Economic blocs boost cross-border trade

Everyday huge trucks loaded with all kinds of goods traverse the highways and entry border points as a sign of increased cross-border trade in southern Africa.

Other than that, 25.4 per cent of cargo rolls down the region’s railway networks from seafront harbours to the dry ports of landlocked countries.

This cross-border trade is on the increase, but may not reach breaking point just as yet because of various economic factors, not least the global downturn which is haunting the economies of many countries and tends to relegate the general intra-regional trade.

Partly, the increase in trade in southern Africa can be attributed to the rise in non-traditional exports by almost 3.8 per cent annually in the past 10 years for most of the countries.

But also the creation of regional free trade zones for member countries of both the Southern African Development Community (SADC) and Common Market for Eastern and Southern Africa (Comesa) has assisted the rise in cross-border trade.

While five years ago trade within the SADC bloc reached about $40 billion (compared with $120 billion with industrialised countries) the figure is expected to close at about $48.2 billion this year, but would have been higher without the shocks from the world recession.

At the same time invisible trade of unofficial cross-border vendors who use private service vehicles and bush paths is also on the increase except the region loses close to $1.2 billion every year in unpaid taxes and duties.

Comesa with a much higher membership than SADC estimates cross-border trade to be almost twice the $40 billion recorded in the 2004/2005 financial year.

According to economic analysts at the secretariats of the two trade blocs in Gaborone, Botswana and Lusaka in Zambia, business would have done much better had member countries of SADC and Comesa followed the trade protocols which they signed.

But this has not been the case as many countries in the region continue to be protectionist, imposing high tariffs on vulnerable goods which they also produce.

It is this fear of undue competition which is stunting trade among member states and fuels smuggling.

Partly to blame is the colonial legacy where most of the countries in the region produce almost the same type of goods for export both to the traditional and non-traditional markets.

Although member countries realise competition is healthy for any kind of business dealing, they like to hedge their manufacturing sectors on the excuse that others do not want to operate on quid pro quo terms.

This in 1990 caused a lot of furore and finger-pointing among member countries who accused such countries as South Africa, Zimbabwe, Mozambique and others of being involved in unfair trade practices because of their unnecessary control of imports from the region.

Only recently Zambia accused the Democratic Republic of Congo of not doing much to facilitate the free flow of exports to that country.