Botswana signs FTA agreement with COMESA, SADC, EAC
Botswana, a mining-rich country, has become the latest country to sign the COMESA-EAC-SADC tripartite Free Trade Area (FTA) agreement, which once in full swing will give the country access to a market of well over 700 million people and counting.
The country’s minister of trade, investment and industries, Vincent Seretse signed the agreement on behalf of government on Tuesday in Gaborone, telling attendants that the agreement, which has been under negotiations for the past 17 years, will help to improve intra-African trade since it seeks to eliminate and reduce tariffs and non-tariff barriers.
“The tripartite FTA is also expected to serve as one of the building blocks of an African Economic Community, thus facilitating deeper regional and continental integration in Africa,” said Seretse in a prepared speech. The trade minister made it clear; the road that has culminated into the signing of the FTA agreement by the country and others has been long and potholed.
Back in 2001, Common Market for East and Southern Africa (COMESA), Southern African Development Community (SADC) and East African Community (EAC) agreed to formalise negotiations that could enable a free trade area. However, there have been back and forth discussions, which ultimately delayed the process, but Seretse is optimistic that, the negotiations are now coming to finality.
The minister said, the FTA agreement will allow Botswana to get preferential treatment when selling its goods and services to the 26 member countries. “This agreement resonates well with the Botswana National Development Plan (NDP11) aspirations of becoming an export-led economy,” said Seretse. On the ground, some commentators have urged Botswana to improve its ease of doing business if it is to become an export-led economy. Diamonds are the country’s best exports by far. Local products which have been identified under the agreement include veterinary vaccines, pharmaceutical products, carpets, plastic, salt and salt products, carpets and textile floor covering.
Government-owned Botswana Vaccine Institute (BVI) already supplies some African countries with agricultural vaccines. Botswana Ash has also found markets beyond the borders. Even before the agreement was signed, Botswana had already started doing more trade with other countries in the respective regions. In 2016, goods worth P997 million were exported outside Botswana. During the same period goods totaling P1, 9 billion were imported from countries such as Rwanda, Kenya, Uganda, Zambia and Zimbabwe into Botswana.
The FTA agreement offers Botswana companies more increased access to outside markets, but capacity looks set to hinder them, Permanent Secretary in the Ministry, Peggy Serame said when giving opening remarks. “More work is only starting as competitive and quality goods will be needed from Botswana companies,” she said.
Seretse has urged the Secretariat to help improve production capacity of member states. “To build these capacities, we can take advantage of Phase II negotiations that will look into trade in services and the industrial development pillar, which aims at developing the productive capacity in the Tripartite,” stated Seretse.
The COMESA, SADC, EAC has an estimated Gross Domestic Product of $1, 4 trillion. COMESA Secretary General, who is also Chairman of the tripartite task force, Sindiso Ngwenya said opportunities are there within the FTA.
At the end of the day, the private sector, not government will play a central role in the FTA. This explains why they were part and continue to be part of the negotiations. “Economies of scale (by the private sector) is key to success,” he said.
SADC Deputy Secretary for regional integration-Dr Thembinkosi Mhlongo heaped praises on Botswana for having found it fitting to sign the FTA agreement. “It is an important step for the country to take,” he said. What is only left now is for Botswana to fastrack the ratification processes, which will kickstart the implementation process of the FTA. Out of the 26 members in the FTA agreement, only 14 countries are needed to ratify the agreement before it can be fully implemented. Uganda and Egypt have ratified the agreement. Botswana’s Seretse said the ratification process will be done in the near future. Meanwhile, Botswana Exporters and Manufacturers Association (BEMA) praised Botswana for signing the FTA, saying it guarantees the country an opportunity o foster free trade flows and strengthen ties with trading partners.
“Botswana will explore other markets and tap into continental value chains through enhanced trade facilitation that will improve the flow of goods and services,” said BEMA CEO, Mmantlha Sankoloba. BEMA members are ready for the opportunity since some of them are already exporting to these markets.
“Implementation of the TFTA will have a positive impact on the economies of scale, cost of production, transportation costs will be lowered, quality will improve and enhanced competitiveness,” said the BEMA Chief. There are even more opportunities such as e-commerce which will be offered by the new agreement.
“Implementation of this agreement will enable BEMA members to share skills and knowledge with their counterparts, explore new business networks through trade fairs, exhibitions and any other opportune platform that may present itself,” stated Sankoloba.