Trade and Industry minister Dorcas Makgato-Malesu defines the historic conclusion of the Economic Partnership Agreement (EPA) between Southern African Development Community (SADC) and the European Union as a ‘great achievement’ they have done thus far.
For the ever confident Malesu, all the praises are now heaped on her and the negotiation team within the ministry. She is perhaps the woman of the moment within the business community at present. The conclusion of the negotiations is also plus for trade minister, who has witnessed previous trade ministers such as Daniel Moroka and Jacob Nkate leave the portfolio without any pen put to paper on the EPA. As she swaggered towards the podium Malesu, like other technocrats within the conference room, punches the air with confidence that Botswana’s goods will now even reach more cities and towns of Europe with special treatment tag. Equally, goods from Europe will also find it easy to land within the SADC countries.
First mooted more than a decade ago, the EPA seeks to among others increase trade between EU and SADC, which boasts top economies like Germany and UK, without necessarily inhibiting growth of home grown industries from the less developed SADC countries. Never mind economic difference. Europe combined Gross Domestic Product runs into well over $17 trillion while that of SADC stands at a paltry $1, 19 billion. Both Malesu and EU envoy to Botswana and SADC Gerard McGovern concur that, after punishing negotiations and broken promises each party should now start to concentrate on increasing production to now meet the huge market that has been created. “We have come to the end of the road,” remarked McGovern, who is expected to leave his post in the coming weeks. Both parties met in Pretoria mid last month to initial the EPAs, which basically paves way for the signing ceremony. “The agreement has been carefully agreed,” said the charismatic McGovern.
Botswana, what is there to benefit?
Fresh data from Statistics Botswana shows that Europe is not the country’s largest international trading partner after all. In May, Botswana’s exports were valued at P5, 1 billion, with Asia topping the list of recipients. Asia’s total imports of goods from the Botswana was 42, 6 percent of total exports. Europe managed to receive P1, 5 billion of goods, which represent just over 30 percent of total exports during the period. While exports figures differ slightly on monthly basis, Prof. Roman Grynberg, a senior researcher at Botswana Institute of Development and Policy Analysis (BIDPA) strongly believes that, apart from the troubled beef sector, the country will not benefit from the deal when things are all said and done. “Look, we used to export garments to the EU, but that has since collapsed. Diamonds are not subjected to duty free quota free.
This means we are only left with beef,” said Grynberg. At a press conference, a cornered Malesu did not respond adequately to questions regarding other products other than beef that the country can benefit from. “Just know that apart from beef, other agricultural products can also be exported to Europe,” said Malesu, who was flanked by McGovern and foreign minister Phandu Skelemani. Econsult macro-economist, Bogolo Kenewendo holds a divergent view from Grynberg. “Beef is big as far as the livelihood of most Batswana is concerned,” she pointed out. The British educated economist told Botswana Guardian this week that, the struggling beef sector still has a number of families attached to it. “By agreeing to sign, Botswana has secured this market,” she said. Europe remains the country’s biggest trading partner in the sector.
According to government data, beef and beef products accounted for only 1, 8 percent of total exports of P5, 1 billion recorded in May this year. More like the trade minister, Kenewendo cannot immediately think of any other products which can be exported to the EU and get the desired profits in the foreseeable future. However, she could not hide her disappointment that the EPA does not cover service industries such as finance and banking. “Services (industries) are key to economic diversification,” she said regrettably. Still the financial and banking industries in Botswana and SADC are dominated by European based companies such as Barclays and Standard Chartered. Chief executive of Botswana Confederation of Commerce, Industry and Manpower (BOCCIM) told this publication that the conclusion of the EPA comes at a time when the country is aggressively looking for opportunities outside. Maria Machailo-Ellis said members of the advocacy group are already hard at work preparing to take opportunities that come with EPAs. She said with cross border partnerships, Botswana can increase the range of products it exports to EU.
‘EPA to speed up integration’
McGovern told a media conference last week that, the conclusion of the EPA with SADC is expected to further boost the lagging regional integration. “The deal will foster regional integration,” he stressed. His argument is that the EPA will allow SADC countries to combine efforts in producing as much goods to meet the ever growing demand of European countries which are recovering from the financial crisis. The EPA has flexible rules of origin which facilitate intra-regional trade and industrialisation across Africa. Regional integration has become a hot topic among SADC countries in recent times. SADC executive secretary Dr Stergomena Tax told a recent meeting of regional trade and finance ministers held in Phakalane that without integration, the region will still find it hard to grow and ultimately attract foreign direct investment. Exports from SADC to outside markets are fast growing while intra-trade is slowly picking. Data sourced from SADC website on Wednesday shows that the region exports increased to $205, 6 billion in 2011, a giant leap from $162, 9 billion recorded the year before.
Still in the same periods, the amount of trade between SADC countries reached $58, 5 billion, representing a marginal increase when compared to $48, 7 billion in 2010. While both Malesu and McGovern agree that the EPA will allow the region to integrate, and ultimately export more to Europe, Grynberg thinks otherwise. “South Africa has no interest in regional integration. The country still views other regional countries as markets rather partners,” he said. ‘I don’t think the EPA will change the situation.” EU is SADC’s main trading partner and South Africa accounts for majority of imports to and from EU into the region. South Africa is also the region’s economic power house, boasting diverse industries which supply numerous countries. Speaking to Botswana Guardian on Tuesday, Machaillo-Ellis said EPA is an eye opener. “We cannot look at South Africa alone. There are other markets such as Mozambique and Angola,” she pointed out. The 2000 strong BOCCIM members have been exposed to the benefits of EPAs in various workshops held in the last two years.
South Africa is the ultimate winner
The region’s economic juggernaut might be the biggest beneficiary of the EPA after all. What places the Jacob Zuma- led country ahead of others is simply its wide economic base. Secondly its existing trade relations with EU under the Trade Development and Cooperation Agreement (TDCA) give it an edge over others. The agreement, which has not been cancelled ahead of the EPA signing ceremony, gives the former British dominion preferential access to EU markets, in addition to what it is expected to get from EPA. South Africa also has everything to smile as it boasts large plantations within the sugar and wine industries, which easily get into the EU market, unlike Botswana which only exports beef to this market, said a source. Before the conclusion of the EPA, Botswana Guardian understands that agricultural advocacy group in that country has selfishly pushed for more access for its citrus products to the EU. Despite all these, McGovern maintained the EPA is designed for all to benefit, regardless of economic size.
EU arm-twists SADC, Botswana?
While negotiations for EPA between SADC and EU were taking place behind the scenes, the latter was busy pumping millions of US dollar capacitating Non-State Actors in various fields of economy. In 2008, Botswana and EU signed a finance agreement to fund capacity building programmes. While this was perhaps a good gesture from EU, critics have wondered the move for such workshops. And just two weeks ago, McGovern signed yet another P350 million trade facility by way of grant to support implementation of SADC protocol and EPA agreement. Malesu and McGovern read nothing out of this, adding the EPA deal will also ensure the protection of ‘sensitive’ industries. Still, SADC EPA countries were negotiating with a deadline hovering over their heads. If the EPA were not initialled Botswana’s beef exports to EU past October 2014 would have been very difficult. Malesu explained they were not pressured. She added they also had their own deadline as a group. SADC EPA countries which have agreed to sign are Botswana, South Africa, Swaziland, Lesotho, Namibia, Angola and Mozambique.