Raw materials dominate SADC trade

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By Magreth Nunuhe

Windhoek – Trade in Southern Africa is dominated by raw materials of ores and metals making up the highest percentage in the export of goods basket, while the lowest percentage of exports is in finished (manufactured) goods.

For the majority of SADC member states, the main export destinations are China, India, the United States, France, Germany, Italy, Belgium and the Netherlands, with South Africa being the only exception as a dominant trading partner for other SADC countries.

This information, provided by the United Nations Conference on Trade and Development’s Maritime Profile (2017), indicates that the majority of SADC countries do not trade with each other and do not add value to their raw materials for export, with only three member states that export the majority of their products in finished form.

The three SADC countries are Lesotho, which leads with 67% of exports in manufactured goods, followed by Mauritius (53%) and South Africa (42%) in the export of finished goods.

Eswatini, the Democratic Republic Congo and Zambia export over 70% of their products in raw form – mainly in ores and metals.

When it comes to the export of food, Malawi leads the SADC pack with 75%, followed by Comoros (66%), Seychelles (64%) and Zimbabwe (46%).

This reveals that significant challenges in trade lie ahead not only in Southern African countries but also in intra-African trade, which is also congruent with Trade Finance in Africa Survey Report by the African Development Bank Group published in September 2017, which revealed that compared to other regions of the world, Africa’s trade is still dominated by international trade.

The European Union accounted for 63% of total trade, 50% for North America and 52% for Asia in 2014, while Intra-African trade only accounted for 15% of overall trade in the same year.

This week, the first African Forum for National Trade Facilitation Committees was held in Addis Ababa, Ethiopia, from 27 to 29 November, under the theme “Empowering Public-Private partnership for trade facilitation”, for African countries seeking to seek ways of easing trade.

More than 300 participants from the public sector, the business community, donors, and regional and international organisations met to discuss the implementation of trade facilitation reforms, including the World Trade Organisation (WTO) and the Trade Facilitation Agreement (TFA).

They addressed, inter alia, the role of African regional organisations and role of National Trade Facilitation Committees (NTFCs) in the implementation of trade facilitation provisions in the African Continental Free Trade Area (AfCFTA).

The AfCFTA seeks to create a single market for intra-regional trade in goods and services, representing more than 1.26 billion people, and a gross domestic product (GDP) of US$2.14 trillion.

The agreement contains trade facilitation measures tailormade to the African context and aimed to make import, export and transit procedures more efficient.

The AfCFTA implementation will require a great deal of coordination among different public and private stakeholders at the national and regional level, ensuring the coherence with other relevant instruments.

The African Forum for National Trade Facilitation Committees in Addis Ababa intend to provide proposals on how the NTFCs could ensure a coherent approach in the implementation of the trade facilitation reforms in the framework of the AfCFTA, the WTO and TFA and other regional agreements.

David Luke, Coordinator of the African Trade Policy Centre at the United Nation Economic Commission for Africa (UNECA), said the meeting was a very important initiative for Africa and could add up to 2.5% to GDP, translating into US$65 billion for the continent.

“This is an opportunity. This year we are very clear at CFTA – the way we do business – to ensure there is a level playing field and to give us a framework to address the challenges on trade facilitation, logistics, infrastructure and energy,” he said.

Shamika Sirimanne, Director of United Nations Conference on Trade and Development, said that trade facilitation brings prosperity to all and helps reduce trade costs, saves traders time and frustration and contributes to the modernisation of public services.

The United Nations Conference on Trade and Development has been assisting trade and transport facilitation reforms in developing countries for 40 years and the forum aims to build strong public-private partnerships for trade facilitation, policymakers, customs officers and business representatives from over 40 African countries.

The United Nation’s Commissioner for Trade and Industry, Albert Muchanga said that every African country used to think of its country as their market, but now “their market is the African Continental Free Trade Area”.

“When we have goods moving without any duty, the price of those goods go down. The average consumer is going to benefit from this process,” he added, saying that when duties are removed, it means that traders can add value to their commodities, which will encourage a rise in manufacturing across the continent.

“The 55 countries are saying ‘we want to remove non-tariff barriers after the agreement comes into force. We are going to establish a Pan-African non-tariff barrier monitoring mechanism so that we are able to monitor real-time that will also assist us to implement the World Trade Organisation trade facilitation agreement,” said Muchanga.

 

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