I N S AT
  ISSUE 4                                                                                                                                   MARCH 2006

After our in-depth look at the WTO ne-             cant tax cuts recently introduced by the
gotiations in Hong Kong in December,               Government of Lesotho and on page 19                     INSIDE THIS ISSUE
we return to our usual format in this              we recount the success of the Botswana
fourth issue of Inside Southern African            Cattle Producer’s Association in obtain-                 Around Southern Africa:
Trade (INSAT).                                     ing higher prices for their cattle from the              Amid Anxiety over Trade with
                                                   monopoly Botswana Meat Commission.                       China, Many See Benefits ..............2
This issue takes a critical look at the
role of the private sector in shaping the          In reading through the issue, however,                   News Briefs ..........................................5
regional business environment through              you will realize that business participa-                INSIDE the Private Sector:
its participation in the policy process.           tion in the policy process at large has                  Karakulia Weavers Stays its
                                                   been mainly ad hoc, sectoral, and uneven                 Course ....................................................6
We highlight a number of instances                 across the region.
where the private sector has lobbied                                                                        More to be Done in Botswana ..6
for policy changes that have improved              Governments of the region are in the                     Tax Cuts to Revive Exports .........7
the circumstances in which it operates.            process of negotiating or considering                    INSIDE the Donor Community:
On page seven we look at the signifi-               trade agreements with potentially far-
                                                                                                            New Project Looks at Ag Issues
                                                   reaching and pervasive consequences.
                                                                                                            in the Region........................................8
                                                   The proposed trade agreement be-
                                                   tween the US and the Southern African                    New Website for Horticultural
                                                   Customs Union (SACU), for example,                       Producers and Exporters ..............9
                                                   may include provisions that could have                   Around the World:
                                                   implications for industrial policy, labor                News Briefs .......................................10
                                                   policy, investment and trade in services,
                                                                                                            INSIDE the WTO ...........................11
                                                   among others.
                                                                                                            INSAT Focus:
                                                   There is clearly an imperative for the                   Private Sector Seeks a Voice .....12
                                                   private sector to engage not only at the
                                                                                                            We Speak To...
                                                   sectoral and national level, but also at
                                                   the regional (referring here to SACU,                    Joshua Setipa, Counsellor in the
                                                   SADC and COMESA) and multilateral                        Office of the WTO Director
                                                   levels where decisions are taken which                   General ................................................14
                                                   could impact significantly on the en-                     Guest Perspective:
                                                   vironment in which the private sector                    Engaging the Private Sector in
                                                   does business.                                           Shaping Business Environment.16
                                                   We hope that you will enjoy this issue                   Resources ..........................................18
                                                   of INSAT and invite you to share your                    INSIDE the Trade Hub ................19
                                                   opinions and suggestions with us.

 Published by the Southern Africa Global Competitiveness Hub as part of its Trade Facilitation and Capacity Building Activities, and sponsored by USAID.
                 However, the views expressed in this publication do not necessarily reflect the views of USAID or the US Government.
 INSAT                                                                                                    ISSUE 4 PAGE 2


The idea that China may flood South-         The immediate impact of trade with             and oil. “In this respect, China and Africa
ern Africa with cheap goods, undercut-      China, many argue, is a reinforcement          are ideal partners. Africa is a treasure
ting local industries and threatening the   of traditional trade patterns between          trove of metals and minerals and has
livelihood of thousands of workers, fills    Southern Africa and other countries,           huge agricultural potential,” wrote Lyal
many around the region with dread.          thus undermining efforts by countries          White, Senior Researcher for Asia and
Many industry sources and analysts in       in the region to build an industrial base      Latin America at the South African Insti-
the region warn that the recent surge       and diversify their exports toward             tute of International Affairs (SAIIA), in a
in Chinese exports to Southern Africa       manufactured goods.                            recent article about growing trade rela-
poses a serious threat to the region’s                                                     tions between China and Africa.
industry, especially in the manufacturing   Nowhere has the impact of Chinese ex-
sector.                                     ports to the region been more evident          The growing Chinese demand for com-

Regional imports from China grew dra-       than in the textile sector. However, other     modities has driven up commodity pric-
matically over the past few years, reach-   manufacturing sectors have also seen a         es, thus softening the impact of increas-
ing a record US$4.2 billion in 2004 com-    dramatic growth in Chinese exports to          ing oil prices on oil-importing countries
pared to a little over US$1 billion five     the region. Chinese exports of machin-         in the region.
years earlier. More than 93 percent of      ery and transport equipment to SADC
these imports were manufactured goods.      reached US$1.5 billion in 2004 – 50 per-       “The oil shock, which one would have
                                            cent higher than total Chinese exports         thought would have been devastating for
By comparison, regional exports to China,   to the region in 1999.                         Africa’s economies, has been offset quite
which also saw a dramatic increase from                                                    substantially by rises in [the prices of] oth-
US$1.3 billion to over US$8.2                                                                         er commodities [that] those
billion over the same period,                                                                         economies produce,” says John
were dominated by raw ma-              “I think all countries have to accept             that         Page of the World Bank.
terials with petroleum and pe-       China is the economy of tomorrow. We need At the same time, China is
troleum products accounting
for about 57 percent of total         to learn to work and cooperate with China                 also promising increased ac-
                                                                                                cess for commodities from
exports in 2004. Manufactured           and find out what we can sell to them.”
products made up less than 14                                                                   Africa into its market.
percent of total regional exports                                                               “The Chinese Government
to China in 2004 – down from 20 per- But some analysts and business people will adopt more effective measures to
cent five years earlier.While manufactured in the region are beginning to recognize facilitate African commodities’ access to
goods accounted for 50 percent of South that China brings significant benefits the Chinese market and fulfill its prom-
Africa’s exports to China in 1993, this and even opportunities to the region ise to grant duty-free treatment to some
figure dropped dramatically to only eight along with its cheap goods.                  goods from the least developed African
percent in 2003. South Africa, the region’s                                           countries, with a view to expanding and
economic powerhouse, ran a US$2.5 bil- First, analysts point out, Southern Africa balancing bilateral trade and optimizing
lion trade deficit with China in 2004.       is benefiting from China’s growing appe-
                                            tite for agricultural commodities, metals the trade structure,” said the Centre for
  ISSUE 4 PAGE 3                                                                                               INSAT
Chinese Studies in a recent paper.           we can sell to them,” says Elias Dewah,      two countries in March 2004.
                                             the Executive Director of the Botswana
Second, Chinese imports have placed          Confederation of Commerce, Industry          The Namibian Minister of Trade and In-
a downward pressure on inflation in           and Manpower (BOCCIM).                       dustry, Immanuel Ngatjizeko, said the
the region. China’s exceptional ability                                                   two countries have already drafted terms
to produce cheaply has pushed down           Hoosen Rasool, the head of the South         of reference for the agreement and are
the prices of many manufactured goods        African Clothing, Textile, Footwear and      working on the final text. The agreement
worldwide, including in Southern Africa.     Leather Sector Education and Training        will be valid for 10 years with an option
Thanks to China, consumers in the re-        Authority (CTFL Seta) argues that “the       to renew.
gion now have access to a wide variety       solution is to shift our thinking towards
of manufactured goods at affordable          a strategy that will embrace improving       According to a source close to the
prices. Loago Raditedu, Executive Di-        the skills of the workforce, upgrading       negotiations, the agreement will not
rector of the Exporters Association of       equipment and targeting the value-add-       specify which products will benefit from
Botswana, says Chinese exports are “a        ed market segment”. “China does not          liberalization. It is also not yet clear by
blessing” for Botswana when it comes         offer low-cost unskilled labor – it offers   how much tariffs on the traded products
to electronic products, for example.         low-cost skilled labor,” he was quoted       will be cut. Angola imports a large num-
As a net importer of electronic goods,       by www.AGOA.Info as saying.                  ber of products from Namibia, including
Botswana, he says, has been enjoying a                                                    meat, foodstuffs, cement, farming equip-
wide variety of cheap electronic prod-       Raditedu agrees that the private sector      ment and building materials.
ucts that would not have been afford-        bears a big responsibility in facing the
                                             Chinese challenge.                           The agreement signals a turnaround
able to most consumers, were it not for                                                   by the Angolan President, Eduardo dos
Chinese goods.                               “We have a lot to do. At the moment we       Santos, who told members of the Na-
Third, China has been increasing its in-     are only buying from China because their     mibian Chamber of Commerce and In-
vestments in Africa, including in South-     products are cheaper,” he says. “It does     dustry (NCCI) at the signing ceremony
ern Africa. Investments have been made       not make sense for countries [in the re-     of the Trade and Economic Cooperation
in a wide range of areas, including trade,   gion] to wait for tariffs to come down to    Agreement in 2004 that duties on Na-
resource development, transport, ag-         enable them to increase their exports to     mibian exports to Angola would remain
riculture and the processing of farm         China because the Chinese themselves         in place until Angola has rebuilt the in-
products. Chinese firms are also tak-         have not been stopped by duties,” Radit-     frastructure destroyed during the coun-
ing on significantly more construction        edu continues. “They are already flooding     try’s 27-year civil war (which only ended
projects, most notably in infrastructure.    our markets and we [in the private sec-      in 2002).
While China’s investments in Africa have     tor] have to pull up our socks.”
                                                                                          Namibian companies have complained
often been criticized for lack of trans-                                                  that the duties imposed by Angola have
parency and for undermining the prin-                                                     significantly undercut the profitability of
ciples of good governance and human                                                       exporting to their northern neighbor.
rights, they still provide a much needed
supply of capital to the continent.                                                       Sven Thieme, Chairman of Namibia
                                                                                          Breweries, which exports beer and soft
Finally, according to White, “Africa can                                                  drinks to Angola, said in the company’s
learn from China’s process of economic                                                    2005 Annual Report that exports to An-
development and liberalization, which                                                     gola continued to be problematic due to
has turned it into an investment magnet                                                   the high duty structure and complex im-
and one of the most competitive mar-         ANGOLA, NAMIBIA TO                           port procedures introduced by Angolan
kets in the world. An improved invest-
                                             SIGN A PREFERENTIAL                          authorities in 2003.
ment climate in Africa will guarantee a
                                             TRADE AGREEMENT
reliable supply of resources and unlock                                                   SOUTH AFRICAN
vast potential in the labor market,”         Angola and Namibia are finalizing a pref-     GOVERNMENT TO
White wrote.                                 erential trade agreement that will put       ADDRESS CONSTRAINTS
Industry sources say that growing trade      an end to high duties slapped on a wide      TO INVESTMENT, TRADE
with China, while posing serious chal-       range of Namibian exports to Angola at
lenges to the private sector, could be       the beginning of 2003 in an effort by the    After setting itself an ambitious growth
turned into opportunities for growth in      Angolan Government to raise revenue          target of six percent, the South African
the region.                                  for its post-war reconstruction efforts.     Government is now trying to address
                                                                                          constraints to investment, trade, and
“I think all countries have to accept        The trade agreement represents a step        growth in the country.
that China is the economy of tomor-          forward in the implementation of the
row. We need to learn to work and co-        bilateral Trade and Economic Coop-           According to the National Treasury Di-
operate with China and find out what          eration Agreement signed between the         rector General, Lesetja Kganyago, a team
 INSAT                                                                                                  ISSUE 4 PAGE 4

headed by Deputy President Phumzile          Agreement (EPA) negotiations, met with        and Industry, Immanuel Ngatjizeko, brings
Mlambo-Ngcuka has identified six fac-         his Rwandan counterpart, James Musoni,        together public institutions and key pri-
tors that have been hindering trade and      in Tanzania late last year.                   vate sector players to discuss Namibia’s
investments in the country. These are                                                      economic and trade policies. According
currency volatility, infrastructure back-    “The meeting was for notes sharing and        to the Ministry of Trade and Industry, the
logs, barriers to entry and limited new      we are making progress,” said Banny           Government will also use the forum to
investment opportunities, the burden         Molosiwa, Permanent Secretary at Bot-         seek input from the private sector on
placed on small and medium businesses        swana’s Ministry of Trade and Industry.       trade agreements that Namibia is cur-
by the regulatory environment, deficien-      She declined to discuss the details of the    rently negotiating with other countries.
cies in government delivery and skills       meeting but revealed that a date for the
shortages. Kganyago says these con-          next meeting has not been set.                According to the Ministry of Trade and
straints are being addressed through                                                       Industry, the forum will be of “a con-
the Accelerated and Shared Growth                                                          sultative and advisory nature”, and will
Initiative (ASGISA), which aims to boost                                                   meet every two months to deliberate
South Africa’s average economic growth                                                     on trade measures, regulations, invest-
rate to 6 percent between 2010 and                                                         ment and trade agreements, product and
2014. To address infrastructure backlogs,                                                  market development issues and any oth-
he said, the Government is also planning                                                   er issues relating to Namibia’s economic
to allocate part of the public sector’s                                                    development.
R320 (US$53) billion investment to in-                                                     “[The forum] provides a platform for
frastructure development over the next                                                     the Government and the private sec-
three years. Kganyago also noted that                                                      tor, for the latter to make its inputs and
currency volatility, which is generally                                                    properly inform national positions and
considered a key impediment to trade                                                       participation in international trade and
and investment in the country, has de-                                                     investment,” says the Ministry of Trade
clined since the currency crisis of 2001.        Hon. Neo Moroka, Botswana’s               and Industry.
Meanwhile, the Department of Trade            Minister of Trade and Industry and
and Industry is developing a new indus-      Chief Negotiator for SADC in the EPA          In explaining the reasons behind the cre-
trial policy that will include new incen-                Negotiations                      ation of the forum, Ngatjizeko said that,
tives for foreign and local investors.       Of the six regional groups in the African,    until recently, Namibia’s positions in bi-
                                             Caribbean and Pacific countries nego-          lateral and multilateral trade negotiations
Nimrod Zalk, Chief Director of Industri-                                                   were primarily decided by government
al Policy at the Department of Trade and     tiating EPAs with the EU, SADC is the
                                             only group whose members are negoti-          officials. But, he said, the Government
Industry, told INSAT that some of the is-                                                  came to realize that the private sector
sues that will be addressed in the policy    ating under two different configurations.
                                                                                           has a crucial role to play in formulating
include cost structures, telecommunica-      Failure to coordinate the negotiating po-     Namibia’s positions in ongoing bilateral
tions infrastructure and skills shortages.   sitions between SADC and ESA may lead         and multilateral trade talks.
“The industrial policy document is be-       to two conflicting agreements, thus un-
                                             dermining SADC’s plans to launch a free       Members of the National Trade Forum
ing developed and will focus on targeted                                                   include the Namibia Chamber of Com-
investment and strategic trade agree-        trade area by 2008 and a customs union
                                             in 2010. The EPAs, which will replace the     merce and Industry, the Namibia Manu-
ments,” Zalk said.                                                                         facturers Association and the Indigenous
                                             Cotonou Agreement between the EU
                                                                                           Business Forum.
SADC, ESA EFFORTS TO                         and the ACP countries, are scheduled to
HARMONIZE POSITIONS                          take effect on January 1, 2008.               The Government also hopes that the fo-
                                                                                           rum will identify new policies and mea-
FOLLOWING CHIEF                                                                            sures that will help enhance the compe-
                                             BUSINESS PARTICIPATION                        titiveness of Namibian producers and
NEGOTIATORS’ MEETING                         IN ECONOMIC POLICY                            the manufacturing sector in local and
While negotiations between Eastern           MAKING                                        foreign markets.
and Southern Africa (ESA) and the EU
                                             Namibia’s Ministry of Trade and Industry      Hennie Fourie, the Chief Executive Of-
entered the second phase after a meet-
                                             has launched a new forum that, for the        ficer of the Namibian Manufacturing
ing in Mauritius in February, efforts to
                                             first time, will formalize and expand pri-     Association, an umbrella body of Na-
harmonize the positions of SADC and
                                             vate sector participation in developing the   mibia’s manufacturing companies, hailed
ESA show little progress.
                                             country’s economic and trade policies.        the establishment of the forum saying
Neo Moroka, Botswana’s Minister of                                                         that it shows that the Government has
                                             The National Trade Forum, launched in         adopted a more “development-orient-
Trade and Industry and Coordinator for
                                             Windhoek by Nambia’s Minister of Trade        ed” approach.
SADC in the EU Economic Partnership
ISSUE 4 PAGE 5                                                                                                    INSAT

                                             NEWS BRIEFS
LACK OF PROGRESS CASTS                       the Acting SADC Chief Director for           Businesses still face challenges on the
SHADOW OVER US – SACU                        Infrastructure and Services, Remmy           road ahead as they seek to make the
NEGOTIATIONS                                 Makumbe.                                     most of the agreement’s potential to
                                                                                          increase trade between the two na-
U.S.Trade Representative (USTR) Rob-         Makumbe told journalists at the recent       tions. Grandford Banda, Malawi Export
ert Portman last month said that the         SADC Council of Ministers’ meeting           Promotion Council (MEPC) Research
US might reconsider negotiations with        in Gaborone that the Univisa will be         and Projects Manager, is quoted in an
members of the Southern African Cus-         in place by the 2010 Soccer World            article on as saying that
toms Union (SACU) over those coun-           Cup. He said it would allow tourists         language differences and Mozambique’s
tries’ failure to agree to the scope of an   to obtain a visa for one country which       complicated records system could pres-
agreement.                                   automatically allows them entry into         ent problems for Malawian traders. He
                                             other SADC member countries. “This           also points to the strong links between
“We don’t want to walk away by any           is expected to introduce equity in the
means if there’s interest,” Portman                                                       Mozambican business owners and busi-
                                             tourism sector and ensure that tour-         nesses in Portugal and India saying that it
told reporters following a February 7        ists get value for money by visiting
speech on African trade issues.“We will                                                   would take aggressive marketing by Ma-
                                             several countries on a single visa,” he      lawian firms to break into the market.
continue to be there to engage but we        said.
have to keep our standards up high.”                                                      SEYCHELLES TO REJOIN SADC?
Negotiations on a Free Trade Agree-                                                       SADC Executive Secretary Tomaz
ment between SACU and the US have                                                         Salamão has confirmed that the Sey-
reached a stalemate over disagree-                                                        chelles have requested to rejoin SADC.
ments on the scope of the negotia-
tions. The US has been pushing for a                                                      Speaking at a press conference prior to
comprehensive agreement that in-                                                          the SADC Council of Ministers meet-
cludes eventual full market access in all                                                 ing in Gaborone in February, Salamão
sectors. SACU negotiators, however,                                                       told reporters that the Foreign Min-
have been trying to negotiate a more                                                      ister of Seychelles had requested a
limited deal that does not cover all         MALAWI – MOZAMBIQUE                          special meeting with him where he
aspects included in the standard U.S.        TRADE AGREEMENT SIGNED                       expressed his country’s intention to
Free Trade Agreement. SACU mem-                                                           rejoin SADC. President Festus Mogae,
                                             Malawi and Mozambique recently
bers have resisted launching negotia-                                                     Chairperson of SADC, also received a
                                             signed a bilateral preferential trade
tions on intellectual property rights,                                                    formal letter to this effect.
                                             agreement that provides for duty and
services, labor, environment, govern-
                                             quota-free treatment and removal of          Seychelles’ decision to rejoin SADC less
ment procurement and investment.
                                             non-tariff barriers on most products         than two years after becoming the first
In a March 27 letter, Portman indi-          traded between the two countries (it         country ever to withdraw from the or-
cated that Deputy USTR Karan Bhatia          excludes sugar, beer, petroleum prod-        ganization was announced by President
would meet with SACU Deputy Min-             ucts, table eggs, dressed chickens, ex-      James Michel during his delivery of the
isters in Pretoria, South Africa, in mid     plosives, firearms, refined cooking oil,       2006 budget back in December 2005. It
April “to review options for the way         manufactured tobacco and Coca Cola           was not clear at the time whether the
forward”. The meeting is scheduled           and Schweppes-branded drinks). In or-        Seychelles had started membership ne-
for April 18.                                der to qualify for preferential treatment,   gotiations with SADC.
                                             goods traded must contain a minimum
UNIVISA FOR SOUTHERN AFRICA                  of 60 percent local content in line with     When asked by INSAT, Mr. Salamão
                                             rules of origin and a 25 percent allow-      could not shed any light on what had
In a bid to boost tourism by cutting                                                      brought about this ‘change of heart’ on
                                             ance for value addition. The agreement
red tape, Southern Africa will intro-                                                     the part of the Seychelles and did not
                                             replaces a 1959 trade agreement signed
duce a Univisa for SADC.                                                                  give any indication as to how the request
                                             between colonial rulers Portugal and
Tourist arrivals in the SADC region          the Federation of Rhodesia and Nyasa-        is being viewed by SADC other than to
reached a record high with 15.1 mil-         land (today Zimbabwe, Zambia and Ma-         say that it will be considered by SADC
lion visitors in 2005, up from 12.2 mil-     lawi). Implementation of the agreement       Heads of State at their next meeting in
lion the previous year according to          is expected to start in July 2007.           Maseru, Lesotho, in August.
INSAT                                                                                               ISSUE 4 PAGE 6

AGAINST ALL ODDS KARAKULIA                                      would not be the same unless they actually use the same
WEAVERS STAYS ITS COURSE                                        material,” she says.

Karakulia Weavers, a Namibian company specializing in the       Carvill established Karakulia Weavers in 1979 using her
production of hand woven carpets and wall hangings, has         savings. She later borrowed money from the Development
carved itself a niche among tourists to the region and is       Corporation of Namibia to expand the company.
now poised to expand its marketing efforts internationally.
                                                                “Once the first loan was repaid I borrowed again to buy
“… I must extract myself from the daily running of Kara-        more equipment and employ more weavers,” she says.
kulia and find [new] markets,” says Jenny Carvill, Karakulia
                                                                Carvill says that, with increased demand for their hand-woven
Managing Director, “Therefore my future plan is to make
                                                                products, the company has bought more looms and trained
Karakulia a BEE [Black Economic Empowerment] company
                                                                and employed more weavers including some disabled people.
guiding the weavers on the design and setting up an over-
seas market.”                                                   Although there is strong competition from other weavers
                                                                of karakul wool in Namibia, Carvill says the biggest threat
Over the years, Karakulia has been able to retain its com-
                                                                to her company comes from weavers producing and selling
petitive position through a combination of original design,
                                                                machine-made imitations of Karakulia’s carpets and rugs.
high quality products, and
efficient and speedy turn                                                                        Karakulia also had to over-
around of orders. Its car-                                                                      come the different chal-
pets, rugs and wall hangings                                                                    lenges of doing business in
made from carding, spinning,                                                                    the region, including retain-
dyeing and weaving of pure                                                                      ing skilled workers and the
karakul wool (high quality                                                                      effects of HIV and AIDS on
wool from a rare breed of                                                                       its work force.
sheep imported into Na-
mibia from Uzbekistan)                                                                          “Today we are a closely
has turned Karakulia into a                                                                     woven family of some fifty
household name in Namibia                                                                       members,” she says, adding
and, over the years, allowed                                                                    that people are not only
it to develop its interna-                                                                      trained in the craft but
tional reputation.                                                                              also in office and computer
                                                                                                work, management skills
“Our forwarding depart-                                                                         and design.
ment also prides itself on
efficiently dispatching parcels to our customers,” says       BOTSWANA PRIVATE SECTOR
Carvill.                                                     WELCOMES REFORMS BUT WARNS THAT
Karakulia’s main clients are foreign tourists to the region. MORE WILL HAVE TO BE DONE
The company also reaches out to potential clients through       The private sector in Botswana is welcoming recent ef-
its participation in exhibitions around the world and it is     forts by the Government to improve the business environ-
listed in several English and German travel guides.             ment, attract foreign investment and diversify the economy
“Karakulia is well-known in Germany and Finland, and has        away from its reliance on diamonds, but warns that much
exported mainly through tourism worldwide,” Carvill says.       remains to be done to eliminate constraints to doing busi-
                                                                ness in the country.
Carvill, who admits that Namibian weavers cannot compete
on price with large international manufacturers that rely       Elias Dewah, the Chief Executive of the Botswana Confed-
on cheap labor and benefit from economies of scale, insists      eration of Commerce, Industry and Manpower (BOCCIM),
that such manufacturers “can never be like [Karakulia]”.        says the recent measures would certainly help businesses
                                                                but cautions that implementation of these reforms may be
Carvill says that she does not perceive Chinese products        an issue. Citing amendments to the Trade Act that would
as a threat to Karakulia’s trade because the “originality” of   expedite the issuance of trade licenses, Dewah says he is
the company’s products is the key element of its competi-       doubtful that the Government has put in place the neces-
tiveness in international trade.                                sary administrative structures to allow a “smooth” imple-
                                                                mentation of the changes.
“Even if [the Chinese] copy our pieces, the end products
ISSUE 4 PAGE 7                                                                                           INSAT

The Government has undertaken several measures to im-         15 percent to 10 percent.
prove the business environment and attract foreign direct
investment (FDI) to the country, including the develop-       While many sectors will benefit from the tax cuts, the
ment of a new FDI strategy (which will also provide for       measures appear to be primarily aimed at revitalizing the
the streamlining of the issuance of work and residence        country’s ailing textile industry.
permits, a regulatory issue that has been identified as one
of the main obstacles to FDI in the country) and reviews of
the Industrial Development Act and the Companies Act.

But Keith Jefferis, an economic consultant and former Cen-
tral Bank Deputy Governor, argues that the measures tak-
en by the Government do not address the key constraints
to private sector development and that they fail to address
the various factors undermining investment in the country,
which were outlined in a 2004 report by the World Bank’s
Foreign Investment Advisory Services (FIAS).

“For these [measures] to work, and really revitalize in-
vestment, they have to be radical, but I am concerned that
they will not be radical enough,” Jefferis said at a recent
meeting on the budget analysis.

He argued that, for example, instead of trying to increase    Thahane also told parliament that the Government is plan-
the efficiency of business licensing, the Government could     ning to cooperate with Chinese businesses to address the
have abolished trade and industrial licensing requirements    problems facing the textile sector.
                                                              “Lesotho has invited China to be a partner in solving the
“The very existence of licenses that have to be renewed       problems and generating jobs; in forming joint ventures;
every year is time-consuming, expensive and burdensome,       training our people in quality assurance; and in the financ-
and places the future of a business venture in the hands      ing and construction of knitted fabric mills to anchor these
of a committee of bureaucrats who probably know very          textiles,” Thahane said.
little about the needs of businesses, and quite possibly
care even less,” he said.                                     Thahane said the Government is implementing the tax
                                                              cuts because it realizes that Lesotho’s 35 percent company
The FIAS report, published in October 2003, identified a       tax must now compete with more favorable rates both
range of constraints to investment in Botswana including,     globally and regionally. He pointed out that given the close
shortage of land, high prices of serviced land, high rental   proximity of South Africa, companies operate across the
and property prices, delays in registering businesses, and    border and pay tax in South Africa on income earned in
delays in recruiting skilled labor and obtaining work per-    Lesotho. South Africa imposes only a 29 percent tax on
mits for skilled foreign labor.                               manufacturing companies.
The high costs of utilities and air transport, inadequate     Thahane said the tax cuts will encourage increased and
telecommunications infrastructure, and high interest and      diversified investment in manufacturing and attract new
exchange rates were also among the constraints cited in       manufacturers.
the report.
                                                              The new tax rates will go into effect on April 1.
CUTS TO REVIVE EXPORT SECTOR                                  The Lesotho Revenue Authority has forecast a loss of 76
                                                              million Maloti in revenue in the 2005/2006 fiscal year as a
The Lesotho Government presented a fiscal budget to            result of the tax cuts.
parliament last month that seeks deep cuts on company
taxes for a range of manufacturing sectors.                   But Retselisitsoe Mabote, an economist in the Research
                                                              Department of the Central Bank of Lesotho, says the
The budget, which was presented to parliament by Min-         Government is hoping that the loss due to tax cuts will
ister of Finance Dr. Timothy Thahane last month, would        be offset by an increase in the total taxes collected due
eliminate taxes on income generated from manufactured         to growing business activities and increased employment.
goods exported outside the Southern African Customs           Mabote maintains that the tax cut will also encourage
Union (SACU). The Government will also scale back             South African corporations currently operating in Leso-
company taxes from 35 percent to 25 percent and reduce        tho to declare their profits there rather than in South
taxes in the manufacturing and agriculture sectors from       Africa.
 INSAT                                                                                                  ISSUE 4 PAGE 8

NEW PROJECT LOOKS AT                          According to Mr. Philippe Dardel of the      million International Development As-
AG ISSUES IN THE REGION                       FAO Subregional Office for Southern           sociation credit to support the conser-
                                              and East Africa in Harare, Zimbabwe,         vation of biodiversity and natural eco-
The Food and Agriculture Organization         “the initiative is just starting and plans   systems in the country. The money will
(FAO) is launching a new initiative that      are still to be specified. More informa-      be used to promote economic growth
will give SADC countries an opportunity       tion will be available after the workshop    and development through the sustain-
to better address challenges in their agri-   organized at the end of March in Preto-      able use of natural resources by local
cultural sectors (including South Africa’s    ria to precisely specify the plans under     communities in Mozambique.
dominance in the region). It is anticipated   this initiative.”
that more specific                                                                          US COMMITS NEW FUNDS
details of the project                                                                     TO AID ON FOOD, ANIMAL
will be available after                                                                    AND HEALTH STANDARDS
a stakeholders’ meet-
ing that is planned                                                                        The United Sates has committed US$
for late March in                                                                          100,000 to help developing countries
Pretoria.                                                                                  analyze and implement international
                                                                                           standards on food safety and animal and
The project is be-                                                                         plant health – sanitary and phytosani-
ing launched by the                                                                        tary (SPS) standards.
FAO in association
with SADC, the                                                                             The funds were committed through the
Southern    African                                                                        Standards and Trade Development Fa-
Confederation    of                                                                        cility (STDF), a joint effort by the World
Agicultural Unions                                                                         Trade Organization, the World Health
(SACAU) and the                                                                            Organization, the World Bank, the
SADC      Employers                                                                        World Organization for Animal Health,
Group (SEG).                                                                               and the Food and Agriculture Organi-
                                              MOZAMBIQUE RECEIVES                          zation, which aims to support capac-
According to the FAO’s Policy Unit,           FUNDING FOR INFRA-                           ity building efforts in the area of food
South Africa alone contributes 67 per-        STRUCTURE AND TOURISM                        safety and SPS standards.
cent of SADC’s total GDP and 62 per-
cent of the region’s total external trade.    Mozambique received funding late last        “This contribution builds on the U.S.
And “although South Africa generates          year from the World Bank and Den-            commitment to help developing na-
only 24 percent of the contribution of        mark to help the country develop its         tions adopt science-based animal and
agriculture to GDP in the SADC region,        infrastructure and tourism sectors.          plant health and food safety standards
South Africa provides half of the agri-                                                    that are so critical to trade,” said U.S.
cultural exports originating from SADC        Denmark offered US$62 million to             Agriculture Secretary Mike Johanns.
countries”.                                   Mozambique to enhance the transport
                                              and communications infrastructures in        COMMONWEALTH HOSTS
The project will consist of a concept         the central and northern parts of the        WORKSHOP ON EXPORT
paper, workshops, country-level studies       country.
and reports and dissemination activities
and is expected to run for one year.          National Telecommunications of Mo-
                                                                                           Botswana’s Acting Minister of Trade and
                                              zambique (TDM) received more than
                                                                                           Industry Moggie Mbaakanyi appealed
Among others, farmers’ representa-            US$15 million in order to expand the
                                                                                           to the Commonwealth Secretariat and
tives from South Africa and the region,       national telecommunications broad-
                                                                                           other development partners to con-
the Namibia Agricultural Trade Forum,         band network in Quelimane, Mocuba,
                                                                                           tinue to offer capacity building train-
agricultural economists, the Zambia           Nampula and Cuamba.
                                                                                           ing programs for developing countries
Agriculture Consultative Forum, and
                                              Another US$19 million will be used by        in order to assist those countries to
representatives from governments and
                                              the Mozambican Airport Company, ADM,         “reach the required levels of produc-
regional organizations will attend the
                                              to upgrade the Beira, Quelimane and Tete     tion efficiency”.
meeting from March 28-29. The goals of
the meeting are to finalize the budget,        airports and US$27 million to clear the
                                                                                           She was addressing delegates at a three-
agree on the workplan, and appoint a          entrance channel to the port of Beira.
                                                                                           day regional workshop on export com-
steering committee.                           The World Bank also approved a US$20         petitiveness strategies in Gaborone,
  ISSUE 4 PAGE 9                                                                                              INSAT
Botswana in March. Mbaakanyi said coun-       [with] all the major horticultural pro-     on good production practice, lists of
tries in the sub-Saharan region need to       ducers in the region”.                      agro-experts and other related agri-
reorganize their business environments                                                    business information.
and improve infrastructure delivery.
                                                                                          The website is part of a region-wide
“Several indicators and pointers to              Agriculture accounts                     Agricultural Marketing and Regional In-
competitiveness in our economies paint           for more than 32 per-                    tegration Project that was launched in
a gloomy picture,” she said, referring to                                                 April 2005 and is funded by the African
shortfalls in the areas of business en-          cent of COMESA’s                         Development Bank.
vironment, infrastructure, cost of doing         Gross Domestic Pro-
business, supply capacity and support                                                     DFID FUNDS FOR
services.                                        duct (GDP), provides                     INCREASED TRADE IN
                                                 a livelihood to some                     SOUTHERN AFRICA
“Many of our business environments
are still punctuated by a number of ad-          80 percent of its la-                    On February 28 the UK Department
ministrative barriers, which cause delays                                                 for International Development (DFID)
in the delivery of services,” she added.         bor force, accounts                      formally launched its Southern Af-
She also pointed to the lack of good
                                                 for approximately 65                     rica Regional Plan which will see £20
                                                                                          (US$34.6) million this year, and up to
roads, ineffective      communications,          percent of foreign ex-                   £100 (US$173) million in the next five
shortage of power, water, serviced land,
factory shells and other crucial services.
                                                 change earnings and                      years pumped into Southern Africa to
                                                                                          boost trade, create employment and
                                                 contributes more than                    combat HIV/AIDS.
“The development and improvement of
these areas should be [at the] top (...)         50 percent of raw ma-
                                                                                          According to Minouche Shafik, DFID’s
[of] our development agendas if we are           terials to the region’s                  Director General for Regional Pro-
to attract much needed investment and
                                                    industrial sector.                    grams, the plan focuses on a regional
increase our exports,” she said.
                                                                                          approach to market access, peace and
The workshop was attended by rep-                                                         security and social services. In this re-
resentatives from Botswana, Namibia,                                                      spect, Mr. Shafik highlighted the impor-
                                              To date, however, only Egypt, whose
Zambia, Mauritius, Lesotho, Swaziland,                                                    tance of “regional public goods, such as
                                              Union of Producers and Exporters of
Malawi, Mozambique, Tanzania, Kenya                                                       roads and rail networks, ports, energy
                                              Horticultural Crops (UPEC) co-owns
and Uganda.                                                                               and communications [as] important for
                                              the site with COMESA, has entered in-
                                                                                          people to trade and do business, and
The workshop is the first of the Com-          formation into the system. “Some other
                                                                                          access social services”. Under the topic
monwealth workshops on export com-            COMESA member states have been
                                                                                          of social services, Mr. Shafik emphasized
petitiveness and targeted for exporters       called upon to submit contact details
                                                                                          peace and security as well as HIV/AIDS
in the private and public sector. Similar     of their agribusiness entities. What we
                                                                                          as focus areas of the regional plan.
workshops will also be held for the Ca-       have done is that we have forwarded
ribbean and the Pacific countries.             this information to member states so        The regional plan places a strong em-
                                              that they can help us – they can put into   phasis on South Africa and that coun-
NEW WEBSITE FOR                               that website all the major horticultural    try’s own plans for development in the
HORTICULTURAL                                 producers that are operational in their     region.
                                              countries. Countries as well as produc-
PRODUCERS AND                                                                             “We want to work with South African
                                              ers themselves can access the informa-
EXPORTERS IN COMESA                           tion. Any producer who wants to have        supermarkets to help regional suppliers
                                              their information posted on the web-        meet their standards. We will help to
At the end of January COMESA
                                              site, they are free to do so,” said Mr.     set up at least three one-stop border
launched a web-based directory of pri-
                                              Miti in an interview with INSAT.            posts in the region, working with SADC,
vate sector entities active in the agricul-
                                                                                          the Common Market for Eastern and
ture sector in East and Southern Africa.      Starting in April, a series of discussion   Southern Africa (COMESA) and the
The website ( gives      forums will be launched on the site and     South African Revenue Service. And we
agribusiness in COMESA access to vari-        a dedicated forum for the discussion of     want to support infrastructure devel-
ous directories of growers, exporters,        sanitary and phytosanitary (SPS) issues     opment, aiming for a 24 percent reduc-
importers, processors and collateral          is planned for later this year.             tion in transport costs for landlocked
service providers in 20 countries.
                                                                                          countries by 2010”, said Mr. Shafik.
                                              Once fully operational, the website will
According to Mr. Chikakula Miti, Agri-        also feature other critical information     To download the Regional Plan, go to
cultural Development Consultant at            such as export prices, worldwide crop
the COMESA Secretariat, “what we are          production statistics, recommendations      ern-africa-regional-plan.pdf.
trying to do here is to have a link (...)
INSAT                                                                                                ISSUE 4 PAGE 10

U.S. CONGRESS SCRAPS “STEP 2”              for sugar production in the EU, enhance    nomic influence in Asia along with the
COTTON SUBSIDIES                           the competitiveness and market-orien-      highly competitive China.
                                           tation of the sector and strengthen the
The U.S. Congress approved last month      EU’s position in the current round of      The US trails China as South Korea’s
the removal of “Step 2” cotton subsi-      world trade talks.”                        second biggest trading partner. In ad-
dies, which are paid to exporters and                                                 dition, the majority of Seoul’s foreign
millers to buy U.S. grown cotton.          US – KOREA FTA TALKS TRIGGER               direct investment comes from the US.
                                           CONCERNS AMONG INDUSTRY
“Step 2” subsidies, which are paid in      AND FARMERS                                The US – Korean FTA negotiations are
addition to subsidies paid to cotton                                                  expected to conclude by April 2007.
growers, were found by a World Trade       The US and South Korea trade talks,
Organization (WTO) panel to be in-         which were launched in early Febru-        BRAZIL EXPANDS EXPORTS OF
consistent with international trade        ary, have triggered concerns in both       ETHANOL
rules in a challenge brought by Brazil.    countries.                                 Brazil saw its exports of sugar cane-
Producers in developing countries have     The US’s three largest auto-makers         based ethanol grow dramatically over
been complaining that U.S. cotton sub-     – General Motors, Chrysler, and Ford,      the past year as high oil prices spurred
sidies undermine their ability to com-     are concerned about the potential im-      international buyers to look for cheap-
pete fairly in the international markets   pact of a free trade agreement (FTA)       er alternatives. Brazil’s ability to pro-
and dampen world prices for cotton.        with Korea on the industry.                duce ethanol from sugar cane – the
                                                                                      most advanced alternative to petro-
Meanwhile, according to informed           At a hearing before the U.S. Senate        leum for mass scale use – has made it a
sources, Brazil has reportedly asked       Democrats in Washington, D.C., the         competitive player in the global energy
a WTO arbitration panel to reassess        president of the Automotive Trade          market.
what retaliation Brazil would be autho-    Policy Council in Washington, D.C.,
rized to impose on the US as a result      Stephen Collins, claimed that South        The Agricultural Ministry expects do-
of its successful challenge to U.S. cot-   Korea has made it extremely difficult       mestic and foreign demand for ethanol
ton subsidies. Brazil argues that the      for foreign operations to be successful    to increase to approximately 6 billion
US, though eliminating “Step 2” of its     in its domestic market through “unfair     gallons a year by 2010. Current de-
subsidies program, has done nothing to     currency manipulation”.                    mand is about 4 billion gallons a year.
change other domestic support pay-                                                    Although Brazil produced 13 million
ments that were also mentioned by the      In South Korea, farmers are worried
                                           that an FTA with the US would lead to      gallons of ethanol in 2005, it is current-
WTO panel in its ruling on the issue.                                                 ly in talks with the United States, China,
                                           a flooding of the Korean market with
The US has indicated it will not make      US agriculture produce. But the Kore-      and India to export 65 million gallons
changes to U.S. farm programs before a     an Ministry of Agriculture and Forestry,   over the next few years.
new farm bill is written or a new WTO      in a bid to allay farmers’ fears, vowed    Japan is currently considering a deal to
agreement is reached.                      to use any necessary measures to re-       import up to 1.6 billion gallons of Bra-
                                           duce the impact of the agreement on        zilian ethanol by 2008.
                                           domestic farmers such as offering mini-
                                           mum prices for products and a special      Brazil reduced its reliance on foreign oil
European Union Agriculture Ministers       income support program.                    imports since the oil crisis in the mid
on February 20th formally adopted                                                     1970s. It cut its oil imports by US$400
                                           If concluded, the agreement would be       billion by relying on home grown fuel.
controversial reforms of the EU sugar      the biggest free trade pact that the
sector, according to a statement by the                                               More than 80 percent of new cars that
                                           US has concluded since the North           are sold in Brazil are equipped to use
EU Commission.                             American Free Trade Agreement              both ethanol and gasoline.
The reforms, which will come into force    (NAFTA) with Mexico and Canada in
on July 1, will bring the sugar program,   1993. South Korea is the tenth largest     Last year, South Africa’s Cane Growers
which has remained largely unchanged       global economy and the US’s seventh        Association Vice Chairman,Tim Murray,
for almost 40 years, into compliance       largest trading partner. Trade between     said in an interview that South African
with WTO rules.                            the two countries reached more than        farmers were considering converting
                                           US$72.5 billion in 2004. The US hopes      their sugar crops to ethanol to power
The EU statement said the reform will      that a free trade pact with South Korea    future cars.
“ensure a long-term sustainable future     would allow the US to maintain eco-
  ISSUE 4 PAGE 11                                                                                                  INSAT

                                  INSIDE THE WTO
CHIEF OF AG NEGOTIATIONS TO                  to raise cash. Falconer suggested that,        take place over a period of time that is
IDENTIFY ISSUES WHERE                        despite differences, Members were will-        much shorter – about one third – of the
CONVERGENCE HAS EMERGED                      ing to discuss compromise.                     implementation period for other cuts in
                                                                                            agriculture subsidies.
Chairperson of the Agriculture Negotia-      On domestic support, Falconer said dis-
tions, Crawford Falconer, told Members       cussions bore little fruit as Members’         The paper also calls on WTO Members
that he will start drafting a “reference     positions remained largely unchanged.          to agree by the end of April on elimi-
paper” on a number of issues where                                                          nating all trade-distorting domestic sup-
there has been a convergence among           There was little convergence on the cri-       port and agree on a date for eliminating
Members. Falconer indicated that his pa-     teria for ‘green box’ support which will       these subsidies before the end of the
per will be designed to evolve into draft    remain unlimited and exempt from re-           Doha Round of trade talks.
modalities, based on inputs from the ne-     duction commitments. Some Members,
gotiations.                                  including the G-20 coalition of develop-       LITTLE PROGRESS IN NAMA,
                                             ing countries, proposed tightening exist-      MEETING HK DEADLINE UNLIKELY
Falconer, who was speaking to Members        ing criteria for the ‘green box’. Developing
at the end of the second session of Ag-      countries also proposed introducing new        According to sources close to the ne-
riculture Negotiations since the Hong        criteria that would make it easier for them    gotiations, the three negotiation ses-
Kong Ministerial, warned however that        to support development objectives.             sions on NonAgricultural Market Access
Members are still far from striking a deal                                                  (NAMA) achieved little progress on the
on any of the key issues.                    Market access remained the most conten-        biggest outstanding issue in the talks
                                             tious area in Agriculture Negotiations, Fal-   – the tariff reduction formula.
“On the whole, there has been some           coner said. There was no convergence on
convergence and more clarity about the       the treatment of ‘sensitive products’ which    Negotiations suffered a setback after
eventual shape of draft ‘modalities’, but    Members may designate for cuts lower           Trade Ministers from the EU, the US, Aus-
the discussion has not entered the zone      than those required by the formula.            tralia, Brazil, India, and Japan (now referred
of a deal”, he told members in an infor-                                                    to as the ‘G-6’) failed to achieve a break-
mal meeting on February 17.                                                                 through on key issues in the NAMA and
                                                                                            Agriculture negotiations.
Discussions on export competition fo-
cused on food aid and how to prevent                                                        Negotiators had hoped that the London
it from distorting competition in ex-                                                       meeting, which took place on March 10-
port markets. Falconer said a “shape” or                                                    11, would lead to an agreement on some
“shadowy outline” is emerging on the                                                        of the contentious issues and help them
issue and that it will be reflected in the                                                   meet the April 30 deadlines set in Hong
reference paper.                                                                            Kong for agreeing on full modalities for
                                                                                            tariff cuts. But the failure of the meeting
On the ‘safe box’ – emergency aid which                                                     made it increasingly likely that negotia-
Ministers agreed in Hong Kong should                                                        tors will not meet this deadline for set-
be protected – participants discussed                                                       ting detailed negotiating modalities.
the use of ‘triggers’ for food aid. One of
the questions that members discussed                                                        Meanwhile, the US and European Union
is whether declarations by intergov-                                                        have agreed to coordinate more closely
                                             AFRICAN COUNTRIES CALL FOR                     on developing a formula for tariff reduc-
ernmental organizations should be suf-       FORMULA WITH STEEP CUTS ON
ficient to trigger food aid under the ‘safe                                                  tion. During a meeting in Washington at
                                             COTTON SUBSIDIES                               the end of last month between U.S.Trade
box’ or whether additional definitions
of emergencies are needed. Participants      Four African countries tabled a proposal       Representative, Robert Portman, and EU
recognized that the ‘safe box’ should        late last month for cutting and eventu-        Trade Commissioner, Peter Mandelson,
also cover situations where donor gov-       ally eliminating trade-distorting domes-       the two sides also agreed to coordinate
ernments might have to act before the        tic cotton subsidies.                          their work more closely on services, ac-
international organizations declare an                                                      cording to media reports.
emergency.                                   Sources at the WTO say the proposal,
                                             submitted by Benin, Burkina Faso, Chad         On the tariff reduction formula, the US
For food aid that is outside the ‘safe       and Mali, is spelt out in a formula de-        and EU agreed to move forward on the
box’ – i.e., not an immediate emergency      signed to ensure that the cuts on cot-         basis of a Swiss formula, where deeper
– the debate continued on whether this       ton will be substantial even if those for      cuts are applied to higher tariffs, with co-
should be given only in the form of cash     agriculture as a whole were modest. The        efficients of 15 for developing countries
or monetized – i.e., sold or re-exported     cuts, according to the proposal, would         and 10 for developed countries.
  INSAT                                                                                                        ISSUE 4 PAGE 12


The past few months have seen increas-          discuss the agreement are being established     At the end of 2004 a new regional body
ing involvement from the private sector         within business organizations and several       was created to represent the private sector
in Southern Africa in formulating national      seminars are being planned to share expe-       at the regional level. Prior to that, the Asso-
trade and economic policies. Yet private        riences with others who negotiated free         ciation of SADC Chambers of Commerce
sector participation in policymaking at the     trade agreements with the US.                   and Industry (ASCCI), which brought to-
regional level remains ad hoc and limited.                                                      gether national Chambers of Commerce
When participation does happen, sectoral        But such efforts at the regional level are      and Industry, was the only organization re-
interests are promoted while overall issues     quite rare and, in this particular case, came   cognized by SADC as representative of pri-
that affect the private sector more broadly     at a time when the negotiations seem to be      vate sector interests at the regional level.
are neglected.                                  “on life support”, as one observer put it.
                                                                                                During 2004 regional sectoral bodies
Recent examples of private sector advo-         Laurraine Lotter, Executive Director of the     such as the Mining Industry Association of
cacy for improved policies include heavy        Chemical and Allied Industries’ Association     Southern Africa (MIASA), Southern African
lobbying by the business sector in Lesotho      and head of the Trade Working Group in          Enterprise Network (SAEN), SADC Bank-
for lower taxes and the campaigning of the      Business Unity South Africa (BUSA), says        ers Association (SBA) and Southern Afri-
Botswana Cattle Producers Association for       the involvement of the private sector in        can Confederation of Agricultural Unions
higher prices from the monopoly Botswana        policymaking in the SADC region is “almost      (SACAU) expressed the feeling that they
Meat Commission (BMC). During the first          non-existent”.                                  were not represented by ASCCI at the
quarter of 2006, the Government of Leso-        The weak engagement of the private sector       regional level and met with the SADC
tho eliminated taxes on income generated        in shaping economic and trade policies is not   Secretariat to discuss their intent to form
from exporting manufactured goods out-          new to Southern Africa. For decades, govern-    a new regional body. According to a press
side the Southern African Customs Union         ments in the region formulated economic         release, the SADC Business Forum (SBF)
(SACU) (see page 8). In Botswana, the BMC       and trade polices and drew up strategies        was thus launched in November 2004 to
increased prices by an average of 40 per-       that directly impacted, and often harmed,       improve cooperation among regional busi-
cent in an initiative aimed at encouraging      businesses with little more than nominal        ness organizations and become the “apex
producers to expand their activities and,       participation from the private sector.          dialogue partner of SADC – the Secreta-
consequently, revive meat exports which                                                         riat and Institutions”.
have fallen significantly over the past few      Private sector participation in economic
years (see page 19).                            policy making at the regional level becomes     The main issue on the SBF’s agenda since its
                                                increasingly critical as countries move to-     establishment has been clarifying the roles of
In Namibia, the Government has set up a         ward greater regional integration and begin     the public and private sectors and establish-
national forum that, for the first time, for-    to negotiate free trade agreements as a re-     ing a framework for a shared public-private
malizes private sector participation in draw-   gional grouping.                                vision on economic and trade issues. The
ing up the country’s trade policies.The Na-                                                     SBF also intends to address constraints to
tional Trade Forum brings together public       Absence of an Effective Regional                trade and economic liberalization in SADC.
institutions and key private sector players     Business Body
to discuss and advise the Government on                                                         The SBF hopes to overcome the problems
economic and trade policies (see page 4).       Private sector sources say several factors      experienced by ASCCI, but it remains to be
                                                have limited, and continue to limit, involve-   seen whether the creation of a new institu-
Business interests have also been trying        ment of businesses in formulating economic      tion will enable the private sector to take
to assume a higher profile in regional and       and trade policies at the regional level.       up a more proactive role in regional poli-
international trade negotiations. In an un-                                                     cymaking.
precedented effort, several businesses and      Undoubtedly, the absence of an effective
civil society organizations (most notably       regional structure with a clear mandate for     ASCCI, established in 1999, had great ambi-
the South African Institute of International    coordinating and facilitating private sector    tions for promoting private sector interests
Affairs) have joined forces to assess the       participation in setting economic and trade     with governments in the region. But soon
potential impact of a free trade agreement      policies has been a major constraint. Other     after its establishment, and following several
between SACU and the US on businesses           constraints include the limited economic        relocations of its Secretariat around the re-
in Southern Africa and place their concerns     impact of regional trade agreements and the     gion, the association’s focus shifted to pre-
on the negotiations agenda. Policy papers       weak capacity of many private sector orga-      serving its own continuity.
are doing the rounds, working groups to         nizations throughout Southern Africa.
   ISSUE 4 PAGE 13                                                                                                       INSAT

ASCCI’s ability to coordinate regional busi-      ricultural Unions (SACAU).                      Economic Empowerment (BEE) has be-
ness activity was further undermined by the                                                       come the primary focus of businesses in
weak capacities of national private sector or-    “Development of well considered positions       the country, sources say.
ganizations, which led the association to con-    for different markets remains a significant
centrate on building the capacities of various    challenge for business in a collective sense    The transformation process has led to the
business organizations around the region          as sectors that are less well organized are     virtual demise of the structures within the
rather than promoting and coordinating pri-       not able to reach enterprises in the sector,”   various business organizations that dealt
vate sector efforts at the regional level.        says Lotter.                                    with trade policy issues, and a trade policy
                                                                                                  committee within BUSA was established
From the outset, ASCCI depended on do-            Moreover, the SBF’s formal engagement           only very recently.
nor funds to execute its regional agenda.         with SADC continues to wait for the sign-
Currently,ASCCI’s main donor, the German          ing of a Memorandum of Understanding            South Africa relies on the NEDLAC pro-
Agency for Technical Cooperation (GTZ),           that will institutionalize their interactions   cess to incorporate the views of the private
is holding back on further funding commit-        with SADC. According to Noko Murangi,           sector into its positions in regional trade
ments pending a clear business plan from the      Director of Trade Industry, Finance and In-     negotiations and does not take private sec-
ASCCI Secretariat which now permanently           vestment at the SADC Secretariat, this is       tor representatives to regional meetings.
resides within the Chambers of Commerce           not expected before August 2006 – almost
                                                  two years after the SBF’s establishment.        As a result,many analysts characterize private
and Industry South Africa (CHAMSA).                                                               sector involvement in trade policy making in
The early development of the SBF mirrors          Lack of Leadership                              South Africa as ‘reactive’ and ‘ad hoc’.
some of the experiences of ASCCI, but also        Developments in the regional powerhouse,        Moving Forward
points to other potential challenges.             South Africa, also impact on the region. Pri-
                                                  vate sector organizations in South Africa       Small and medium-sized enterprises in South-
While there has been consistent involve-                                                          ern Africa have limited experience in coordi-
ment of the regional business organizations       have had to address the challenge of finding
                                                  their voice in the new democratic South         nating multi-sector activities and lobbying for
who expressed the initial desire to estab-                                                        policy change within their national govern-
lish a new regional body, the process also        Africa. Business organizations have sought
                                                  to cast off their apartheid legacy which re-    ments, and inevitably have limited resources
relied heavily on the financial and technical                                                      to dedicate to protecting their interests in
support of ProInvest, an agency of the Eu-        sulted in them being organized along racial
                                                  lines. To date, this has resulted in two na-    national and regional policy processes.
ropean Commission. A year and half after
the launch of the SBF, the organization has       tional bodies with overlapping mandates         Establishing new institutions such as the
not yet established a permanent Secretari-        and incomplete internal transformation          SBF may be a positive development but
at and most of its activities continue to be      processes.                                      it will be necessary for the SBF to guard
led by its members rather than by the SBF         According to Peggy Drotsky, Head of Pol-        against the pitfalls that ASCCI encountered
as an organization.                               icy and Advocacy at CHAMSA, “some of            in its efforts to represent private sector
                                                  the things that the constituents would do       interests within SADC.An effective SBF re-
At present, ten regional business organiza-                                                       quires the commitment of the private sec-
tions, including ASCCI, are members of the        before, CHAMSA does…[therefore] we
                                                  are sometimes in competition with our           tor to allocate sufficient resources to carry
SBF, and the Secretary of the SBF, Mr. Ishmael                                                    out its mandate.
Sunga, recently told INSAT that they had          constituents”.
also received an application for member-          “It has not turned out how we thought or        Ishmael Sunga, SBF Secretary, says there is
ship from the regional textile association.       how we anticipated,” laments James Len-         “so much that the SBF can do” and that
However, many sectors are not represented         nox, ex-CEO of the South African Cham-          the organization needs to assign a full-time
within the SBF, and it is not clear how sectors   ber of Business (SACOB), who was actively       employee if it is to play its role effectively.
that do not have their own regional business      involved in the process.                        “I think we need to gain more momentum
organizations will be able to join the SBF.                                                       and begin to be a bit more proactive than
Sectors with weak regional bodies may also        National level, multi-sector participation of   we have been in the past,” he says.
find it difficult to get their concerns on the      the private sector in the policy process in
agenda in an organization that is dominated       South Africa is prescribed by the National      The modest successes of the private sec-
by very strong regional sectoral bodies with      Economic, Development and Labor Coun-           tor in lobbying nationally for pro-business
a long history of lobbying for their interests    cil (NEDLAC) where Business Unity South         policy change represent a positive develop-
at the national and regional levels such as the   Africa (BUSA) exclusively represents pri-       ment and should be regarded as a build-
Federation of Eastern and Southern African        vate sector interests. The debates within       ing block for ensuring an effective voice for
Road Transport Associations (FESARTA)             this forum are dominated by domestic and        businesses regionally as they seek to com-
and Southern African Confederation of Ag-         industrial issues. More specifically Black       pete in the global economy.
  INSAT                                                                                                              ISSUE 4 PAGE 14


How do you see the role of the private sector      NEDLAC [the
in trade negotiations?                             National      Eco-
                                                   nomic Develop-
The private sector is, at the end of the day,      ment and Labor
the engine of any trade in countries. This         Council] which
fact needs to be more underscored, but             represents three
we sometimes fail to do so because we              stakeholders
get so locked in these negotiations. Coun-         –      government,
tries don’t trade, it is the private sector that   the private sec-
trades, so they need to be brought along           tor and labor
as we move forward.                                – is very active in
A good example of successful private sec-          South Africa and
tor participation in the WTO process was           provides a forum
the role of the pharmaceutical industry in         for the exchange
2001/2 when countries were negotiating             of views on what
the TRIPS/public health agreement to try           the South African
to improve access to medicine to treat             position and ap-
AIDS and TB and other pandemics. The               proach should be
pharmaceutical industries in the US, Brazil        in these negotia-
and India were very, very central to those         tions.
                                                                                                      ally been able to articulate their interests be-
negotiations – they lobbied governments,           So I think that in the case of South Africa        cause they don’t understand the issues. As a
they provided solutions, and they came up          there are definitely inputs, but it is more         result they do not make a very good partner
with ideas which at the end of the day led         sectoral based, it is not overall. So there is     and therefore you see policies that are made
to the final package being adopted.                 definitely some room for improvement as             without the input of the private sector. I think
                                                   to how those inputs feed into the process.         that is a limitation most countries have in as
So, if it is approached well, and it is based
                                                                                                      far as the negotiations are concerned.
on informed discussions where each stake-          Another country that has from time to
holder sees their role and sees themselves         time brought along the private sector is           What has been your experience with regards
as part of the final solution, then yes, it can     Mauritius. In fact, the Mauritius Chamber is       to regional efforts to organize the business
yield very positive results. But there are only    the only one that I know of which came             sector in Southern Africa?
one or two cases where this has happened           and opened an office in Geneva specifically
– it is not something yet which is regular-                                                           In as far as the SADC Chamber is con-
                                                   to monitor the negotiations. So, this is also
ized across all the negotiating issues.                                                               cerned, you just look at the process of ne-
                                                   a positive development, at least in that it
                                                                                                      gotiating the SADC Trade Protocol, private
Another good example is the current dis-           shows that they do appreciate the potential
                                                                                                      sector impact was almost zero…in terms of
cussions on Aid for Trade where we are             impact that this could have on their abil-
                                                                                                      guiding governments in how they should ap-
looking at new funding mechanisms to               ity to compete – whether in the domestic
                                                                                                      proach the Protocol. In the current SADC
provide support particularly for infrastruc-       market or in their export markets.
                                                                                                      EU EPA negotiations, they are nowhere near
ture and supply-side issues. Now these will        [However], I think that at the national level      the process – you don’t feel their presence.
have to be jointly financed by private sec-         in most countries in Southern Africa, the          You don’t even see them intervening when
tor sources and through public funds. So           consultative process is very much interde-         it comes to resolving regional trade issues
the private sector has to be part of the           partmental.There is not much input from the        – whether it is resolving bottlenecks across
discussions if they are going to play a role.      private sector and in most cases it is a reflec-    borders, for example, goods from Zambia
                                                   tion of the limitations that exist as far as the   into South Africa or vice versa – they are not
In your experience, has the level of participa-
                                                   private sector interest groups are concerned       anywhere.You only see them in exceptional
tion of the private sector in Southern Africa
                                                   – they are not well-organized and they are         cases like for example, when Woolworths
been sufficient to allow them to play this role?
                                                   not well-structured. So they have not re-          complained through the DTI [South African
   ISSUE 4 PAGE 15                                                                                                           INSAT

Department of Trade and Industry] that it          solicit inputs from the private sectors and       sector participate. But they still do.
could not get its bread into Botswana. But         understand what the challenges are that the
it is very selective. It is not well-coordinated   private sector faces. But equally the private     Now, as far as the WTO is concerned, as
and it is not driven by a policy or driven by      sector has the responsibility to mobilize it-     you know, the WTO is an intergovernmen-
an awareness of the role across the board          self and to mobilize its resources to engage      tal forum, so it is very difficult for the WTO
that they can play in the process. So, it is not   the government, to provide not just a cri-        to insist to Member States that they should
a well-coordinated approach and as a result,       tique but also to guide the government on         bring the private sector along every time
for me, it has never really made much of an        what its priorities are and on what the situ-     they come here. But it is something that
impact on shaping regional trade policy.           ation on the ground is and where they think       they themselves already underscore as an
                                                   their strategic interests lie. Otherwise, the     important thing to do. When we had a
What are the implications of this at the re-       government is negotiating with blindfolds         meeting a few days ago on Aid for Trade
gional and multilateral level?                     on, because it has no view of where its po-       hosted by UNCTAD and the Common-
                                                   tential competitiveness lies – whether it is      wealth Secretariat, there was a very strong
At the regional level the main implication                                                           representation from the private sector
is that most times the positions that you          in the region or whether it is globally.
                                                                                                     from India which was quite helpful because
see being advanced by a country do not             It has no real picture of what it should do       they brought with them experiences in as
reflect the reality on the ground in terms          to foster and let the private sector grow.        far as the issues are concerned. But still, it
of where their strategic interests are: what       And government often does not have the            is not a widespread approach – you don’t
sectors have the potential to grow and             capacity to appreciate what some of the           see that in a coordinated manner.
where they can be competitive. There is            measures that they put in place do in terms
no information or inputs from the private          of protecting, or even undermining, the           What can be done in Southern Africa to ensure
sector that would support such positions.          private sector. For example, you take tariff      that ten years from now there is more effective
So most positions you find are taken more           policy. Governments impose high tariffs on        participation from the private sector?
on a group level in terms of taking into           some sectors and therefore these sectors
account what the trend is in the region                                                              Of course the issue of resources is very
                                                   are not actually becoming competitive.The         important and it determines the ability of
towards an issue, not based on national            day that those tariffs go, it gets wiped off. A
strategic assessments. So they are lacking                                                           the industry to represent its interests. At
                                                   good example is the South African textiles        the end of the day, if you look at all the
in that sense.                                     industry which is not competitive because         major industries in the region which have
Why do these limitations exist in the private      for a very long time they lived in an en-         the potential to export – whether it be
sector?                                            vironment where they enjoyed very high            regionally or globally – they could also con-
                                                   levels of protection by the state.                tribute some part of their resources/their
I think the biggest cause is the capacity                                                            profits towards improving their under-
of the private sector to organize itself to        What are the challenges faced by govern-
                                                   ments and intergovernmental organizations         standing of the issues, towards improving
engage the government and to insist on                                                               their lobbying capacity, towards improving
being an equal partner to government. To           in incorporating private sector inputs into
                                                   their policy positions?                           their participation. I mean, it is a sacrifice,
ensure that the information that flows to                                                             just as a government has to sacrifice part
governments in terms of the negotiations           The biggest challenge is the same that            of its resources to send people to Geneva
also flows to them and also that they are           NGOs face in as far as participation in these     to negotiate – it is a decision that they have
consulted and that they are part of the            intergovernmental discussions or fora are         to make. They first have to get convinced
process – in terms of even participating in        concerned. Because of [governments’] lim-         that in the long term they will benefit from
Ministerial Conferences. The private sector        ited understanding or appreciation of what        having permanent representation – until
doesn’t participate and even if it partici-        each stakeholder can bring to the table           such time they will not be prepared to in-
pates, it is just symbolic, they do not have       – there is a lot of suspicion. And the private    cur the expenses, to make compromises. I
an impact on the positions that countries          sector, to their disadvantage, are not very       think it is important for them, at first, to re-
advance. Also, the fact that the relationship      pragmatic.They look at things only from one       alize their strategic interests in the process
between governments and the private sec-           angle which is to always to try and secure        and they will then be able to come up with
tor in as far as government trade policy is        the highest level of protection.They are the      the resources.
concerned is also very, very weak.                 ones that are always pushing countries to
                                                   refuse certain efforts to open up sectors         And of course, governments should, where
How can these challenges be overcome and                                                             possible provide support in terms of help-
where does the responsibility lie?                 where they are involved. So they are not
                                                   very helpful in that, and as a result, there is   ing them coordinate themselves and meet
I think it goes both ways. I think the gov-        a bit of a reluctance on the part of some         them half-way in making sure that they be-
ernment has a responsibility to secure and         governments to open up and let the private        come able partners.
 INSAT                                                                                                  ISSUE 4 PAGE 16


   By Carl Noffke, International and Political Consultant, Former Diplomat and Newspaper Editor

If one takes a look at the scorecard of       growth in Southern Africa.                   and energy-related products, minerals
successes in the global economy, private      NEPAD has been receiving substantial         and metals, textiles and apparel, and cer-
enterprises play an essential role in pro-    offers of economic aid from a number of      tain transportation equipment attract
moting economic growth and develop-           sources, particularly the Group of Eight     the majority of overseas interest. These
ment.                                         (G8) nations and lately from Japan and       are indeed the sectors which should
According to the Chief Executive of the       India. One should remember that NE-          provide tremendous opportunities for
New Partnership for Africa’s Develop-         PAD’s role in Africa is to the infrastruc-   economic growth.
ment (NEPAD), Prof. Firmino Mucavele,         ture on which economic growth would          Many African countries have opted for
a solid foundation has now been laid for      be based.                                    a balance between public and private
the successful implementation of NE-          Private enterprise is essential in the       enterprise. For example, in South Africa,
PAD programs and for an environment           quest to jump-start economies. The en-       the State has preserved its established
for their sustained development.              tire continent and especially the coun-      (but not exclusive) role in certain trans-
The question is: What now? Critics of         tries without oil reserves in Southern       portation sectors (such as railways, har-
NEPAD have quite rightly criticize both       Africa (with the exception of Angola)        bors and the national airline South Af-
the NEPAD Secretariat and the Heads of        desperately need foreign direct invest-      rican Airways) while leaving the rest of
State for not utilizing (with few excep-      ment (FDI). Direct investment capital is     the economy to private enterprise. One
tions, such as the successful e-Schools       most likely to be attracted to countries     should take into account that South
project) the tremendous resources of          pursuing market-oriented economic            Africa’s well-established parastatals like
private enterprise in the huge planning       reforms. Dr. Monde Mnyande, Senior           Eskom, Transnet, the Industrial Develop-
exercise. The fact is, organized private      Deputy Chief Economist and head of the       ment Corporation (IDC) and the Devel-
enterprise does indeed play only a minus-     South African Reserve Bank’s Research        opment Bank of Southern Africa (DBSA)
cule part in the NEPAD structure.             Department, reminded us in August            are active in creating an environment
                                              2004 which forces propel FDI flows. In        more conducive to private enterprise in
The cumbersome, bureaucratic and of-                                                       the region.
ten ill-equipped NEPAD structures are         his address at a business meeting in Jo-
rather surprising because a new busi-         hannesburg, Dr. Mnyande warned that          SASOL, the synfuel and chemicals giant
ness-oriented political leadership corps,     while FDI flows are based on long-term        of South Africa, with international op-
determined to forge policies enabling the     considerations, they also depend to          erations now flowing from its innovative
continent to play its rightful role in the    some extent on aspects of the overall        manufacturing and business operations,
global economy, has been emerging in Af-      investment climate, such as the rule of      is a textbook example of the value-add-
rica during the past decade. Key nations      law, the sanctity of property rights and     ed services that result from this type of
in Africa, such as Nigeria, Senegal, Angola   the transparency – or lack thereof – of      public to private enterprise transforma-
and South Africa play an important role       the policy-making process.                   tion.
in the rapid transformation of Africa. To     The continent, and especially Southern       Southern Africa’s minerals and metal
some extent, however, the tremendous          Africa, has vast mineral resources. Oil      sector remains a dominant sector, be-
role of the private sector in promoting       and gas along the West Coast have stim-      ing a big earner of foreign exchange and
the rapid acceleration of economies has       ulated tremendous investment. Trans-         attracting considerable international
been grossly neglected, and this aspect       port, power generation and telecommu-        investment. For example, in 2003, 68
should receive priority attention.            nications are focal points, especially for   percent of U.S. imports from sub-Saha-
On the road ahead, the public sector          future private sector involvement.           ran Africa were platinum-group metals,
should actively involve the private sec-      To summarize: agriculture, fisheries, and     which were almost all from South Africa,
tor in ensuring real, dynamic economic        forest products; chemicals, petroleum        and diamonds, mostly from South Africa,
  ISSUE 4 PAGE 17                                                                                               INSAT

the Democratic Republic of the Congo         in meetings.                                  South Africa are already assisting in the
and Angola. U.S. iron and steel imports      It is of vital importance that progress is    development programs of the Southern
also increased, reflecting the continued      made with respect to transparency, cor-       African region. International business
growth of iron and steel industries in       ruption, and regulatory reform.               organizations, such as the American,
South Africa, Tanzania and neighboring                                                     British, German and French business
countries.                                   Successful regional business institutions     chambers, are already playing an impor-
                                             and domestic business chambers in             tant role. The South African Chamber of
Southern Africa, however, should not be      Southern Africa play a key role in attract-
seen only as the “Persian Gulf” of metals                                                  Business’ (Sacob) Business Confidence
                                             ing foreign investment. The Southern Af-      Index promotes both domestic and
and minerals to the developed and rap-       rican Development Community (SADC),
idly developing countries, such as China                                                   international interest as well as invest-
                                             with headquarters in Gaborone, will be        ment, while the Business Against Crime
and India. Southern Africa could also ex-    able to attract much-needed foreign
cel in niche manufacturing areas. South                                                    Initiative in South Africa focuses atten-
                                             investment once its potential has been        tion both on blue collar and white collar
Africa has lately become a dominant          fulfilled. The Southern African Customs
producer of motor vehicles and motor-                                                      crimes in the country. These initiatives
                                             Union (South Africa, Botswana, Namibia,       help to promote business confidence.
vehicle components for export markets,       Lesotho and Swaziland) at present offers
with projected exports in 2006 estimat-      what foreign investors need: safe and         South Africa has in place a large number
ed at approximately 200,000 vehicles.        secure markets and a business environ-        of state incentives to promote private
NEPAD intends to resolve the prob-           ment conducive to trade.                      initiatives, such as innovations in research
lems of inadequate infrastructure which                                                    and development, incentives for enter-
                                             The Southern African region needs to          prise development, incentives for the
hinders trade and investment in many         sharpen its focus on entrepreneurship.
countries in Southern Africa. What is                                                      enhancement of competitiveness, and
being planned and implemented through        One can easily theorize about what is         incentives for export promotion and
NEPAD is impressive.What bothers pri-        required to transform Southern Africa         development. These steps, coupled with
vate enterprise is the negligible involve-   economically. The infrastructure is being     treasury guidelines to promote econom-
ment of the business sector in crucial       attended to reasonably well at this stage.    ic growth, should form useful guidelines
decisions, and their limited participation                                                 for the rest of the region.
                                             Well-organized business institutions in

                                              ESSENTIAL REPORTS
   UNCTAD’s Developing Countries in Interna-               A statistical analysis option allows for
   tional Trade 2005: Trade and Development In-                     quantitative analysis of trade capacity building data by
   dex, a report by the UNCTAD Secretariat, examines                category.
   the trade and development performance of countries,
                                                                    The report shows recent trends in assistance re-
   highlights the interaction between the two, and shows
                                                                    lated to two significant Doha Development Agenda
   how a number of factors can impact both trade and
                                                                    developments: Cotton-related decisions by the WTO
   development outcomes. The report can be accessed
                                                                    General Council in the 2004 July Package and the
                                                                    launch of WTO negotiations on Trade Facilitation.
                                                                    The report is available at
   The 2005 Joint WTO/OECD Report on Trade-                         2005%20Report-Final.pdf.
   Related Technical Assistance and Capacity
                                                                    The Economic Commission for Africa’s Meeting the
   Building (TRTA/CB) presents an overview of TRTA/
                                                                    Challenges of Unemployment and Poverty in
   CB committed between 2001 and 2004 based on
                                                                    Africa, finds that despite relatively high growth rates in
   data reported to the WTO’s Trade Capacity Build-
                                                                    sub-Saharan Africa, much of this growth is driven by oil
   ing Database. The searchable database contains over
                                                                    export revenues while labor-intensive industries such
   15,000 national and regional activities from 2001 to
                                                                    as textiles and apparel face severe challenges. The re-
   2006 provided by more than 40 bilateral donors and
                                                                    port is available at
   multilateral agencies and can be accessed on http://
INSAT                                                                                             ISSUE 4 PAGE 18

                             TRADE RESOURCES
SOURCES ON TARIFFS, TRADE                                       NEW RESEARCH
                                                                Late last year the
The AccessGuide,, serves         USAID Trade Hub
as a database for developing country exporters seeking          hosted the Bot-
entry into the European Union market. It offers infor-          swana launch of a
mation on the legislation and market requirements for           new book edited
the EU. The guide recently added information on Norway          by Peter Draper,
which participates in the European Economic Area (EEA)          Research Fellow
and therefore adheres to EU legislation even though it          at the South Afri-
is not an EU member. In addition, exporters can access          can Institute of In-
actual case studies that illustrate how other companies         ternational Affairs.
have successfully implemented standards and maintained          Reconfiguring
market access.                                                  the     Compass:
                                                                South Africa’s
Exporters from developing countries who wish to access          African Trade
the EU market can also refer to the EU Helpdesk for             Diplomacy is a
assistance. At   collection of six
development/pr140605_en.htm they can access informa-            chapters by dif-
tion in English, Spanish, and Portuguese.                       ferent     authors.
                                                                The launch at the
Trade Attaché is a database that provides both import-
                                                                USAID Trade Hub took the form of an intimate round-
ers and exporters with a vehicle through which they can
                                                                table discussion with high-level participants from around
locate and contact one another. The database includes
                                                                the region. On the basis of his own analysis and the dis-
500 million companies from over 200 countries and en-
                                                                cussions, the respondent, Dr. Clement Ng’ong’ola, of the
hanced listings and banners for traders. Viewers are able
                                                                University of Botswana’s Law Department, wrote a very
to search for contacts by product, industry, company, and
                                                                comprehensive review of the book which can be accessed
SIC or HTS Code. In addition, the international trade di-
rectory offers a pro-active online chat support.
                                                                Trading on Time, a recent report by the World Bank,
More information on Trade Attaché can be found at www.
                                                                looks at the effect of time delays on exports and finds or
                                                                that time-consuming customs procedures and inefficient
Africa and the WTO: 100 Key Words, published by                 transportation systems affect exports as much as tariff
the Economic Commission for Africa sheds more light             barriers. The report finds that it takes an average of 48
on the jargon used in multilateral trade negotiations. The      days to move a container from the factory gate and load
book also discusses projections for the final outcome of         it onto a ship in sub-Saharan Africa and that each addi-
the Doha Round and what is necessary to achieve the ini-        tional day that a product is delayed prior to being shipped
tial objectives of the Round from an African perspective.       reduces trade by at least one percent. But if these coun-
For more information, visit:                     tries were able to reduce the time to export by 10 days,
                                                                sub-Saharan African countries would be able to expand
Weekly Customs, Excise, Tariff and Trade Rem-                   their export volume by approximately 10 percent. Visit
edy Summary Notification. The Trade Law Center         
for Southern Africa (tralac) and Customs and Trade in-          port.pdf for access to the complete study.
telligence (CTi) will be launching a webpage containing
information on customs, excise, tariff and trade remedies       A new report entitled Responsible Competitiveness:
within the BLNS countries – Botswana, Lesotho, Namibia          Reshaping Global Markets Through Responsible
and Swaziland. According to tralac, the website will serve      Business Practices encourages business to be compet-
as an early warning system and provide a database of            itive responsibly. Africa ranks as one of the top emerg-
such investigations and their progress.                         ing economies. Mauritius is ranked among the good per-
                                                                formers while Zimbabwe and Algeria, on the other hand,
In order to register to receive such information, you will      had the lowest scoring overall. Their rankings are tied to
need to be an interested party that is based in one of the      their responsible competitiveness. For the full report, see
BLNS countries.Access to the site will be restricted. Please
contact tralac at for more information.
   ISSUE 4 PAGE 19                                                                                             INSAT

                     INSIDE THE TRADE HUB
TO BECOME                                      BMC PAYS PRODUCERS HIGHER PRICES IN
EXPORTER OF                                    BID TO BOOST THE CATTLE INDUSTRY
                                               In an effort to revitalize the cattle industry and increase incentives for raising
In 2007 Botswana’s farmers will start          cattle, the Botswana Meat Commission (BMC), which has a monopoly over
commercial production of at least 30           Botswana’s beef exports, has increased the prices it pays to producers by an
hectares of selected varieties of sweet        average of 40 percent since the beginning of this year.
melons and watermelons for export to
South Africa.                                  The price increase comes at a time when the Botswana cattle sector is facing
                                               significant difficulties due to declining exports.The sector’s share in exports has
                                               fallen by more than 50 percent – from 3.4 percent in 1998 to only 1.3 percent
                                               in 2003 with only a slight recovery to 1.5 percent in 2004. Revenue from beef
                                               exports also reached a record low in 2003 with only 166 million Botswana Pula
                                               (US$30 million), down from 349 million Pula (US$63 million) in 1998.

                                               The cattle sub-sector is the mainstay of Botswana¹s rural economy, with an
                                               estimated 20-25 percent of the country’s households involved in cattle rearing
                                               as owners or employees. While the amounts are low, it remains the country’s
                                               second largest foreign exchange earner.

                                               Sources say that the recent increase in prices is aimed at spurring growth in the
This is the result of a successful first se-    industry by encouraging more investments in cattle rearing.
ries of trials to farm melons in Botswana
in order to fill a gap in production dur-       The Minister of Agriculture told Parliament earlier this month that the Govern-
ing South Africa’s winter season.              ment has left the door open for further reviews of its policies on the cattle
                                               industry and, potentially, more price increases for producers.
The first trials ran from September 2005
to February 2006 with support from             Government efforts to boost the cattle industry, including the recent price
Geest, a large South African-based food        increases, are in line with recommendations made in a USAID Trade Hub study
processing firm. Geest selected three           by Dr. Keith Jefferis. The study, published in 2005, identified the low prices paid
varieties of sweet melons and seedless         by the state-owned BMC as the main impediment to the economic viability and
watermelons (needed for fruit salads           expansion of the sector.
exported to the UK) for further trials
to be carried out during 2006.                 With Trade Hub support, the Botswana Cattle Producers Association (BCPA)
                                               provides a strong voice to cattle farmers and is recognized as a key partner by
Six farmers from the Gaborone area of          the Government of Botswana.
Botswana were selected to participate
in the initial trials. Twenty percent of the
melons produced during the trials were
sent to South Africa as samples, and the
remaining 80 percent were sold on the
local market.

With a potential net profit of 40,000
Pula (US$7,500) per hectar, this high-
value crop presents lucrative opportu-
nities for these farmers and others who
will be brought in for the second series
of trials.
The technical assistance provided by
the USAID Trade Hub in these trials
has also led to further opportunities for
Botswana farmers to export to South
Africa and Europe.
 INSAT                                                                                                  ISSUE 4 PAGE 20

                    INSIDE THE TRADE HUB
Filming started early in the mornings and continued all day
as the crew accompanied workers to their apparel jobs in
the tiny mountain kingdom of Lesotho before the break of
dawn and followed trucks from Southern Africa’s economic
hub, Johannesburg, through the seemingly endless desert that
spans Botswana and Namibia to the port of Walvis Bay on the
Atlantic Ocean.

All this hard work is paying off as the Trade Hub is putting the
finishing touches on a series of five short educational films for
use in dialogue and outreach activities in the region. The films
will be launched at a regional private sector roundtable in May.

The documentary-style films, each 15 minutes in length, touch
upon trade-related issues important to the region’s competi-
tiveness and aim to appeal to a broad audience.
                                                                    The films discuss the issues and challenges faced by countries
Shot on location throughout the region, the films examine five        in the region as they build global competitiveness and highlight
inter-related topics: (1) the impact of trade preferences, with a   initiatives and efforts to improve the business and trade envi-
particular focus on AGOA and the apparel industry in South-         ronment in individual countries and the region as a whole.
ern Africa (using Lesotho as a case study); (2) business envi-
ronment challenges in the region and initiatives to improve         Filming started in Lesotho’s struggling textile factories in late
competitiveness; (3) building an effective private sector voice     November 2005 and moved on to Swaziland where the crew
for policy change (using the Hub’s work with the Botswana           interviewed a broad range of people from the public and
Cattle Producers Association (BCPA) as a case study); (4) im-       private sectors for the business environment and HIV/AIDS
proving trade facilitation by means of the Trans-Kalahari and       pieces. In Botswana, footage was gathered from farms, a cattle
Maputo Transport Corridors; and (5) HIV/AIDS from a busi-           auction, an abattoir, and butchery for the private sector advo-
ness and economic perspective.                                      cacy piece.

                                                                    In February 2006, the team followed a truck from Gauteng to
                                                                    Windhoek along the Trans Kalahari Corridor (TKC) to iden-
                                                                    tify remaining barriers to the efficient transport of goods in
                                                                    the region and to examine initiatives to improve the situation.
                                                                    They also drove along the Maputo Corridor to see how the
                                                                    TKC successes and lessons learned are being applied there.

                                                                    Interviews with a privately funded orphanage, a well-known
                                                                    musician, private companies, and public sector officials in Mo-
                                                                    zambique, South Africa, Lesotho, Swaziland, and Botswana pro-
                                                                    vided the material for the film addressing HIV/AIDS challenges
                                                                    for businesses.

                                                                    The films are the brainchild of Lisa Yarmoshuk,Trade Hub Direc-
                                                                    tor, TFCB, and are being produced in collaboration with Emmy
                                                                    Award-winning journalist Hanson Hosein of HRH Media.

         Southern Africa Global Competitiveness Hub, Units 1 & 4, Plot 40, Gaborone International Commerce Park
         PO Box 602090, Gaborone, Botswana. Tel: +267 390 0884. Fax: +267 390 1027. E-mail:

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