The African Continental Free Trade Agreement (AfCTA) presents a golden opportunity for Botswana to tap into new export markets and thereby boost economic growth. It is after all, a well-known fact that to reduce poverty, create jobs and improve general living standards, Botswana needs to accelerate economic growth as matter of priority. In fact, the National Employment Policy for Botswana, which was recently approved by Parliament, states that the economy has to grow at a minimum 5.5 per annum percent to reduce unemployment to a single -10 percent –digit, by 2030.
The World Bank on the other hand, has crunched a few numbers and estimates that implementing the AfCTA , would “Lift 30 million Africans out of extreme poverty and boost the incomes of nearly 68 million others who live on less than $5.50 a day”. Income would according to the World Bank , rise to $ 450 billion by 2035 while exports would increase by $560 billion and wages for skilled and unskilled workers are expected to rise by 10.3 percent and 9.8 percent respectively.
If implemented, the AfCTA would also reduce people living in extreme poverty in Southern Africa by 3.9 million. It does not matter that the majority of Southern Africa’s poor may not be in Botswana. Living in a region where the majority of people are not poor holds many advantages. It puts us in good stead to improve living standards even further. For a change, Africa would also pick up its weight a bit and contribute to a $ 76 billion rise in income for the rest of the world.
The Bank also adds that for AfCTA to bear fruit, we have to “create competitive business environments that can boost productivity and investment; and promote increased foreign competition and foreign direct investment that can raise productivity and innovation by domestic firms.” And this is where rubber hits the road because we have to transform the agreement from paper into action.
The first thing to do is to prepare people for economic dislocations that are bound to occur as a result of free trade. There will be need, for example, to provide safety nets for affected workers and conduct retraining activities to enable them to take advantage of new opportunities.
The second task is to be outward oriented instead of hoping to grow through inward looking policies. Outward orientation means opening up our markets to goods from other African countries. It means opening up to African foreign direct investors and welcoming them with open arms and not red tape. In the process, outward orientation also means making local firms understand that they have to step up to foreign competition and not expect perpetual protection.
We have to realise that embracing free trade changes the game as we know it. It now means that we can no longer base our growth strategy on statutory instruments for snacks, milk or school uniforms to shield ourselves against foreign competition.
Free trade enjoins us to remove all sorts of tariffs against our new trading partners. We cannot grow by planning to sell goods to our AfCTA partners while building up high walls against their exports which of course reach our shore as imports. In other words, we cannot export but keep out other people’s exports. Such a strategy will simply prove untenable. If we want to export then we must be prepared to reciprocate and allow them to export to us. We cannot afford to labour under the notion of “sensitive goods” whereby we seek to bar imports of say beef or diamonds. We have an opportunity to export even more beef instead of thinking that imports would hurt our industry when our major task is ramping up exports.
