Gaborone: The Ministry of Trade and Industry is bracing for opposition as the Southern African Customs Union (SACU) begins debating an industrial policy for members, a document likely to be as contentious as the recent row over sharing the union's revenues. Earlier this year, SACU tendered for the development of an industrial policy framework, designed to ensure that the value generated in the union translates to a balanced industrial development of the five members. Ministers from Botswana, South Africa, Lesotho, Namibia and Swaziland, are due to attend a retreat soon where individual members' issues on a common industrial policy will be aired.
At its heart, the industrial policy carries the frustrations of SACU's smaller members for whom the union has essentially provided regional powerhouse, South Africa, with a duty and quota free market for its products, at the expense of other members' industrial development. Smaller members argue that SACU has almost singularly benefitted South African industry, with the external investors who are drawn in by the large market and incentives provided, almost exclusively opting to establish themselves in more developed South Africa.
For Botswana, non-mining industrial exports have found little market space against powerful South African brands within the SACU region, essentially meaning the export of jobs to the regional powerhouse via imports.
Trade and Industry Minister, Dorcas Makgato-Malesu said Botswana would not pull any punches in the discussions around SACU's industrial policy.
"We may be a small economy, but we have the ability to pay for what we consume," she said at a recent consultative forum. "We have purchasing power and this has been the case for many years. We have to be taken and treated as such at the table and we don't want to take the little crumbs. We must approach this integration at SACU with a common agenda for industrialisation and we are saying there must be a common agenda."
She continued: "As far as industrialisation is concerned, we have not reaped the benefits that we could have. Our focus is to fight for a common industrialisation policy that's of benefit to all and I believe we are making progress in that regard."
For Botswana, SACU's industrialisation issues came to the fore when the Hyundai assembly plant shut down in 2000, throwing thousands of Batswana into the streets and denting national revenues. The plant, which was exporting vehicles to the SACU region, closed after South Africa challenged a rules of origin provision entitling the plant to the duty and quota free export.
"It would be interesting to see on an industry basis, whether SACU has made any demonstrable benefit to Botswana over the past 50 or 60 years," said Fleming Asset Management CEO, Piet van Riet-Lowe at the same forum. "We have been a victim rather than a beneficiary of SACU. Just look at the Hyundai issue where we tried to make vehicles and ended up with the wrath of god on us."
Another trade expert told Business Week that while SACU's smaller members would have high hopes in the industrial policy, these would likely be dashed. The expert said whatever the scope of the policy, it was unlikely to adequately address the imbalances present in the union."They (South Africa) produce, and we buy. We produce almost nothing and we buy almost everything from them," the expert said.
"From the point of view of revenue, SACU has been great and also from the point of view of granting us a larger market. However, in terms of getting investment into the country, SACU has been a catastrophe. As an investor wanting to produce something for all five members under SACU's duty free provision, would you want to locate in Botswana or in Gauteng, the heart of industrialisation?" he asked, rhetorically. The trade expert said the industrial policy should help smaller countries attract investment and industry.
Consultants working on the SACU industrial policy are expected to conduct a detailed situational analysis of the industrial and economic landscape of all members and propose various policy options and strategic interventions. However, the results of the situational analysis will determine whether SACU will require the consultants to produce proposals for strategic interventions.