Sunday, September 26, 2021

Minimal trade between Botswana and East Africa

On account of being part of the Southern African Development Community (SADC) Botswana and Tanzania have preferential access to each other’s market. Botswana imports crab, lobster and shrimp from Tanzania and reciprocates by exporting fish to that market. However, a report prepared for the British High Commission by Imani Development (International), a Cape Town consultancy firm, says on the whole bilateral trade between the two countries is very minimal. This situation gives insight into potential trade with other East African countries that will be liberalised under the Tripartite Free Trade Agreement involving the Common Market for Eastern and Southern Africa,(COMESA) East African Community EAC) and SADC.

This would seem to confirm previous analysis by a Zimbabwean economist, Dr. Albert Makochekanwa of the University of Zimbabwe, who measured levels of unrealised trade potential between SADC countries. Whereas Botswana’s highest unrealised trade potential is with Madagascar at a ratio value of 142.4, its potential with Tanzania is only 11.9. Negotiations for the establishment of the TFTA are ongoing and the Imani study assesses the potential for trade in goods and services in the TFTA, in particular potential export sectors.

The rationale of the Imani study is that as the only SADC member state which is also a member of the EAC but not COMESA, Tanzania could provide insights into the trade possibilities between Botswana and the EAC region. Imani says that the review of the studies and of Botswana’s trade with Tanzania revealed few opportunities for export, with some scope for textiles and clothing (footwear) and equipment.

The report says that the expected impact of the TFTA on Botswana is limited. It adds that this was to be expected given that the country is already in a free trade agreement or customs union with neighbouring countries, that (excluding Tanzania) its main exports are not key imports of EAC, that distances are far and that transport costs to these new markets are very high.

“There is very limited opportunity for Botswana’s goods and services to benefit from the TFTA. Botswana’s main trading partners in Africa are in SADC and there is very minimal trade with non-SADC Tripartite states. Exports to non-SADC Tripartite states were just over $2 million in 2012. Similarly, imports to Botswana from non-SADC Tripartite countries remains marginal at a little less than $2 million. Imports are coming from Kenya ($1.2 million), Uganda ($527 000), Egypt ($169 000), Ethiopia ($42 000) and Rwanda ($9 000),” the report says.

It further states that while there is little immediate commercial interest for Botswana in the TFTA, participation in the TFTA is still relevant because it would deepen regional integration within SACU and SADC, align the country with efforts to create an Africa-wide free trade area as set out in the Abuja Treaty and benefit from a larger Cape-to-Cairo market through attraction of FDI. The TFTA could play a role in increasing effective market access from Botswana to this larger market through customs and infrastructure co-operation and movement of business people ÔÇô reducing the high transport costs and facilitating trade and investment.

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