Local firms not ready for AfCFTA – BB
Business Botswana (BB) is concerned that the benefits of the African Continental Free Trade Area (AfCFTA) Agreement, will not be fully exploited by local businesses. The agreement is expected to give Batswana the opportunity to benefit from inter-regional trade within the African continent, and greatly contribute to the growth and diversification of the country’s economy.
However, when briefing the media this week, BB president Gobusamang Keebine said the local manufacturing industry is not ready for the export market. “There are only a handful of local businesses that will participate, as most of them are not export-ready. Government should consider involving the private sector about these bilateral agreements before signing them,” he said. Despite signing it in 2019, Botswana has not yet ratified the agreement, which was initially scheduled to kick off on January 1, 2021 with trade amongst countries that have agreed on tariffs.
AfCFTA will potentially be the biggest common market in the world, with 1.27 billion consumers and an aggregated Gross Domestic Product of up to $3.4 trillion.
For Botswana’s aspirations of an export-led economy, AfCFTA is a dream come true. On the ground, however, is the recurring nightmare of AfCFTA leading to a swamping of the local market by cheap imports, drowning out the little manufacturing capacity available. Voices in certain circles fear that AfCFTA could be a ‘mega-South Africa’, which for decades has overshadowed the local productive sector empowered by the provisions of the Southern African Customs Union (SACU) agreement.
The Ministry of Investment, Trade and Industry has been engaging the private sector to spread awareness about AfCFTA and how local businesses can position themselves to benefit. Local businesses, through their associations, have however expressed concern about lack of capacity to fully take advantage of the continental deal, especially as many of them are still battling powerful South African dominance in the local market.
Like SACU, AfCFTA has industrial and infrastructure development provisions, but under SACU, even with those facilities, Botswana is importing up to P50 billion in non-diamond commodities each year, with about P8 billion of this being food and beverages mainly from South Africa.