20 June 2008

Southern Africa: Region Seeks to Tap Into European Demand for Organic Products

Organically grown products have been identified by Trade advisors as potentially lucrative exports for countries in Southern Africa that are aiming to boost their competitiveness in the European market.

In a move to expand their traditional product range, these countries hope to benefit from the high demand for organic fruits and vegetables which has increased across Europe in recent years. Horticultural products, particularly flowers, have also been earmarked as other exports for these countries to consider trading.

"It is important for countries to diversify their range of exports in order to reduce overreliance on a few product lines. If the price of one commodity goes down this will have a serious knock-on effect on a country's economy," says Anselmo Nhara, a Regional Trade Policy Advisor from the Southern African Development Community (SADC).

"By increasing your range of exports you cushion yourself from this potential risk," he explains. "There are already plans underway to have regional laboratories set up to certify the quality of these products so they meet European Union standards."

This move is one of a number of areas SADC countries - Angola, Botswana, Lesotho, Namibia, South Africa, Swaziland and Tanzania - are looking at to improve their trade relations and competitiveness in Europe.

Increasing value of products

They are also examining the benefits of increasing the value of products which they have exported for a number of years. Instead of Swaziland exporting sugar, they are considering using this commodity to make and then export chocolate, whilst Botswana may decide to cut and polish diamonds before trading them, thus boosting their value on the European market.

Hub and Spokes

The primary objective of the 'Hub and Spokes' project is to facilitate the integration of African Caribbean and Pacific countries in the global trading system.

A 'Hub' is a Trade Advisor usually based in a regional organisation, like SADC.

'Spokes' are also advisors, normally stationed in Trade ministries in countries.

Even with organic products countries may wish to "move up the value chain" by canning fruits and vegetables rather than selling them unprocessed, according to Mr Nhara.

These SADC countries are currently in the process of negotiating Economic Partnership Agreements with the Europe Community. By the end of this year it is hoped that each country will have selected one sector - whether it be telecommunications, tourism or financial services - for which they have successfully negotiated terms. It is up to them to decide which sector is most important to them.

If, for example, tourism is chosen by a country they will negotiate the most beneficial terms for them which are still agreeable to their counterparts in Europe. A country may decide that foreign companies can only invest in three star hotels and above, which allows home-grown businesses to develop as well as encouraging foreign investment.

In three years time, the aim is for negotiations to be completed on a comprehensive number of these sectors.

Mr Nhara is one of a number of experts funded by the Commonwealth Secretariat and the European Commission as part of the 'Hub and Spokes' project, which aims to help African Caribbean and Pacific (ACP) countries integrate more easily into the world's trading systems. The project also helps trade negotiators in these regions articulate their national or regional positions in various international forums like the World Trade Organization.

The Hub and Spokes project is a joint initiative between the Commonwealth Secretariat, the Organisation Internationale de la Francophonie and the European Commission, along with the support from the ACP Secretariat.

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