2001.
• The active participation of the private sector in the provision of basic telephone services is beginning, and decisions have been made in most Member States to privatize, partially or wholly, the government-owned telecommunications entity. As of May 2000, South Africa and Seychelles were still the only member States which have already entered into a strategic partnership for basic telephone services. Tanzania is also about to conclude a strategic partnership agreement. Such agreements will probably be concluded in three other Member States (Lesotho, Malawi and Mauritius) in the year 2000/1.
• Independent telecommunications regulatory bodies have been established in Botswana, Malawi, Mauritius, Mozambique, Namibia, South Africa and Zambia, while the one in Angola reports directly to the Ministry.
• Regional coordination and cooperation is being strengthened through the transformation of the Southern African Telecommunications Association (SATA) into an industry association and the formation of the Telecommunications Regulators Association of Southern Africa (TRASA).

The impact of reform efforts in the telecommunications subsector can best be seen in 1998 performance results: the region had a telephone density of just 4 per 100 persons in 1997 and reached nearly 5.1 per 100 persons in 1998. Member States, which turned in a particularly good performance between 1995 and 1998, included:

• Botswana more than doubled the number of telephone lines, reaching the level of 110,000, representing a density of 7.36.
• Mauritius added 90,000 lines, reaching a telephone density of 21 in 1998.
• Namibia increased its network by more than one-third, reaching a 7.5 telephone density in 1998.
• South Africa expanded its installed telephone network by more than 1.3 million lines, during the three-year period, reaching a telephone density of approximately 11.9 in 1998.

Other countries have also made progress, telephone densities in five Member States still remain below 1.

The Regional Postal network and systems are adequate in terms of coverage in rural and urban areas in the majority of Member States. However, the unit costs remain high and service delivery standards low throughout the region. The industry is facing intense competition from outside which from the standpoint of the users of communications services, is a very good thing indeed that the telecommunications, information and courier industries are providing services that were largely unavailable a few years ago, or were available only at high prices. These industries are now becoming increasingly competitive.

From the standpoint of the postal services industry, its market is eroding. The financial health of the industry, never particularly good, is in jeopardy of worsening, unless effective action can be taken to halt market erosion. In 1999, the number of parcels posted and delivered by the region's postal industry continued to decline, by an alarming 34 percent compared to 1998. The number of letters handled in ordinary mail service also decreased by about 12 percent.

The region will be best served by communications services if the postal services industry can become sufficiently competitive to halt the erosion of its market, or at least to limit the amount of market erosion. In regard to approaches for remedy, postal services can "borrow" or otherwise "use" some of the strategies of its competitors. The industry is, in fact, already "borrowing" from the courier industry its "track and trace" system. The industry also recognizes that it is not sufficient to just achieve service improvements; it is also necessary to ensure that the general public is aware of such improvements.

Where the introduction of new services is concerned, postal services has advantage of its geographically extensive network of post offices and postal agents. The industry is planning to use the comparative advantage by providing the masses with e-mail services, currently used by only a small percentage of the population. However, the postal industry has only a window of opportunity in regard to these services, as the number of direct e-mail users is rising rapidly in the region. Thus, if a scheme to offer e-mail services is to help to secure the postal services market share, the scheme must be implemented within a short period.

Early implementation of an e-mail single-day delivery scheme probably requires the involvement of private sector joint venture partners, for reasons of planning and design, as well as the investment required. South Africa in 1999 led the way by entering into strategic partnership with an international operator for management of its postal services. It is expected that others will also follow soon.

The industry is also undergoing fundamental changes in policy, regulatory and operational framework as public and private operators are allowed to compete on equal footing. Postal operations are being separated from regulatory functions although the majority of Member States have not yet established independent regulatory bodies. At least five Member States have regulatory authorities (Malawi, Mozambique, Namibia and South Africa). A few other countries are in the final stages of doing so. It is anticipated that the remaining Member States will have regulatory framework incorporated into national laws on the basis of the Model Legislative Provisions on Postal Services. At regional level, the Postal operators and, to some extent, the Regulators are in the process of establishing their respective regional bodies. Thus, the Southern Africa Postal Operators Association (SAPOA) is expected to be established within 12 months from April 2000.

Mining

Mining continued to be the major foreign exchange earner in most of the economies of the sub-region, contributing to approximately 10 per cent of sub-regional GDP and over 60 per cent of foreign exchange earnings. However, the repercussions of the East Asian economic crisis of 1998 greatly affected the sector, particularly when the world's second largest mineral consumer, Japan, went into an economic recession. This situation resulted into low mineral commodity prices, whose overall index increased only by 9.2 per cent in the third quarter 2000 from 15.5 per cent in the second quarter. One of the most affected commodities was copper, whose price dropped by 11.5 per cent in the third quarter 2000.

Low commodity prices precipitated the closure of a number of mines. This was accompanied by laying-off of workers. Declining world demand of asbestos, for example, precipitated mine closures and job losses in the asbestos producing mines in South Africa, while the closure of the Hartley Platinum Mine in Zimbabwe in June 1999 also caused loss of employment for over 3000 people.

Despite the adverse developments mentioned above, mining industry continued to be attractive and to receive new investments. These were the cases of a US$ 300 million Skorpion zinc project near Orangemund in Namibia; the Ngezi project in Zimbabwe; the two Amplats projects in South Africa (Bafokeng Rasimone and Maandagshoek); the US$ 62.5 million nickel expansion project by Tati Nickel Mining in Botswana; and the privatization of ZCCM in Zambia, to name just a few.

These new investment projects, coupled with the recovery in the industrialized and emerging countries in Asia, are expected to boost further the performance of the mines in the sub-region. More importantly, the new investments are expected to contribute to employment creation in the mining industry. The promotion of a jewelry fabrication industry in South Africa, for example, is expected to lead to creation of up to 250,000 jobs by the end of the first decade of this century.

Energy

Member States continued to implement important economic policy measures to create a more enabling environment for energy development and trade in the sub-region. In the electricity sub-sector, for example, this has led to the participation by new actors, and utilities have greater flexibility to fix tariffs and make decisions on investments based on market principles. Similarly, in the oil refining and marketing system, significant restructuring is under way in most countries. Although at different stages, the progress already made by some countries towards commercialization of utilities and increased scope for private sector participation is commendable.

The present era of globalization and liberalization poses, however, a set of challenges in the struggle to provide economically efficient, socially equitable and environmentally sustainable energy services in the sub-region. Such challenges include among others: the deregulation of the petroleum industry; the restructuring of the electricity supply sector; increasing environmental concerns; changing energy demand profiles; and access/generation of adequate capital to sustain the implementation of development projects. A scenario of unmatched supply/demand balance still prevails, although in aggregate the resources, and even the installed supply capacity, do exist and largely cover the energy demand. There are surpluses of electricity, coal, and petroleum, which don't benefit all the areas when and where a situation of deficit in supply occurs.

Although Angola is the only oil producer, the sub-region is endowed with huge new and renewable energy resources (NRSE), such as solar energy for electricity generation and heating; wind energy for water pumping and electricity generation, especially on the coastal areas of the sub-region; mini and micro-hydro power potential for electricity generation and mill grinding. Despite this availability of energy resources, the great majority of the population in the sub-region lives in the diverse rural and peri-urban areas with no access to electricity and are dependent on woodfuel. Thus, about 75 per cent of the total domestic energy consumption is woodfuel based, which contributes to environmental degradation.

In order to increase accessibility to this important factor of development at affordable prices with a sustained quality of service, important steps are being undertaken, mainly in the area of training, the establishment of fair energy tariffs and by strengthening the existing interconnections as well as by promoting new interconnections particularly to those countries that are not yet covered by the regional grid.

Controversy over critical issues that have already been highlighted still persists. Consensus is still to be achieved on issues such as the practice of establishing tariffs, which do not reflect the costs upstream, thus decapitalising the utilities, and the slow pace of the process of establishing a new Cahora Bassa energy tariffs.

As of 1999, the total electricity net supply in the sub-region amounted to about 207.285 GW/h, a 4.2 per cent increase over the 1998 figure. The total annual maximum demand in 1999 went up to 35.013 MW, exceeding the 32.117 MW registered in 1998 by 9 per cent. The installed capacity stood at 46,020 MW.

The total energy consumption figures in Southern Africa are still not an accurate reflection of demand. In most countries, low income prevents electricity supply utilities from expanding networks sufficiently to reach all customers. Besides the low income constraint, the inability of the majority of Southern Africa utilities to meet demand is typically a reflection of financial weakness, the root cause of which is again the tariff policy.

On the other hand, recent worldwide concern about environment and climate change has stimulated interest in NRSE technologies, as one way of mitigating against greenhouse effect caused by increased use of fossil fuel. These two facts, combined with the huge NRSE potential in the region, if efficiently managed, can contribute significantly to the energy equation of the region and thereby contribute to reduction of greenhouse effects.

Tourism

Tourism is increasingly becoming one of the world's fastest growing industry. On account of its socio-cultural and economic dynamics, it constitutes an excellent instrument for promoting economic development, understanding, goodwill and close relations between peoples.

World tourist arrivals maintained the same level of growth in 1998 as in 1997 (i.e. 2.4 per cent) and reached 625 million, while tourism receipts (excluding international transport) grew to US $ 445 billion. The African continent showed the strongest expansion in tourist arrivals in 1998, up by 7.5 per cent over the 1997 level, although receipts increased more moderately in Africa by 5.9 per cent (Table 3).

However, in 1998, Africa received only 4 per cent of international tourists and earned only 2 per cent of the global tourism receipts, as compared to other destinations. Hence, there is room for improvement. According to the World Tourism Organization (WTO), total international arrivals would reach 692 million in the year 2000, 1 billion by 2010 and 1.6 billion by 2020. The growth rate of tourist arrivals in Africa is expected to be 5.5 per cent between 1995 and 2020.