Mozambique exports to SADC countries still low
He was speaking at a Maputo press conference held to announce that the SADC heads of state will formally declare the free trade area at their next summit, on 17 August, in the South African city of Durban.
Fernando said Mozambican exports to the rest of southern Africa are currently running at around two billion meticais (about 83 million US dollars) a year. Unsurprisingly the largest market for Mozambican produce is South Africa – which purchases the bulk of the electricity produced by the Cahora Bassa dam on the Zambezi, and most of the natural gas processed at Temane, in the southern province of Inhambane.
Imports from the region are growing significantly, said Fernando. The main supplier of consumer goods for Mozambique remains South Africa. A long way behind come other SADC members such as Mauritius, Tanzania, Malawi and Swaziland.
As of 1 January, tariffs on most imported goods originating from SADC countries were supposed to fall to zero. Yet no decline in prices of South African products in Maputo shops has been noted.
Mozambique’s exports remain dominated by the aluminium ingots produced at the MOZAL smelter on the outskirts of Maputo. Currently Holland is the largest purchaser of MOZAL aluminium.
Fernando stressed that Mozambique 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 suggested that businesses are not exporting more, because they are still unaware of the procedures and the benefits of the free trade area.
“Imports have undergone major growth since the start of the free trade area in January”, said Fernando, “but Mozambique’s exports are not growing much. 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 recognised, however, that there is a thriving informal cross-border trade that does not enter the official statistics. Thus large amounts of potato produced in Tsangano district, in the western province of Tete, are sold over the border in Zimbabwe at cheap prices. Likewise, a variety of medicinal plants, herbs, and even local alcoholic drinks, are taken illegally into South Africa.
“Lots of exports happen without our knowledge”, Fernando admitted. “We have to improve our capacity to record exports”.
Fernando remained optimistic about SADC’s regional integration plans, despite the failure of most SADC members to opt clearly for SADC rather than other regional bodies. For example, no fewer than 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).
South Africa, Namibia, Lesotho, Botswana and Swaziland are members of the long-established Southern African Customs Union (SACU). Tanzania is a member of the East African Community (EAC). Angola and the Democratic Republic of Congo are members of the Economic Community of Central African States (ECCAS). In fact, Mozambique is the one and only SADC member that belongs to no other regional grouping.
This problem is becoming increasingly acute – for the next stage in regional integration is the SADC customs union, scheduled for 2010.
Yet states cannot be members of more than one customs union – so what is the future of SACU? Furthermore COMESA claims 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 SADC one.
But Fernando thought that such problems could be dealt with as integration advanced. “I think regional integration isn’t threatened”, he said. “It’s a process that takes time to build, and during this period some decisions will be taken”.
“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. ‘ New Ziana/AIM