Through a Regional Indicative Strategic Development Plan (RISDP) 2005-2020, SADC economies had set themselves incremental milestones which included economic integration that would culminate into an FTA by 2008. However, the 15 member states community is yet to have an FTA, seven years after the set deadline. The Business Weekly & Review asked the Trade and Industry Minister, Vincent Seretse, how the creation of the FTA is progressing. Seretse responded that implementation of an FTA should be done with caution because other member states like Botswana are less industrialized. “The creation of an FTA in the current state of affairs would give leverage to industrialized economies like South Africa to dump their products in economically inferior economies at predatory pricing thus crumbling the private sector in less industrialized economies. So, FTA cannot be fully implemented at a go because it would be dangerous,” he said.
Boitumelo Gofhamodimo, Director of the Trade, Industry, Finance and Investment (TIFI) at the SADC Secretariat acknowledged that the RISDP had envisaged an FTA by 2008, a Customs Union by 2010, a common market by 2015, Monetary Union by 2016, and an Economic Union with a single currency by 2018. TIFI’s role within SADC is to facilitate trade liberalization and integration to attain macroeconomic stability in the SADC region. Further, Gofhamodimo said that while the advancement of integration has not progressed beyond the FTA, the set milestones remain relevant in the medium to long term. “A thorough assessment is still to be done within the framework of the revised RISDP to set out reasonable timeframes but most importantly, to ensure that a solid foundation has been created to advance regional integration,” explained Gofhamodimo. She further opined that although a full FTA has not been achieved, 85 percent of tariffs on goods have been zero rated by almost all FTA participating countries.
Interestingly, all Heads of State who spoke during the summit were worried by the low volume of trade between the 15 member regional development body, high rates of poverty, unemployment and high income disparities, but pointed all these to challenges in trade barriers, being tariffs on goods traded between members states.
Namibia’s newly elected President, Dr Hage Geingob said during the summit that poverty within SADC member states remain high, despite the abundance of natural resources. He noted that the poor intra-trade within SADC is a result of capacity to process raw materials for exportand trade. His Zambian and Mozambican counterparts, Presidents Edgar Lungu and Filipe Nyusi, all expressed concern over the low volumes of trade between SADC member states, but remarked that if the members were to push for industrialization, it could push for increased trade, accelerated economic growth and a reduction in poverty and unemployment. Incoming SADC chairperson, President Ian Khama decried trade imbalances within SADC member states, lamenting that they are “enough to jump start industrialization”.
Outgoing SADC Chairperson, Robert Mugabe, expressed similar sentiments saying these impediments would stall plans of economic unification, increased trade as well as extraction of value out of natural resources in the region. He also spoke of restrictions in doing business within the SADC region. “As we speak, Zimbabwean companies find it difficult to export goods into South Africa, although the two states are SADC members,” he said. He pointed to the blockade of goods movement as a major limitation in boosting intra-trade within SADC saying they are costly and even create inertia amongst cross border trade.“They say the process of exporting to Africa’s second largest economy is not only demanding but costly, propelling companies to rather migrate to South Africa where the market is larger, rather than exporting,” Mugabe said,adding that SADC has been slow in implementing the freedom of movement protocol and establishing policies suitable to support SADC’s aims of free trade and ease of doing business.
However, according to Khama, all the challenges and concerns raised by successive speakers at the Gaborone summit will be addressed by the Strategy of Industrialization which was adopted at the SADC Extraordinary Summit held in Harare in April. SADC adopted a resolution to industrialize SADC in an effort to champion economic development through technological transformation and competitiveness.
Echoes to industrialize economies of SADC member states come against the backdrop of high unemployment rates in member states and failure to extract value out the abundant natural resources. The southern African region is rich in mineral resources like gold, diamonds, platinum, coffee and even fertile land suitable for agriculture, but due to lack of proper processing and manufacturing industries, SADC member states, and Africa in general,export raw minerals and materials thus extracting minimal value out of the exports.