22 November 2007
Maputo — The idea that competition from South Africa will kill off Mozambican industries is greatly exaggerated, Tomaz Salomao, the Executive Secretary of the Southern African Development Community (SADC), told the Mozambican parliament, the Assembly of the Republic, on Thursday.
Salomao was addressing a seminar on regional integration, and found that there were prophets of doom on both sides of the Assembly.
The free trade area that SADC will declare in 2008 might lead to the impoverishment of Mozambique, claimed Francisco Machambisse of the former rebel movement Renamo.
Another Renamo deputy, Jose Palaco said Mozambique would become "just a place for warehouses and the sale of other people's goods". There would be mass unemployment, he predicted, and the benefits of cheaper imports would evaporate "because the army of unemployed will not be able to buy anything".
But some deputies from the ruling frelimo Party had an equally apocalyptic vision. Palmira Francisco cast herself as champion of the country's vast informal trading sector, and claimed the informal traders would suffer with the abolition of tariffs against South African goods (this claim is extraordinary, since representatives of the informal sector have been making the opposite claim for years - namely that it is the customs duties that are suffocating their businesses).
"This might be annexation, not integration", warned Francisco darkly.
Salomao, who is a former Mozambican Finance Minister, retorted that tariff reduction has been under way for the past 12 years.
Even before the timetable for SADC integration was drawn up, Mozambique was reducing tariffs under its agreements with the World Bank and the IMF.
Thus the phased SADC reduction of the maximum tariff to 30 per cent in 2000 and to 25 or 20 per cent by this year was exactly the same as in the Mozambican government's programme with the Bretton Woods institutions. In fact, many goods were now traded at lower tariffs, or were zero rated.
"Two or three years ago we were importing goods at a 30 per cent tariff, and today there's no tariff on them at all", Salomao said. "Annexation hasn't happened so far, and it won't happen".
In 2008, the great majority of goods that qualify under the SADC rules of origin will not pay customs duties. But, like all other SADC members, Mozambique has published a list of "sensitive" products (including dairy products, maize flour, and automobiles) on which duties will not be eliminated until 2012.
"In my opinion, Mozambique will emerge a winner from regional integration", Salomao said. "But under no circumstances can we go forward saying that we're going to be losers".
And while it was true that many Mozambique small and medium companies might not be able to compete against South African companies, "they can certainly compete against Malawian, Zambian or Tanzanian companies. In the region as a whole, we certainly have the capacity to compete".
While people in Maputo might be mesmerised by the nearby presence of South Africa, that wasn't the case in northern Mozambique.
Salomao pointed out that the cheap goods flooding into shops in northern Mozambique do not come from any SADC member at all, but have been imported from India, China, Dubai and even Thailand.
He noted that the textile industry in one of the most prosperous SADC nations, Mauritius, has wilted under competition, not from South Africa, but from Asian producers.
Salomao added that the idea that South Africa wanted to destroy Mozambican industry was the opposite of the truth. At the SADC extraordinary summit held in Midrand, South Africa, in October 2006, it was the South African president, Thabo Mbeki, who championed the need for expanded industrial production in other SADC member states.
"South Africa wants greater productive capacity in its neighbours, because it doesn't want citizens of other SADC countries to come pouring over its borders", Salomao stressed.
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