Post on 13-Sep-2014
description
Talitha Bertelsmann-Scott
Research Associate – South African Institute of International Affairs (SAIIA)
20 February 2013
• Combined population of 273 million consumers • 9.8 million km2 surface area – roughly the same
as China or US • Dynamic growth area in time were West is
stagnating • From 2000-2010 GDP in the region grew by 45% • Mineral resource deposit significant with new
finds in Mozambique, Tanzania, Malawi • Water rich countries like Lesotho, Zambia • South Africa dominates
� In comparison to N and W-Africa, quite small � DRC and Madgascar has French connection
(Seychelles and Mauritius) � Physical Embassies throughout Southern Africa
with dedicated economic relations departments in South Africa, Mozambique and Angola
� Mozambique – • investment of around €1 million per annum with a total
stock of €9 million • 21 Companies with 10,000 employees in primary sectors,
services (Bureau Veritas, Sofreco), energy (Total), construction (Razel, Soletanche Bachy) and engineering (Alstom)
� Angola – • Trade balance in favour of Angola: France
imports large amounts of oil and little else • Exports from France also largely for oil industry
and some household products • France third largest investor in Angola in
agriculture, services, pharmaceuticals and oil • French companies employ around 20,000
workers
� South Africa • Largest and most diversified presence • France is ranked as the 9th largest investor in
South Africa, with • 203 French companies with 29 000 employees • investment value of €1,3bn
� Low levels of trade • Africa accounts for <2.5% of world trade • Intra-Africa trade is low: only around 10-12% -
compared to EU of around 60% � Africa relies heavily on exports of
commodities • This reliance has led to debt crisis and poor income
distribution • Need diversified opportunities to trade, profit from
larger markets � 7 African countries in bottom ten most
restrictive trade regimes
� Economic scene dominated by • Large companies – sustained and inclusive
growth, employment should come from SMME’s � Trading environment difficult for small operators
• South Africa – � Retail, another important growth and employment
sector is dominated by SA companies: Shoprite, Game, Woolworths change in operations
� Services: Banking – Standard Bank, Communications � Construction contracts predominantly
won by Chinese firms in recent years
� Other success areas include SAB Miller, British American Tobacco, Distell, SAA
� South African dominance is such that even successful regional companies relocate to make use of value-chains, markets, distribution networks • Windhoek Lager
� Yet increasingly facing competition from Brazil, Russia, India, China (BRIC) nations
� Since end of apartheid countries unified in Southern African Development Community (SADC)
� 15 Member States, but Madagascar suspended
� Why Regional Integration? • Overcome problem of small markets, political
fragmentation, huge cost of infrastructure development, policy lock-in effect
� Model integration on European Union example of linear integration • From free trade area to political union (?)
� Free Trade Area – remove tariffs on significant amount of products between parties, maintain external tariffs (2012)
� Customs Union – remove internal border controls and only have one set of tariff codes for all countries (2015)
� Common Market – unified standards and practices, labour mobility(2016)
� Monetary Union – Common currency (2018) � Sovereignty ceded to regional authority at
each step
� Currently excludes DRC, Angola, Seychelles and Madagascar
� 85% of tariffs were liberalised in 2008, moving closer to 95% coverage by end last year
� Number of exclusions remain � Advantages in import to South Africa –
markets where overlap like Tanzania and Kenya
� Advantages in export where market share competes with East African produce
� In theory this should apply to Asian competitors but in general terms Asian countries hold price advantage despite tariff advantage
� SADC FTA progress in increasing trade but not enough to ensure movement of goods
� Five countries in SADC belong to a customs union • South Africa, Botswana, Lesotho, Namibia and
Swaziland • Overhang from colonial times • South Africa collects customs revenue and
shares all between BLNS � Effectively development assistance � If expanded the BLNS are sure to lose out � Lesotho, Swaziland resource 50% of fiscal income
� Real agenda of SADC?
� Realisitic within Southern and Eastern African context
� South Africa increasingly leaning towards postponing further integration in favour of another bigger FTA with East Africa • Tripartite FTA – as it will include all states in
COMESA and East African Community • 26 States = free trade from Cape Town to Cairo
� BUT it is not enough to bring tariffs down • Enforcement not effective without regional court
� Poor infrastructure � Lengthy waiting times at borders � Corruption � Non Tariff Barriers – very difficult to
monitor and control � Insurance � Financing � Poor consumers � Dominance of South African retail stores
� Many focus on trade facilitation in order to increase SADC trade
� Focus on reducing complexity and cost of trade transaction in order to increase efficiency, transparency and predictability of trade but to maintain government control where necessary
� It costs $5000-$8000 to ship a 20ft container from Durban to Lusaka but only $1,500 to ship from Japan to Durban
� Only so much that can be achieved on policy level
� Trade facilitation next step towards increasing intra-regional trade
� Donors and governments have adopted a corridor approach towards trade facilitation
� North-South corridor – connecting Eastern states to Durban and Dar es Salaam Ports and develop Maputo
North-‐South
Northern
Central
Nacala
Maputo
Beira Trans-‐Cunene
Namibe
Malanje
Trans-‐Caprivi
Lobito-‐Benguela
Dar es Salaam
Trans-‐Kalahari
Ethiopia -‐ Djibou?
Western Cluster
N-S Cluster
Eastern Cluster
EAC Cluster
Corridor Management Committees: Transport Corridors have their own management structures that are usually established through a MoU between the countries the corridor transits through. Efforts are being made to “cluster corridors and to manage the corridors in clusters.
Corridors along the top Focus Areas and Corridor Layers
Click on a road section
Click on a document
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OSBP – On-going work at Chirundu Border Post
Journey times on NSC typically 1/3 driving and 2/3 waiting. Most effective way to reduce costs is to reduce waiting times at borders. This can be done by converting to OSBP but need to address: physical facilities (common control zone with a fenced perimeter, common facilities – scanning, weighbridges and inspection bays); operations and training; and legal framework (extraterritorial jurisdiction).
Chirundu can be said to be now truly operating as a OSBP. Have been challenges (such as how to address transit fraud) but procedures now signed off so out-standing issues (signage, additional training, fibre across bridge, preparation of a performance charter and final modifications to buildings) can now be completed.
Border Crossing Monitoring:
Have relat ively sophist icated border monitoring processes based on a GPS truck tracking system. The system tracks “queuing” times as well as border clearing times.
28 28
32 32 32
25
30
21 23
24
21 23
0
5
10
15
20
25
30
35
juil.-‐07 août-‐07 sept.-‐07 oct.-‐07 nov.-‐07 déc.-‐07
Avg hours to cross from Zimbabwe to Zambia
Avg hours to cross from Zambia to Zimbabwe
36%
65%
Border Crossing Time reduced by >1/3
Nr of Vehicles increased by 2/3
Note: Before December 2009, average border crossing time was between 72 and 120 hours
Note: Chirundu average border crossing time down to 25 hours in June 2012
� Exisiting surveys from many organisations, including World Bank, but no accessible case studies
� Developed a list of barriers from exisiting work and validated against firm level interviews
� 50 Case studies in 10 countries (+Moz) � Initial findings show correlation but with
striking differences
Customs RegulaGons
29%
CorrupGon 11%
Skilled Labour 13% Inefficient
Bureaucracy 11%
Infrastructure 27%
Access to Finance 9%
All
SAIIA
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Customs RegulaGons
CorrupGon
Skilled Labour
Inefficient Bureaucracy
Infrastructure
Access to Finance
SAIIA
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Customs Regulations
Corruption Skilled Labour Inefficient Bureaucracy
Infrastructure
South Africa
Botswana
Lesotho
Namibia
Swaziland
0
5
10
15
20
25
30
Customs Regulations
Corruption Skilled Labour Inefficient Bureaucracy
Infrastructure Access to Finance
SACU
Non-SACU
0% 10% 20% 30% 40% 50% 60%
Customs Regulations
Corruption
Skilled Labour
Inefficient Bureaucracy
Infrastructure
Tax rates
Exchange rates/FOREX/Banking
Malawi
DRC
South Africa
0
2
4
6
8
10
12
14
16
18
20
� Of the opinion that if corruption could be done away with, the other barriers would automatically resolve themselves
� Customs clearance – three advantages in DFZ • Special lane at border • Customs officials visit on site • Limited paper work due to duty exemption
� Infrastructure • Government has invested in ports in order to satisfy
demands/needs of oil and aluminum companies
� Infrastructure • Don’t make much use of the roads • Ample electricity, water • Additional oil, gas and coal finds might
overburden existing ports � Banking
• Despite or perhaps due to large figures involved they’ve not had any difficulty in moving funds in or out of Mozambique
� Message – it pays to be big • Also evident from other case studies
� Weighbridges most often mentioned as significant NTB • Readings differ, payment options limited, no security
for trucks • Roadblocks – unpredictable, have to plan ahead to
be corrupt � Labour market – permit system
• Mozambique very clear and efficient system • Other end of the scale – large sums but no pos result • Large companies rotate staff globally for skills
training, but very difficult in Southern Africa
� E-platform – recent introduction in SA • Welcomed by Road Freight Association • E-platforms frequently mentioned as solution to
delays and corruption • BUT e-platform seems to have added to delays � Border officials still want to the paperwork � Infrastructure at borders problematic
� Paperwork for mixed consignment of fresh produce easily a foot deep
� Size matter as larger companies can outsource logistics, customs clearance or appoint in-house expertise
� Hierarchy of stumbling blocs associated with development • Banking, access to forex important barriers in
DRC, Malawi not so in South Africa rest of SACU • Corruption headache for South Africans wanting
to do business in DRC, for DRC locals accepted as normal costs associated with doing business
� For SACU companies, greater focus on efficiencies and predictability
� Infrastructure in Southern-SADC has improved dramatically, • only mentioned in context of physical border
infrastructure � North still lagging far behind and
weather dependent • Time to get goods across borders and to point of
sale varies from shipment to shipment
� PS interesting position: beneficiary, implementor, driver, stumbling block
� Very limited engagement at the regional level
� National engagement as well as bilateral • Mixed results
� Exception is telecommunications that has effective tool in CRASA • Again, it pays to be big, telecom huge tax revenue
and profits, mutual benefit in engagement
� SADC-wide business visa � More effective SADC e-platform that
gives regular updates on tariffs, excise and other developments
� SADC Rules of Origin certificates to become more easily obtainable
� Uniform regional weighbridge system and clearance
� Where does it leave companies in SA wanting to trade with neighbouring states? • Western Cape well placed ito access to
Mozambique • Retail sourcing practices in local agriculture
beneficial • Growing middle-class in SADC means increased
wine sales • Cape Town Port industry missing out vis Maputo,
Dar es Salaam, Walvis Bay, Luanda
� Small companies • Know the risks – waiting times, corruption, NTB’s • High risk, high reward? • Feed into value-chain of larger operators • Participate in regional forums for private sector • Read www.thetradebeat.com - research findings • Report NTB’s – www.tradebarriers.org • Subscribe to TMSA newsletter
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