[South Africa] SADC must push for free trade area

from The Sunday Times

By Donwald Pressly

This week's Southern African Development Community (SADC) heads of state summit will have to look at how to revitalise the implementation of the economic integration agenda of the region, South Africa's deputy Foreign Minister Aziz Pahad said today.

South Africa's predominant position in intra-regional trade would also have to be a matter of discussion, he said.

Pahad mentioned two dates for the implementation of a free trade area for the region - 2008 and an outer year of 2012. He said that by 2008, 85% of goods within the region would face "zero" tariffs and this would open up the region considerably.

When the region started to implement the free trade protocol in September 2000, only about 45% of goods within the region were traded "at zero tariffs".

"Our immediate goal is implementation of a SADC free trade area," he told journalists.

At a briefing at Parliament in Cape Town, the deputy minister noted that the summit on Thursday and Friday in Lesotho "must explore ways ... of consolidating economic development and integration within the region".

Noting that about half of the population in the region still lived below the poverty datum line - despite impressive economic growth rates recently enjoyed in much of the region - he said the countries would have to discuss "how we deal with this specific problem".

Pahad said the "key driver for development" over the next few years was going to be market integration. "This will be an important session of the SADC," he said.

Noting that Angola was expected to play an increasingly important role in the regional economy, having notched up a growth rate of some 15% last year and an anticipated 35% growth rate this year - mainly on the back of its oil industry, he said the region as a whole was expected to grow at a "much faster rate" than the overall rate of some 5% in 2005.

Mining was driving growth in Botswana, Mozambique, Namibia and Zambia, while agricultural expansion was notable in Mauritius, Mozambique and Zambia in particular. Tourism business development was notable throughout the region.

Pahad made no reference whatsoever to the troubled economic situation in Zimbabwe. He said the region as a whole had been "practically stabilised".

Turning to South Africa's role within the region, he said the country's exports to other southern African states rose from 215 billion rand in 2001 to 320 billion rand in 2005. The regional contribution of exports to South Africa amounted to just 24 billion rand in 2001, although this had risen to 70 billion rand in 2005.

"There is still a great discrepancy between the figures," he noted.

There were various reasons for this, he said, including capacity constraints in southern African states and a lack of the beneficiation of the industrial base which meant that they were "not responding" to an increased market access provided by South Africa. Progress had been made on integration, he said, although he said it may not have been fast enough.

Noting that the Southern African Customs Union (SACU) was a grouping with SADC, since January 2006 tariff preferences into SACU were duty free except for sugar, certain clothing items and various automotive lines of trade. There was "movement in the right direction," he said.

However, inter-regional trade, which had stood at just 20% of total trade in 1997, had only risen to 25% by 2003. Notably trade within the region amounted to less than 3% for Mauritius, while for Swaziland it amounted to over 80%. For Zambia and Zimbabwe intra-regional trade made up about 50% of their exports.

SADC countries include Angola, Botswana, the Democratic Republic of the Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zimbabwe and Zambia. It is headquartered in Gaborone, Botswana.