South Africa has adopted a new trade policy approach aimed at looking at its own interest first, despite a drive for more regional integration to sustain Africa’s trade growth with the rest of the world. Importers of several products have been experiencing dramatic increases in tariffs from South Africa, as well as an increase in anti dumping and safeguard measures aimed at protecting South African industries.
Trade and Industry Minister Rob Davies this week approved the increase of tariffs on frozen poultry following an application by the local poultry industry. George Geringer, a senior manager at PwC, said regional trade relations had been put on the back burner in favour of measures to protect South African manufacturing industries against cheaper imports.
“Government realised that manufacturing as a percentage of gross domestic product has declined from about 40% to about 12% in the past 20 years,” Mr Geringer said at the 16th Africa Tax and Business Symposium hosted by PwC in Mauritius.
Trade between Africa and the rest of the world has increased by more than 200% in the past 13 years, with optimism from the World Bank that Africa could be on the brink of an economic takeoff, similar to that of China and India two decades ago.
A key element for Africa to sustain the trade growth is regional integration to build economies of scale and size, in order to compete with other emerging markets – but limited resources, internal conflict and the lack of a mechanism to monitor the integration process is blocking it, says trade analyst from PwC.
South Africa has been regarded as the “champion” of the Southern African Development Community (Sadc). Sadc member countries eliminate tariffs, quotas and preferences on most goods and services traded between them. The member countries include Mauritius, Mozambique, Namibia, Swaziland, Botswana and the Democratic Republic of Congo.
The assistant manager at PwC’s international trade division, Marijke Smit, said less than 10% of African nations’ trade was with each other, compared with 70% between member states of the European Union. Benefits of regional integration include increased trade flows, reduced transaction costs, and a regulatory environment for cross-border networks to flourish. Ms Smit said an unsupportive business environment and cumbersome regulatory framework, weak productive capacity, inadequate regional infrastructure, poor institutional and human capacity, and countries’ prioritising their own interests stood in the way of integration.
Mr Geringer referred to the new action plan endorsed by leaders from the African Union in January last year. The plan will see the creation of a continental free-trade area by 2017. The enlarged free-trade area will include Sadc, the East Africa Community and the Common Market for South and East Africa (Comesa). The trade bloc will include 26 nations in three sub-regions. Source: BDLive.com