Trade agreements simplified with the support of UNDP will facilitate their effective utilisation by the business community in Botswana, including the SMEs

Posted April 12, 2021

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Gaborone, 12th April 2021; UNDP in collaboration with the Ministry of Investment, Trade and Industry (MITI) hosted a virtual meeting to present the simplified trade agreements whose aim is to improve their level of use, especially by the private sector and increase exports to the respective markets. The three simplified agreements are The African Growth and Opportunity Act (AGOA) (US market); EU/SADC EPA (EU market); and the SADC Trade Protocol (SADC market)

In 2020 the Government of Botswana through the Ministry of Investment, Trade and Industry with the support of the United Nations Development Programme secured the services of an expert to simplify the African Growth and Opportunity Act (AGOA), EU-SADC EPA and SADC Trade Protocol into plain and less technical English language to facilitate their effective utilisation by the business community, including the SMEs.

Botswana is the world’s largest rough diamond producer. Total exports for February 2019, were valued at P3,178.7 million, with 88.9% (P2,826.1 million) attributed to exports of Diamonds, followed by Machinery & Electrical Equipment and Salt & Soda Ash with 3.4 % (P108. 6 million) and 1.4% (P44.3 million) respectively. Meat and Meat Products and Gold contributed 1.2% (P39.3 million) and 1% (P32.2 million) respectively.

Botswana’s GDP per capita was about USD8,000 in 2018 according to World Bank, which has guaranteed its middle-income status. Despite Botswana’s upper middle-income status, it suffers high rates of unemployment and a small manufacturing sector.

Over the years, Botswana has leveraged on creating avenues/strategic partnerships with a view to expand the economic base. These efforts include being party to trade and investment agreements, among others, which, are expected to gradually improve the contribution of non-traditional commodities in Botswana’s economic transformation agenda.

The African Growth and Opportunity Act (AGOA) is one of the trade agreements. It was enacted in May 2000 and in 2015 was extended by ten (10) years, that is 2015-2025, to allow eligible AGOA beneficiaries to maximise and come up with sustainable and effective initiatives for utilising the existing provisions offered by the U.S. In 2017, Botswana developed a response strategy to capitalise on the duty-free market access and private sector development provisions under AGOA.

The Department of International Trade (DIT) in the Ministry of Investment, Trade and Industry (MITI) is tasked to ensure effective implementation of existing trade agreements. The trade agreements as written, are technically complex and are not easy to understand by the general public and the business community who are their key target users. It should ordinarily follow that if the trade agreements are easily understood by the business community, their level of use will increase and the benefits thereof will be realized, especially in relation to the following areas:

·         Increase in trade; exports and imports;

·         Increase in foreign direct investment;

·         Creation of wealth;

·         Creation of sustainable jobs/employment; and

·         Acquisition and nurturing of applicable and sustainable skills and expertise.

Engagements between the public and the private sector have been undertaken regarding collaborative efforts on enhancing the implementation challenges for Trade Agreements. One major challenge was the lack of uptake by the private sector and the business community, which is attributed to the complexity of the technical language of the trade agreements and lack of understanding of the market access requirements for the products, among other factors.

Further, it is expected that the Trade Agreements should be aligned to the objectives and anticipated output of the National Export Strategy, Economic Diversification Drive Strategy and other key national economic development strategies that will be used to achieve the aspirations of Vision 2036.

Therefore, the simplified texts of the above listed trade agreements are intended to assist Small and Medium Enterprises (SMEs), the business community through the private sector as well as civil society in both rural and urban areas to understand the markets of interest, assess the benefits thereof and have an appreciation of the detailed processes needed to utilise these Trade Agreements.