Trade barriers empede growth

Friday, 12 February 2016 11:59   |   Written by TLOTLO MBAZO
Trade barriers empede growth

The private sector of the Southern African Development Community (SADC) region is worried that the region cannot provide legal certainty that investors require in particular to trade facilitation, investment, industrial and infrastructural development.

The region’s business community is of the view that failure by SADC member states to implement their regional obligations have serious implications for business, and are now calling for a shift to implementation.

Business Botswana (formerly BOCCIM), the Business Council of Southern Africa and the NEPAD Business Foundation express similar sentiments that among other reasons, there are still no enforcement mechanisms that force sovereign countries in the regional bloc to comply with recommendations.

Senior Programme Officer at the SADC Secretariat, Willie Shumba believes that implementation could be achieved through legislating policies into laws. Overlapping memberships, where member countries belong to more than one regional economic community also hinder cross border trade in goods and investment in the region, in his view.

Shumba says issues like banking and insurance processes involved in cross border trade; the delay in implementing the single window concept that allows the region’s borders to access information and documentation submitted in a single border, for example, still hinder progress.

“Most countries in the region including Botswana and Malawi are still working on the single window concept, but Mozambique has already started implementation,” he said. The region still awaits a simplified trade regime for cross border trade that will be adopted by member states.

According to Shumba ongoing initiatives to ease trade facilitation in the SADC region include simplification and harmonisation of customs laws and procedures. The region is also engaged in tariff and statistical nomenclatures, harmonisation of valuation laws and computerisation of customs operations.

Associate and Founder of Tralac, a South African based capacity-building organisation developing trade-related capacity in east and southern Africa, Professor Gerhard Erasmus is of the view that Free Trade Agreements are legal instruments of a particular kind, and therefore sovereign countries need to understand what they have agreed to.

“Countries need to understand their obligations contained in these instruments and implement at a national level,” he said. He believes that the logic of regional integration that has taken centre stage has implications on sovereign states. “Institutions need to monitor regional and continental negotiations and compliance,” Erasmus said, quizzing whether domestication of these is required to ensure implementation.

President of the Federation of Clearing and Forwarding Associations of Southern Africa, Joseph Musariri says lack of harmonisation of electronic clearance systems pose serious challenges because countries in the region are at various levels of development in border clearance systems.

“These border posts are so close to each other physically however, they are miles apart when it comes to harmonisation of their clearance systems,” Musariri said. He also decries the fact that borders prioritise revenue at the cost of cross border trade facilitation. “There is a huge appetite to collect as much as possible at the cost of cross trade facilitation.” Musariri says that malfunction of railway systems and lack of implementation of border management systems, are serious constraints to facilitate trade across borders.

This in his view is exacerbated by the fact that direct private sector engagement with customs has collapsed. Senior Trade Policy Advisor, Paul Kalenga is of the view that the business community of individual states needs to be involved in assisting their states to implement protocols.

“SADC has succeeded in implementing some protocols, for example, reducing of tariffs, however, we have not succeeded in the implementation of others,” he said, adding that implementation challenges are largely at national level. Lack of implementation does not only hinder the region’s potential to build and diversify markets and improve the living standards of ordinary citizens.

CEO of the German-African Business Association, Christoph Kannengiesser says as much as his organisation works closely with African economies, southern African region has not attracted many investors because of the regional integration challenges and lack of implementation. “Challenges at borders and lack of harmonisation disadvantages southern African countries from benefiting from investment from Germany,” he says.

The southern African business community believes that the revised Regional Indicative Strategic Development Plan (RISDP) and Industrialisation Strategy acknowledges the private sector as at the centre of plans for growth and employment creation in the SADC region, and therefore SADC needs to urgently address the movement of goods, services and business people in the region and provide certainty with regards to processes, regulations and timeframes.

The business community is of the view that the monitoring mechanisms of non-tariff barriers must continue to be operational and a procedure for the resolution of priority issues should be developed in partnership with the private sector.

The business community also believes that a SADC Railway Development Master Plan is needed as a framework for prioritised and synchronised implementation of hard and soft projects identified in the Regional Infrastructure Development Master Plan and to rebalance road and rail market share.

They are also for sustainable and affordable access to energy and water for all of the economic development goals of SADC.