Doing business and trade in SADC

Article publié le Mercredi 17 septembre 2008.

The World Bank’s Doing Business Report 2009 shows Mauritius has gained 5 places in the global rankings on overall ease of doing business, climbing up to 24th out of 181 countries. This result is excellent but trade in the regional community still needs to be boosted.

The assessement by the World Bank is done according to 10 different business regulatory indicators. They comprise Government requirements for starting and closina business, employing workers, dealing with construction permits, getting credit, paying taxes, registering property, enforcing contracts, protecting investors and trading across borders. 

Mauritius takes top spot in Africa ahead of South Africa and is justifiably praised for providing “inspiration for reform and good 

practices to other economies across Africa”. The outstanding performance of Mauritius stems from key reforms undertaken by Government especially in the areas of starting and operating a business, obtaining licences and permits, openness to foreign investors and tax administration. 

Many African economies have also embarked on regulatory reforms to reduce the cost of doing business in recent years. The Doing Business Report 2009 thus reveals that over the period April 2007 to June 2008 28 African countries completed 58 reforms and 3 of the world’s top 10 reformers were from the continent, namely, Senegal, Burkina Faso and Botswana. But generally speaking despite some commendable initiatives, Africa and of particular interest to us the SADC region, still lag behind in terms of business facilitation and do have quite a lot of ground to make up in order to provide an environment that is conducive to business. For instance, the majority of the SADC member countries are ranked above 100 for their overall ease of doing business, the only exceptions being Mauritius (24), South Africa (32), Botswana (38) and Namibia (51). 

The Association of SADC Chambers of Commerce and Industry (ASCCI) Regional Business Climate Survey further finds that issues such as crime, theft and corruption; customs regulations, procedures and bureaucracy; exchange rate fluctuations; lack of market information; inadequate transport infrastructure; uncertainty linked to economic policy; lack of transparency of rules and regulations and; inadequate enforcement of contractual and property rights among others represent the biggest obstacles to doing business and trade within the region. 

Unsurprisingly then, intra-SADC trade, i.e. trade within SADC countries, represent the smallest proportion of exports and imports for all the individual member countries. For instance, in the case of Mauritius, trade with SADC only accounted for 8.7 percent of total trade in 2007, with South Africa alone making up the bulk of the trade share. As such, it would appear that businesses have so far shunned the possibilities of engaging in greater regional trade. 

“Despite some commendable initiatives, the SADC region still lags behind in terms of business facilitation and has a lot of ground to make up to provide an environment that is conducive to business.” 

An enabling business environment is essential for supporting the competitiveness of enterprises, attracting investment and facilitating trade. This is all the more important in the current context of globalisation and regional integration. Some of the steps being taken to improve the regional business and trade environment consist of the modernisation and streamlining of customs procedures, tackling customs delays, reducing transportation costs and stamping out corruption. Additionally, the SADC private sector has identified specific trade facilitation measures that should also be implemented. These include the improvement of physical infrastructure; reduction of transit delays; clarification of the rules of origin and establishment of compliance mechanism for their consistent application; putting in place workable processes in support of electronic customs clearance; harmonisation of technical regulations and sanitary and phytosanitary standards; developing systems to ensure that relevant and user friendly information are available to traders; facilitating the movement of business people within the SADC region and; greater involvement of the business community in the regional decision making processes. 

SADC is committed to see through the process of regional integration and the implementation of the Free Trade Area (FTA) in 2008 is another firm step toward deeper economic integration of member states. This, coupled with recent efforts to enhance the business climate, has led to improving business confidence and renewed optimism toward exploiting business opportunities within the region. The development of an economic environment where businesses can thrive must therefore be the focus of efforts undertaken to drive forward the agenda of economic integration. 

In essence, the benefits of an integrated SADC region are potentially enormous. Deeper regional integration provides greater opportunities for achieving high sustainable growth and development as well as the alleviation of poverty mainly through increased trade and investment. It can also make a real contribution toward the convergence, coherence and credibility of economic policies while promoting good governance, efficient institutions and political and economic stability. 

Dr Vishal Ragoobur - Economist Mauritius Employers’ Federation