Post Zambia, March 12, 2014

SOUTH Africa’s unfair trading practices are frustrating a diversified intra-regional trade in SADC, says Dr Caleb Fundanga.

Making a presentation at a Consumer Unit Trust Society (CUTS)-organised discussion on regional trade on Monday evening, Dr Fundanga, the former Bank of Zambia governor, said South Africa still had in place a number of non-tariff barriers where some agricultural products from the region cannot enter their market for one reason or another.

“Zambian beans for example cannot enter that market yet our beans is better than most of that South African beans found on their shelves,” he said. “Recently, Vice-President Dr Guy Scott told Parliament that Zambian grapes cannot be sold in South Africa. The South Africans alleged that the grapes were affected by a certain disease. These are non-tariff barriers that need to be removed.”

Dr Fundanga explained that South African companies, which were dominant in a number of SADC countries, tended to favour South African products.

“For example, South African Breweries promotes the sale of Castle Lager all over the region, but does not promote other beer brands in South Africa even if it now owns the breweries that produce these beers such as the Zambian lager, Mosi. They have concentrated on marketing Castle, yet Mosi is equally a good brand,” he said.

Dr Fundanga said the scope for expanding intra-regional trade in SADC existed if only South Africa could open up more to the products of other SADC member countries.

He noted that intra-SADC trade between 2000 and 2008 had increased from US $11.6 billion to US $29.3 billon, but that the increase was driven by the region’s shift in the source of imports from Europe to South Africa following the end of apartheid.

Dr Fundanga said intra-regional trade had to a large extent benefited South Africa, as that country was exporting more compared to other countries in the region.

“This is very clear, for example in the supply of mining equipment. South Africa is the regional hub for most of the global suppliers of mining equipment,” he noted. “Further, the recent expansion of South African supermarket chains into the region has increased the bias for South African consumer goods. Thus, the increase in intra-regional trade is concentrated in one country – South Africa.”

Dr Fundanga, however, noted that potential for Zambia to penetrate countries within the region by exporting products such as kapenta and maize was huge.

“There seem to be a pervasive feeling amongst most Zambians that there is little that can be exported from Zambia, other than copper, a product of an industry which is mainly dominated by external investor interests. This is not true. A number of export opportunities can be identified,” he said.

“Europe has a market for local delicacies like Impwa, Cassava and so on but no one is exploiting those opportunities, yet the most successful exporting nations of recent times like South Korea have exported almost unimaginable products. I have seen canned Inswa from South Korea selling in Germany.”

He observed that the success in exporting to the region was perhaps much easier than exporting far afield because of similarities in cultures and tastes.

“…but clearly there are a lot of obstacles to success in penetrating the regional market,” said Dr Fundanga.

Former commerce minister, Felix Mutati, who was one of the discussants, cited access to affordable finance, high cost of doing business and the existence of policy consistency as some of the non-tax barriers for countries in COMESA to boost intra-regional trade.

“We have agreed to non-tariff barriers, but what is happening on the ground is different. Countries are putting in place the barriers. Unless we begin to tackle these issues we will not be able to use trade by SMEs as catalyst for growth,” said Mutati.

And World Bank country representative for Zambia, Kundhavi Kadiresan, said there was need for countries to simplify cross-border trade.

She said one way that countries could boost cross-border trade, especially for SMEs was by cutting down on paper work.

Kadiresan said focusing on SME cross-border trade could make a huge difference in alleviating poverty and inequality.

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