The AfCFTA arrangement allows goods originating from Botswana and destined to members of the African Union to attract preferable lower tariff rates into any other African country that is signatory to this agreement. In order for the goods to enjoy these trade concessions, they must be processed or manufactured in Botswana guided by the agreement’s Rules of Origin. Prior to exportation, traders are required to register with the Botswana Unified Revenue Service (BURS).
The arrangement also implies that goods from other member countries will access the Botswana market free of duty if they meet the agreement’s rules of origin. Additionally, traders carrying goods under the AfCFTA and passing through Botswana are to produce an AfCFTA temporary admission document at Botswana points of entry, which should attract lesser taxes in the form of reduced licence fees for them.
However, International Merchandise Trade Statistics data to-date shows little or no sign of the effectiveness of AfCFTA to Botswana’s trading patterns, both in imports and exports. The latest data published in August 2021 shows imports for the month valued at P8.6 billion giving an increase of 17.8 percent from the revised July 2021 value of P7.3 billion. Total exports during the same month stood at P6.9 billion, showing a decline of 10.7 percent over the revised July 2021 value of P7.8 billion. But these changes were as a result of factors divorced from the AfCFTA.
According to the data, the SACU region remains Botswana’s import source, contributing 66.2 percent to total imports, while those from the EU and Asia accounted for 18.3 percent and 9.6 percent respectively. Imports from South Africa alone accounted for 58.0 percent of total imports. The rest of the world, which should include the rest of Africa, is a mere 1.5 percent of Botswana’s total imports. Infact, there is no recognisable contribution of imports by any African country outside of SADC and SACU.
Asia, the EU and SACU also remain the country’s source of export revenue, accounting for 58.2 percent, 27.1 percent and 12.4 percent of the monthly total respectively. The contribution of the rest of the world (the rest of Africa included) to Botswana’s exports is also far below 1.5 percent. Whilst this is a very crude analysis, it remains a fact that nothing so far has been conspicuous about AfCFTA, at least in Botswana. Even so, there is much to be said for the hyped agreement with potential to create the largest free trade area in the world, measured by the number of countries participating. The pact connects 1.3 billion people across 55 countries and is expected to create a combined GDP of US$3.4 trillion and lift 30 million people out of extreme poverty.
It is, however, too early to judge the impact of a two-year-old baby, given that other trade agreements have been in place for much longer. There are a lot of outstanding operational issues to be resolved within the giant trading bloc. Key among the issues is the need to put in place significant policy reforms and trade facilitation measures that will enable a smoother implementation of operational modalities. Nonetheless, a critical analysis can never be avoided, given the hope being placed on AfCFTA.
This article was prepared by Data Collection & Analysis, a business research firm. Feedback or enquiries can be relayed to 76740658/ research@easternman.co.bw
