Regional Free Trade Areas (FTAs) are welcomed innovative initiatives that entice all sectors of the economy. This is caused by the perception or the anticipation of better business opportunities brought about by access to bigger markets.
Industries often ululate whenever new agreements on trade facilitation and regional integration are signed. Although it was well noted that there will be challenges in the implementation of the currently signed AfCFTA, one can assume that these challenges are not unique to the AfCFTA but cut across implementation of most Regional FTA agreements.
It is said that countries would need to adopt the objectives and draw national road maps. However, one wonders if indeed these agreements bring positive business performance/results to all. Do those who are affected always reap the intended benefits?
As early as 2001 the Word Bank issued the first guidelines for trade facilitation assessment. This was in recognition to the fact that since Trade Facilitation is the key to international logistics and supply chain`s seamless flow, challenges in transport and logistics are serious bottlenecks to international competitiveness and the growth of imports and exports.
The big question here is the extent of readiness of the private sector in this case the transport and logistics sector (in Botswana) in terms of capacity building to compete continentally. Local Transport and Logistics sector is composed of, amongst others, SMMEs which in most cases are characterised by low technically capacity and inadequate general asset base to compete when borders are demolished.
The Transport and Logistics industry in Botswana is presumably or perceived to be small, under developed and inadequate as compared to other similar sectors in other countries in the SADC region. Botswana is saved mostly by transit Transport and Logistics companies based in South Africa. The capacity of the sector is an important factor for achieving and benefiting from the objectives of the AfCFTA. Capacity building and management would enable the sector to successfully and efficiently compete in FTA. Botswana is a landlocked country strategically located at the centre of SADC. The Transport Hub initiative determined to position the country as a transport and logistics hub for the SADC region.
With the coming into force of the regional and continental FTA agreements, it is expected that the country would have policies geared towards growing the capacity of the transport and logistics industry in Botswana to take the opportunity to benefit from the impact of the FTA Agreements
The transportation system is the most important component in the logistics and supply chain. Transportation is needed in the whole production system, from manufacturing to the final consumers. Therefore efficient and effective coordination of each component in transport and logistics can bring in maximum benefits for all industries. Henceforth, an enabling environment is a key component that supports transport and logistics businesses` competitiveness and sustainability.
The transportation sector is highly regulated in Botswana. Tariffs are generally imposed for one of four reasons:
• To protect newly established domestic industries from foreign competition.
• To protect aging and inefficient domestic industries from foreign competition.
• To protect domestic producers from "dumping" by foreign companies or governments.
• To raise revenue. Many developing nations use tariffs as a way of raising revenue. For example, a tariff on oil imposed by the government of a company that has no domestic oil reserves may be a way to raise a steady flow of revenue, Import duty etc
The regulation of the physical aspects of transport affects the management of a transport enterprise to the extent that it may influence the cost of providing the service, and the capital structure of the enterprise. It is sometimes difficult to obtain the capital to finance good equipment, which may limit the services that can be rendered.
The high protectionist tariffs that shield the domestic transportation industry against foreign competition are some of the tariffs which are a subject of FTAs negotiations. However it was noted in other countries like India that when barriers to trade were removed, SMMEs found it difficult to compete in the global market due to capacity constraints.
It is therefore necessary to ensure that these enterprises are well capacitated before the knocking down of borders. National Transport regulatory policies need to cater for growth initiatives that will graduate the transport companies from infancy or immaturity to the next levels that will even prompt the government to scale down on the regulations. These would be moving in the right direction towards assimilation in the FTAs.
The enterprises themselves should develop new innovative ways to ensure that their products are fit for purpose in the global markets in order for them to benefit from the opportunities brought about by the AfCFTA.
In conclusion, the move towards integrated world economy is on the agenda of every continent. It’s a global call for every industry player to dynamically ensue that their role in the value chain is heightened in order for well-coordinated efforts towards the achievements of the objectives of the AFCFTA Agreement.
*Evies Ipelegeng Tlhatlogang-Joina (MA, MSc, MCILT, Bcom is a lecturer Business Management Department, Faculty of Commerce, BA ISAGO University
