Mozambican exports to SADC members still low

Agencia de Informacao de Mocambique (Maputo) 2008-07-24

Although the SADC (Southern African Development Community) Free Trade Area came into effect in January, exports from Mozambique to other SADC member countries remain low, Minister of Industry and Trade Mr Antonio Fernando admitted on Monday.

Fernando was speaking at a press conference in Maputo, held to announce that the SADC heads of state will formally declare the free trade area at their next summit on 17 August in Durban, South Africa.

He said that Mozambican exports to the rest of southern Africa are currently at around two billion meticais (about US$83 million) per annum. The largest market for the country’s products is without surprise South Africa, which purchases the bulk of the electricity produced by the Cahora Bassa dam on the Zambezi river as well as most of the natural gas processed at Temane in the southern province of Inhambane.

Imports from the region are, however, growing significantly, said Fernando. South Africa remains the primary supplier of consumer goods for Mozambique, with other SADC members such as Malawi, Mauritius, Swaziland, and Tanzania remaining a long way behind.

As of 1 January this year, tariffs on most imported goods originating from SADC countries were due to fall to zero. However, no decline in prices of South African products in Maputo shops has been noted.

Exports from Mozambique remain dominated by the aluminium ingots produced at the MOZAL smelter on the outskirts of Maputo. At present, Holland is the largest purchaser of MOZAL aluminium.

Fernando emphasised that the country needs to diversify its exports to other SADC members. “The country has the potential to offer much more”, he said. “We have to change the range of products to increase the volume of exports to SADC countries and thus contribute to increasing the country’s income.”

He argued that businesses continue to export little because they are still unaware of the procedures and benefits of the free trade area. “Imports have undergone major growth since the start of the free trade area in January, but Mozambique’s exports are not growing much”, Fernando said. “We aren’t exporting much because people still don’t know about the free trade area. We have to step up our work of explaining the conditions necessary for exporting.”

Fernando nonetheless recognised that there is a thriving informal cross-border trade that does not enter official statistics: “Lots of exports happen without our knowledge”, he admitted. “We have to improve our capacity to record exports.”

For instance, large amounts of potato produced in the Tsangano district in the western province of Tete are sold over the border in Zimbabwe at cheap prices. Similarly, a variety of medicinal plants, herbs, and local alcoholic drinks are taken illegally into South Africa.

Fernando remains optimistic about SADC’s regional integration plans, despite the failure of most member countries to opt clearly for SADC rather than other regional economic bodies. For instance, seven SADC members (eight if Seychelles, which has applied to rejoin SADC, is included) are also members of the Common Market for Eastern and Southern Africa (COMESA).

Botswana, Lesotho, Namibia, Swaziland and South Africa are members of the long-established Southern African Customs Union (SACU). Tanzania is also a member of the East African Community (EAC), while Angola and the Democratic Republic of Congo (DRC) are members of the Economic Community of Central African States (ECCAS). Mozambique is in fact the sole SADC member belonging to no other regional bloc.

This problem is becoming increasingly acute, as the next stage in regional integration is the SADC customs union, scheduled for 2010. States cannot be members of more than one customs union, so what is the future of SACU? Furthermore, COMESA claims that it will form its customs union this year, and Zimbabwe has quite openly stated that it may join the COMESA customs union rather than the one in SADC.

Fernando believes that such problems can be dealt with as integration advances. “I think regional integration isn’t threatened. It’s a process that takes time to build, and during this period some decisions will be taken”, he said.

“After the free trade area comes the customs union in 2010, and countries who belong to other unions will have to choose between one or the other”, he added.