COVID-19 stresses Intra-SADC Trade

John Hogg/World Bank
John Hogg/World Bank

Intra-Southern African Development Community (SADC) exports and imports as a proportion of overall trade of the region rose from 15.2% and 17.5% to 19.5% and 19.15% respectively between 2008 and 2018. In their virtual meeting held in March 2020, the SADC Council of Ministers (SCM) observed that less than 20% of intra-SADC trade prevents member States from realising their economic potential. Thus, the above marginal intra-regional trade, firstly, reflects low industrialisation, evidenced by a slight increase in the manufacturing sector’s contribution to gross domestic product (GDP) from an average of 10.3% in 2013 to 11.9% in 2018. Secondly, this reflects lack of diversifying member States’ economic structures from agriculture and mining sectors, which in 2018, accounted for an average of over 25% of GDP. While in particular, South Africa, the largest and most diversified economy, has high capabilities of dominating intra-SADC trade.

CountryMain export product
Angola Diamonds, oil, minerals, coffee, fish & timber
BotswanaDiamonds, copper, nickel
LesothoClothing, wool, livestock
MalawiTobacco, tea, sugar
MozambiqueSeafood, cotton
NamibiaDiamonds, copper, gold, zinc, lead, uranium, livestock
SwazilandSugar, wood pulp, minerals
ZambiaCopper, minerals, tobacco
Zimbabwe Tobacco, cotton, agricultural products, gold, minerals
Source: Derived from many sources

Indeed, the majority of SADC economies are dependent upon agricultural and mineral commodities (see adjacent table), which are not only vulnerable to adverse terms of trade shocks notwithstanding competing against each other on the same global markets, but are also non-contributory to intra-regional merchandise. On the contrary, particularly South Africa, the largest and most diversified economy, has high capabilities of dominating intra-SADC trade. The above, as rightly observed by SCM, intensifies calls, inter alia, to consolidate the implementation of the SADC free trade area, currently shunned by Angola, Comoros and the Democratic Republic of the Congo (DRC), of which Angola and the DRC are large-scale economies, with huge potential to contribute significantly to intra-regional trade as well as implement industrialisation strategies such as increasing value addition and agricultural and non-agricultural regional value chains.

SADC Production structures and exports by country

The above observation by SCM coincided with the outbreak of the COVID-19 pandemic, which forced regional leaders to close borders; restrict the production of goods and services; and disrupt or restrict the supply of goods and services for the domestic, regional and global markets. In this respect, regional countries shortened the working hours. For example, the Zimbabwean Statutory Instrument 174 of 2020, reduced working hours from the usual 08h00 to 17h00 to 08h00 to 15h00 for a month. This means that some industrial processes significantly slowed down while others ceased operations altogether. As a result, some industrial companies failed to fulfil orders due to their inability or delays to get essential raw materials for their respective manufacturing production processes, a development that disrupted the whole value chain of the production processes of certain products. Reduced working hours also affected operations at the ports of entry such as airports and border posts as well as other related cross border trading institutions. For instance, reduced business hours have been affecting the clearance of goods of Container Depots and Customs Offices of the respective countries, with the exception of essential cargo as specified from country to country. In response, some businesses cancelled their orders largely due to insufficient cargo flights into or out of their countries. Trucks were not allowed to move between certain times of the night; and in some instances where their movement was restricted, the drivers found most businesses including fuel stations closed, forcing them to wait until they opened the next day for them to re-fuel and continue their journey. In particular, curfews in countries such as Zimbabwe (SI 174 of 2020) and Mauritius also undermined industrial production and related trade facilitation within the region.

#COVID-19 has severely affected economic activities across all sectors, but also greatly undermined intra-SADC trade.

COVID-19 lockdowns, particularly, the closure and/or restrictions of ports of entry have been limiting the movement of goods and/or types of goods being allowed across into other regional markets. Not all borders were open during the lockdown periods. In addition, regional countries added more COVID-19 induced controls, which are blamed for delaying road and air cargo movements at regional ports of entry notwithstanding existing cargo movement facilitation policies. Firstly, the mandatory health checks for cross border truck drivers and crews and compulsory disinfection of trucks before and after crossing, resulted in delays at most border posts, especially at Nakonde (between Zambia and Tanzania), Chirundu (between Zambia and Zimbabwe), Forbes (between Zimbabwe and Mozambique), Beitbridge (between Zimbabwe and South Africa), Lebombo (between South Africa and Mozambique) and Kopfontein (between South Africa and Botswana). Secondly, some member States insisted on the physical inspection of cargo despite the COVID-19 induced reduction in staff levels. Thirdly, not all regional countries have embraced Risk Management protocols since the coordination by government border agencies at the Botswana, Mozambique, Zambia and Zimbabwe ports of entry still rely on manual processes even though the processing of import and export documents is computerised. This caused delays in moving cargo across the regional countries’ borders as the drivers and clearing agents still need to submit hard copies of documents to customs authorities for, inter alia, verification, stamping and filing, a process that greatly slows down the movement of goods.

Due to the lack of uniform standards and conformity systems to guide importers and exporters, the COVID-19 lockdowns have been compelling SADC countries to seek conformity certificates for the different countries that they trade with. For example, Zimbabwe through Statutory Instrument 124 of 2020, introduced conformity requirements for some COVID-19 related goods such as masks in order to ensure that they meet the required minimum standard. On the contrary, with respect to goods originating from outside the SADC region, traders are not expected to obtain conformity certificates as member States agreed to facilitate trade by recognising those standards, the purpose of which is to protect regional citizens from using or consuming unfit product(s). 

Slow opening of SADC countries respective borders and permission for more industrial production and other economic activities worsen the intra-SADC trade situation. Fear of a sudden rise in new and active COVID-19 cases and fatalities compelling most SADC countries to reintroduce restrictions and lockdowns risks not only dampening regional economic prospects for 2021 against the backdrop of projected regional real GDP growth contraction of 4.8% in 2020, but also worsening intra-SADC trade. The above not only confirms that COVID-19 has severely affected economic activities across all sectors, but also greatly undermined intra-SADC trade. However, the severity of economic underperformance varies across Member States since some countries have been avoiding the premature withdrawal of stimulus packages and safety nets thereby reversing the progress that has been made to revive the economies. Also, closure of border posts forced informal cross border traders to smuggle goods through undesignated points thereby evading all Sanitary and Phytosanitary controls, payment of import duties and flooding local markets with smuggled goods. Zimbabwe informal traders continue entering South Africa through undesignated points notwithstanding risk of crossing crocodile-infested Limpopo river, an electric fence, and patrolling armed soldiers. In this regard, the South African Police apprehended several cases of cigarette smuggling syndicates and increases in cigarette smuggling cases from Zimbabwe, and liquor smuggling from Lesotho during the lockdown periods when the importation and consumption of alcohol was banned in South Africa. All of these factors served to undermine recorded intra-SADC trade.

Dr Richard Kamidza is an independent international development consultant specialising in the regional integration process of the Southern African region (COMESA, SACU and SADC)

Article by:

Richard Kamidza
Independent International Development Consultant

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