Sello Motseta
2nd March 2021
The Botswana Government insists that its decision to continue implementing targeted restrictions on the import of bottled water, baked goods, salt and masks to protect fledgling industries does not undermine its commitment to an ambitious continental wide free trade agreement.
It is expected that the implementation of the African Continental Free Trade Area Agreement (AfCFTA), which became operational in January 2021, would reduce region’s vulnerability to global disruptions, as well as deepen trade and economic integration, while also boosting competition and productivity.
However, the successful implementation of the AfCFTA will, of necessity, require Member States to eliminate both tariffs and non-tariff barriers, and generally make it easier to do business and invest across borders. Any state sanctioned efforts to restrict import may be regarded as regressive.
Not so say Botswana trade officials who insist exceptions in free trade clauses sanction restrictions.
“There are inbuilt provisions for Infant Industry Protection in the AfCFTA. As and when we have new industries requiring such protection we will invoke the relevant provisions,” said Phazha Butale – Chief Negotiator for Botswana and a senior official at the Ministry of Investment, Trade and Industry.
He said, “There a lot of potential benefits accruing from the AfCFTA ranging from a bigger market to supply (approximately 1.4 billion population), to possible attraction of investment in industrial development to supply the market, and access to cheaper raw materials from the Continent.”
Butale maintained that Botswana has absolutely no reservations about its commitment to protecting infant industries and officials remain confident that the current continental free trade deal is the best possible agreement for Botswana and her stakeholders.
The Botswana Government is in the process of evaluating tariff offers of other AfCFTA members prior to ratification, following which Botswana’s participation in the AfCFTA will come into effect.
According to officials the Southern African Customs Union (SACU) of which Botswana is a member recognizes key processes required for the implementation of the AfCFTA. In fact, the revised SACU Tariff Offer, which comprises 5,988 product lines with agreed Rules of Origin, representing 77 percent of the SACU Tariff Book, was submitted to the African Union Commission (AUC) in November 2020.
The implementation of this agreement comes as Botswana experienced negative growth caused by the stringent containment measures implemented during the April/May 2020 lockdown to combat alarming spread of COVID-19, combined with a sharp fall in international economic activity.
Economic activity in the second quarter of 2020 was 24.0 percent lower than in the same period in 2019 owing to the impact of the pandemic. Amongst the hardest-hit sectors of the economy were Mining, Trade, Hotels and Restaurants, Construction, and Manufacturing.
To stimulate Investment into the targeted sectors, create employment, sustain industries, promote the use of available local resources and enhance shelf space for local products Government is promoting a buy local campaign designed to encourage the uptake of locally manufactured goods and services.
The Statutory Instrument (SI) on the restriction on the Importation of Baked Goods introduced in August 2020 has led to an upsurge of bakeries from 83 to 285 during this period with local bakeries producing assorted types of bread ranging from loaves, rolls, muffins, scones, cakes, pies etc.
Products that are now still being imported are mostly assorted biscuits, frozen cakes, pastries, pies and bread rolls and 14 bakers have been engaged by different retailers. Similar success has been enjoyed by restricting importation of bottled water with 48 companies active up from 19 when restrictions were introduced. Employment levels have also increased from 198 to more than 250 individuals.
“The water bottling sector now consist of six (6) large companies and twenty-nine (42) companies in Small and Medium Enterprise (SME) category. At full capacity, Botswana can now produce more than 20,185,200 liters per month which translates into over 242,222,400 liters per annum,” said Ruth Baoki, Acting Director – Department of Industrial Affairs at the Ministry of Investment, Trade and Industry.
She said, “Production is mainly concentrated on still or natural water. Four companies have diversified into flavored and sparkling water with potential capacity of 54 400 litres and 14 400 litres respectively per month. One company produces spring water at 450 000 litres per month on full capacity.”
Baoki revealed that the investment levels of salt packaging companies increased from P 9.925 million to P18 million with salt packagers participating in the sector increasing from six (6) to fifteen (15) after measures were implemented to protect infant salt industries in June 2015.
