Chapter 5

International trade
in southern Africa
and Africa


Lecture overview
The Southern African Development
community (SADC)
What is SADC?
The SADC Protocol on Trade
The mission of SADC
The SADC economy
International trade in SADC countries
Exports and imports in southern Africa.

Lecture overview (continued)
Export processing zones in southern
Africa
The SADC free trade area and regional
integration
Southern Africa and COMESA
Southern Africa and the African Union
The Southern African Customs Union
Other regional trade/economic
communities in Africa
Learning objectives
Describe the role of SADC in facilitating
development and economic growth in the southern
African region.
Appreciate the importance of the adoption of the
SADC Protocol on Trade in enhancing bilateral
and regional initiatives to advance regional
economic integration.
Identify initiatives that improve the African
countries market access to the EU and the US.
Outline the export and import trends in southern
Africa
Learning objectives (continued)
Explain the importance of export processing
zones in creating an environment for regional
firms to participate in global markets.
Explain how firms could tackle African markets.
Describe the role of the African Union, COMESA,
and the Southern African Customs Union in
fostering economic, social and cultural integration
of the African continent.
Describe some of the other regional economic
communities that exist in Africa
What is SADC?
It is the Southern African Development
Community.
Its predecessor the Southern African
Development Co-ordination Conference (SADCC)
was formed in Lusaka, on 1 April 1980.
The Treaty establishing the Community, which
replaced the SADCC, was signed at the Summit of
Heads of State on 17 August 1992.
SADC consists of fourteen member countries.


The SADC region
SADC consists of fourteen member countries:


The SADC protocol on trade
The aim of the protocol is to increase trade
without any impediments by:
Eliminating import duties
Eliminating export duties
Eliminating non-tariff barriers
Essentially it aims to enhance bilateral as well as
regional initiatives to advance regional economic
integration, co-operation to liberalise trade and fair
competition in commodity trade
Criticisms of Protocol on Trade
Little is done to ensure that other
complementary policies are put in place to
industrialise the region.
Reduction on services and non-tariff barriers
have been neglected.
Rules of origin are complex and they hinder
regional economic integration.
The objectives of the SADC
To achieve development and economic growth
To alleviate poverty
Enhance the standard and quality of life of the
peoples of southern Africa
To support the socially disadvantaged through
regional integration
To evolve common political values, systems and
institutions
To promote and defend peace and security

Objectives of SADC (continued)
To promote self-sustaining development
To achieve complementarities between national
and regional programmes
To promote and maximise productive
employment and utilisation of resources in the
region
To achieve effective protection of the
environment
To consolidate the long-standing historical, social
and cultural affinities and links among the
peoples of the region.


Goal of SADC
The ultimate goal of SADC is to extend the current
preferential trade arrangement so as to establish a
regional trading block and a common market for
SADC.


The SADC economy


International trade in SADC countries
Exports and imports in southern Africa
The US has been the destination for most of
Angolas exports mainly oil.
The major destination for Botswanas exports
(mainly diamonds and beef) is the EU.
The main export destination for the DRC is
Belgium (mainly diamonds).
Lesothos largest trade market is the US and
relies heavily on SA for all its consumables.
The largest export market for Malawi is also the
US.
Exports and imports in southern Africa
(continued)
The EU is the leading export market for
Mauritius.
Mozambiques most important trade partner is
South Africa.
Namibias trade is highly oriented towards the EU
on the import side SA is the dominant partner.
Seychelless main trading partners are France,
the UK, Germany and Japan.
The EU is South Africas most influential trade
partner.
Principal exports and imports per SADC
country
Country Principal exports Principal imports
1. Angola Crude oil, refined petroleum products,
diamonds, coffee
Consumer goods, capital and
intermediate goods, transport
equipment, food
2. Botswana Diamonds, copper, nickel, soda ash, beef
exports, vehicles and parts
Food, beverages, tobacco,
machinery, electrical equipment,
chemical and rubber products,
vehicles and transport
3. DRC Diamonds, copper, cobalt, coffee,
petroleum, gold
Consumer and capital goods, raw
materials, energy products
4. Lesotho Clothing and textiles, food and live
animals, tobacco, chemicals, machinery,
manufactured goods, diamonds
Textiles and fabric, crude materials,
machinery and transport material,
chemicals, manufactured goods
5. Malawi Tobacco, tea, sugar Machinery and transport, chemicals,
materials based manufactures
6. Mauritius Clothing, sugar, fish, pearls and precious
stones
Manufactured goods, machinery and
transport, food and animals, fuels
7. Mozambique Aluminium, wood, food and live animals,
electricity
Machines, transport equipment, oil,
food
Principal exports and imports per SADC
country (continued)
Country Principal exports Principal imports
8. Namibia Diamond, copper, zinc, processed fish, beef Fuels, machinery, transport
equipment, chemicals, food,
consumer goods
9. Seychelles Canned tuna, frozen fish, cinnamon bark Manufactures, petroleum
products, food, machinery
10. South
Africa
Gold, platinum, diamonds, machinery and
transport equipment food, beverages, tobacco,
manufactured goods
Food, fuel and energy, capital
goods, manufacturing parts
11. Swaziland Raw sugar, apparel and clothing, wood pulp,
waste paper
Fuels, machinery, transport
equipment, chemicals
12. Tanzania Gold, agricultural products, fish products,
manufactured goods
Cons. goods, machinery, oil,
transport & equipm, industrial
raw material,
13. Zambia Copper, non-metals, cobalt Petroleum, metals, fertiliser
14.
Zimbabwe
Tobacco, gold, horticulture, minerals, sugar,
cotton
Machinery and transport equip,
chemicals, petroleum products,
food
Exports processing zones in southern
Africa
Are industrial zones with special incentives set up
to attract foreign investors, in which imported
materials undergo some degree of processing
before being re-exported
They include free trade zones, special economic
zones, bonded warehouses, free ports, customs
zones, and Maquiladoras
In South Africa they are referred to as Industrial
Development Zones (IDZ)
Export processing zones in southern Africa
EPZs are established for a number of strategic
reasons:
As a source of foreign investment
To find a niche in the global economy
To serve as industrial estates that have duty-
free production of exports, facilities and
services tailored for export oriented industries
As part of a broader development initiative that
encourages private sector participation in
providing infrastructure in areas with abundant,
unutilised potential.
Exports processing zones in southern
Africa
In South Africa four IDZs can be
identified:
Coega
East London
Johannesburg
Saldanha and Richards Bay
All part of a broader initiative to encourage
private sector participation in areas with under-
utilised potential
Export processing zones in southern
Africa (continued)
In Mozambique EPZs are either separate
geographical areas or single factor units geared
towards exports.
In Malawi, the EPZs were introduced in 1995 to
attract foreign investment. Special incentives are
given to investors involved in manufacturing for
exports.
In Mauritius, government focuses on forging
competitive edge of export oriented activities,
particularly in the textile industry.

Export processing zones in southern Africa
(continued)
Namibia had 22 EPZ companies in 2003 which
had invested N$ 3.3 billion and created nearly 10
000 direct employment opportunities.
In 2001 Seychelles had 24 EPZ companies which
generated US$150 million, accounting for 22% of
all exports in the country.
Southern Africa and COMESA
The Common Market for Eastern and Southern
Africa (COMESA) was established in 1994.
COMESA is a regional grouping that started
with 20 countries in eastern and southern
Africa.
The original 20 member countries of COMESA
were Angola, Burundi, Comoros, DRC,
Djibouti, Egypt, Eritrea, Ethiopia, Kenya,
Madagascar, Malawi, Mauritius, Namibia,
Rwanda, Seychelles, Sudan, Swaziland,
Uganda, Zambia and Zimbabwe.
Southern Africa and COMESA (cont.)
The combined GDP of COMESA countries totalled
over $175 billion in 2003.
In 2000, COMESA launched a Free Trade Area
(FTA) with nine out of the 20 countries participating.
Several countries that did not participate cited
insufficient economic development to compete
openly with the stronger and more developed
countries.
Since the launch of the FTA, intra-COMESA trading
has been reported to have increased by 30%
Some suggestions for firms involved in
cross-border trade
New entrants may establish commercial presence through
joint ventures, licensing agreements, merger or acquisition.
Intra-industry trade is a more effective channel for
technology transfer:
Integrating foreign technologies if actively involved in
trade and cross-country product sharing.
Intra-industry trade reduces transaction costs associated
with intra-regional trade.
Engage in inter-firm and intra-firm research and
development for transfer and development of technology
Intra-regional industrialisation and socio-economic
progress lie in the accelerated development of industries
where FTAs have a comparative advantage.
Southern Africa and the African Union
The Organisation of African Unity (OAU) was
established in 1963
Its objective is to foster economic, social, and
cultural integration of the African continent
The development of NEPAD is considered as
one of the most important development in the
history of OAU
The primary objectives of NEPAD are to eradicate
poverty and to place African countries on a path of
sustainable growth and development
The OAU history and initiatives
Lagos Plan of Action and the Final Act of Lagos (1980) that incorporate
programmes and strategies for self reliant development and cooperation among
African countries
The African Charter on Human and Peoples Rights (Nairobi 1981) and the Grand
Bay Declaration and Plan of Action on human rights the two instruments to
promote human rights in the continent

The OAU Declaration on the political and socio-economic situation in Africa and the
fundamental changes taking place in the world (1990) which underscores Africas
resolve to seize the imitative, to determine its destiny and to address the
challenges to peace democracy and security

The Abuja Treaty (1991) proposed the establishment of an African Economic
Community (AEC) whose objective is to foster the economic, social, and cultural
integration of the African continent
African Common Position on Africas External Debt Crisis (1997) a strategy for
addressing the continents external debt crisis
The Algiers decision on unconstitutional changes of government (1999) and the
Lome Declaration on the framework for an OAU response to unconstitutional changes
(2000)
The New Partnership for Africas Development (NEPAD) adopted as a Programme
of the AU at Lusaka Summit in 2001
The Southern African Customs Union
(SACU)
Came about as a result of negotiation involving
Britain and SA as early as 1910, and persisted until
1960.
The new renegotiated agreement was adopted in
1969 by five member countries: South Africa,
Botswana, Lesotho, Namibia and Swaziland.
The aim of SACU is to maintain the free
interchange of goods between member countries.
SACU provides for common external tariff and
common excise tariff. Customs revenue collected is
shared among members.

The Southern African Customs Union
(SACU)
SACU agreement was further reviewed after
the first democratic election in 1994.
Consensus was reached on institutional reform
principles, including a share of customs pool, a
share of the excise pool, and a share of the
development component.
The new agreement focuses on (1)
governance & administration, (2) economic
policy and regulatory issues, (3) revenue
sharing.
Other regional trade/economic
communities in Africa
The East African Community (EAC)
Economic community of Central African States
(ECCAS)
Central African Economic and Monetary
Community (CEPGL)
Intergovernmental Authority of Development
(IGAD)
Economic Community of West African States
(ECOWAS)