Botswana will sign Africa free trade zone pact

SHARE   |   Monday, 26 March 2018   |   By Kabelo Adamson
Minister of Investment, Trade, and Industry, Vincent Seretse Minister of Investment, Trade, and Industry, Vincent Seretse

Botswana has signed a declaration to be part of the $3 trillion continental free-trade zone in the future, despite not signing up to become part of the free trade bloc during a signing ceremony in Kigali, Rwanda on Wednesday. Chief Negotiator within the Ministry of Investment, Trade and Industry (MITI) Phadza Butale told this publication on Friday in an interview that the reason they did not sign to be part of bloc just yet was simply because of constitutional processes that have to be followed before such a decision can be taken. “This is for the private sector, therefore we have to make consultations with them first before taking up those consultations within government before Cabinet can make a decision,” Butale said, explaining that other countries that signed this week may be that their leaders have been conferred with powers to do so in the absence of any consultations. Botswana is one of the countries which stayed away from signing the agreement, along with continental heavyweights like Nigeria and South Africa. Others that stayed out of the bloc are Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Len and Guinea Bissau. Butale said even then, the annexes of the agreement are not yet complete which means it is not that others who have not yet signed will be totally left out. He said they have signed a declaration to be part of the process, meaning that once the consultation processes are complete, Botswana can always sign to be part of the agreement. At the summit in Kigali this week, 44 countries signed to be part of the bloc with the project needing a minimum of 22 countries signing up to get off the ground.

Consult first
Some local analysts have also supported the decision by Botswana, saying that the countries have signed the declarations for the protocols means nothing to Pan Africanists, who are not happy Botswana,RSA,Namibia,Nigeria didn't sign the AU Free Trade and Free Movement protocols but rather opted for inter-country consultations first. They argue that had RSA signed the protocols,there would have been an avalanche of Africans going down south for economic opportunities. They observe that consultation with stakeholders is key, contrary to what some African dictators do by commiting their countries without involvement of internal consultation mechanism. "We should build capacities of Regional Economic Communities like SADC,ESA,ECOWAS first. Let's create free trade areas within the regions first and create free movement within SADC first. We should learn lessons from Brexit and not be fast to commit our countries without public buy in. Most countries have signed the declarations and this is a bankable prospect and we should wait for internal consultations," one analyst proposes. Yet another observes that Nigeria's apprehension is genuine. They do not want products to be dumped in Nigeria to the detriment of local producers. "Forget RSA and SADC,every manufacturer would want to set up plants in Nigeria and tap into the larger Naija market. Down south,RSA manufacturers are already entrenched and quite advanced and will withstand the competition. Nigeria manufacturers are not sophisticated and are easy pickings for competition," he said, citing the example of the EU model, which started as a group of like-minded, and largely culturally homogeneous Western European states forming the European Economic Commission, EEC in the 1950s.

Upon forming the EU in 1993, their Maastricht Treaty criteria still created guidelines; the ratio of government debt to GDP, the inflation rates of countries entering the union had to be at a certain level. Much later, when the Eastern European states applied to join, they had to undergo reforms in order to meet such criteria. "But here in Africa we want highly indebted poor countries to integrate with more stable countries in one fell swoop. A country like South Africa is still grappling with inequality, having a ‘white monopoly capital’ controlled first economy, and the majority in the townships and rural areas living in a third world economy. Continental free movement of goods would benefit the national elite, including the nouveau riche black bourgeoisie and leave behind the masses," said another trade expert, emphasising that although greater regional and continental integration is a noble concept, we should revisit the old SADCC self-reliance ideals, and look at the comparative advantages of different nation states in our respective regions, assist that state to nurture that particular industry and provide a market for it. For example, he said, let Zimbabwe feed SADC with maize, let Botswana provide them with coal & its by-products, let DRC be supported to tap on its rich resources. Let Botswana and others ensure that mineral beneficiation and other forms of downstream industrial activity takes place, nationally and regionally. Otherwise we will end up with a common African market that is flooded with goods from international capital or regional white monopoly capital, he warned.

Other views
Economists point to Africa's low level of intra-regional trade as one of the reasons for the continent's enduring poverty and lack of a strong manufacturing base. It is blamed on a host of factors, from colonialism, to high internal tariffs to poor road and rail links to excessive border bureaucracy and petty corruption at frontier checkpoints. The relatively small-size of many African markets – only Nigeria and Ethiopia have populations estimated at 100 million people or more – also inhibit private sector investment. Africa already has an alphabet soup of competing and overlapping trade zones – ECOWAS in the west, EAC in the east, SADC in the south and COMESA in the east and south – although only the EAC, driven mainly by Kenya, has made significant progress towards a common market in goods and services. Analysts said governments needed to do more to ensure goods and people flowed freely across borders. "If they just  sign the agreement without opening the borders, without getting rid of non-tariff barriers and if they don't work on free movement of people, it is not going to work," analyst Kottoh said. Even the six-nation EAC has its sticking points - Tanzania has been known to kick out Kenyan executives and impound Kenyan imports at the border, in violation of EAC rules. Businessmen said the current set-up forced them to look outside the continent, particularly Asia for manufactured goods. "It is easy and cheaper to buy in Asia than to buy in the sub-region because of less-flexible rules of origin and non-tariff barriers that are not clear," said Meriem Bensalah-Chaqroun, head of the Moroccan Confederation of Businesses. Sudden changes in rules and impromptu checks on goods also held up supply chains. "Some countries all of a sudden decide they are going to do a quality check on goods but they don't really know what they want to check. That slows the trade," said Thomas Schafer, CEO of Volkswagen Africa. "We are not able to bring a vehicle from South Africa into Zimbabwe in a cost-efficient and fast way. That needs to change." [e*trade zones  provided additional reporting; The Patriot on Sunday]