By Munetsi Madakufamba – SANF 04 no 21
ARUSHA, 13 March — Tanzanian President Benjamin William Mkapa has called on South Africa to take greater responsibility in correcting current trade imbalances between the country and its southern African neighbours. This is urgent if the recently launched 15-year plan, which aims to establish a customs union in the Southern African Development Community (SADC) by 2010, is to succeed.
President Mkapa, who chairs the 14-nation regional economic grouping, said, “If we get to 2010 with the same structure of intra-SADC trade, where South Africa accounts for over 50 percent of intra-SADC exports, and less than 10 percent of intra-SADC imports, we will have extremely difficult negotiations for a SADC customs union.”
He said this when he launched the Regional Indicative Strategic Development Plan (RISDP) in Arusha at the SADC Council of Ministers meeting on 12 March. The RISDP has several key milestones among which is the incremental process of creating a free trade area by 2008, a customs union by 2010 and a common market by 2012.
For this to happen in a sustainable manner, member states would need to be at a reasonably similar level of development. However, at the moment there is a huge asymmetry of economic power between South Africa and the rest of the region. The situation is further worsened by the fact that most SADC countries have similar comparative advantages, meaning that any specialisation would have to be in non-traditional or completely new areas.
With reference to the SADC blueprint, Mkapa said, “I would urge South Africa to accept a larger proportion of the responsibility to push this prospect forward through more investment in the industrialisation of the rest of the SADC region.”
He said, “With its superior infrastructure, South Africa can become the conduit of foreign direct investment from outside to the rest of the SADC region.” President Mkapa however, said this would have to be done in a mutually beneficial manner.
“I believe it can be done, and I believe this will hasten to make negotiations for a SADC customs union much easier, and the transition much smoother,” said the SADC chairperson.
Intra-SADC trade is currently at 22 percent, which, while representing a major jump from a paltry three percent in 1990, is far too low for an integrated market. In comparison, the European Union enjoys intra-trade of well over 60 percent. Worse still, intra-SADC trade is heavily skewed in favour of South Africa.
“Certainly intra-SADC trade outside the South African Customs Union (SACU) is a great disappointment, for I do not think it exceeds five percent,” said the Tanzanian president.
Mkapa called on SADC citizens to change their mindsets and buy nationally and regionally produced goods and services. Over-reliance on imported commodities, he said, is synonymous with exporting jobs and reducing government revenues.
“As long as quality standards are met, and the price is competitive, why should our people continue to worship goods and services imported from outside our region? This attitude is a threat to jobs, and to investments in our region, turning it into a supermarket for aggressive exporters from abroad into our region.
“And I am not talking protectionism; I am talking common sense! If we could substantially change our consumption habits, being proud to shop nationally and regionally, we would provide the impetus for higher investment, more jobs, faster growth and broader development in our countries, and our region,” he said.
Private sector investment remains the key to economic growth and development in SADC, as it is worldwide. And the RISDP rightly prioritises the private sector. On the other hand, governments, in partnership with the private sector, need to invest in infrastructure and social services such as health and education.
As President Mkapa noted, foreign direct investment, would then complement national and regional efforts. (SARDC)
