Angola: The Reluctant SADC Trader
The Southern African Development Community (SADC) Protocol on Trade (PoT) was signed in 1996 with the aim of increasing trade between member states through the elimination of tariffs and harmonisation of customs procedures. Regional tariff phase-downs began in 2000 and the SADC Free Trade Area (FTA) has been in operation since 2008, with 85% of SADC trade among 12 of the 15 member states now duty free. By 2012 all member states were supposed to have joined and be working together towards the next goals of an SADC Customs Union, Monetary Union, and finally a single SADC currency. However, Angola, which is SADC’s second-largest economy after South Africa, shows few signs of wanting to enter the FTA, despite having signed the PoT in 2003.
The government of Angola (GoA) has attributed not joining the SADC FTA to the country’s ‘conditions’. It says Angola has only recently emerged from a prolonged period of civil war that began in 1975 and ended in 2002, which destroyed its infrastructure and left it with little productive industry. Therefore, it is careful about opening up the country’s borders to its neighbours for fear of an ensuing flood of duty-free imports hampering efforts to relaunch its manufacturing and productive sectors and damaging its economic development. Furthermore, the GoA reportedly intends to introduce a new customs regime that would increase its top tariff from 30% to 50% for some domestically produced items. They argue this is needed to protect nascent local industry, create jobs and diversify the economy away from concentration on crude oil. The effectiveness of these protectionist policies has been questioned as to whether they really protect the economy or merely a few politically connected businessmen. In the longer term, these policies may do more damage than good to local industries, which will lack the competitiveness and efficiency found in more liberal market places. Angola’s failure to implement the Protocol on Trade is read by some as an indication of weakness within the SADC Secretariat. This self-imposed exclusion is also highly frustrating for SADC exporters, for whom the country offers tantalising market opportunities, since there is enormous scope for exports to Angola due to its demographic and food market characteristics.
In the long run Angola has ambitions to expand its export market beyond crude oil. But by cutting itself off from SADC with this protective stance, Angola risks damaging regional trade ties that it may, in the future, depend on for its exports. The high cost of living in Angola is well documented and routinely blamed on the dependence on expensive overseas imports, yet the GoA is reluctant to allow lower-cost imports from its SADC neighbours to bring these costs down. Government officials and business leaders across the SADC block are frustrated by Angola’s behaviour, yet no one appears to be prepared to publicly challenge the status quo. Instead, there is a tacit acceptance that Angola is a sovereign state, whose position must be respected.
Despite its mandate to promote deeper regional integration, which would surely suggest a responsibility towards driving Angola’s entry into the FTA, the SADC Secretariat seems to allow Angola to carry on unchecked. It says that Angola is a sovereign country, whose decisions and positions must be respected, and that the SADC Secretariat is merely an ‘enabler’ to carry out the work of the member states, of which Angola is one. This apparent hands-off approach is a source of great irritation within regional trade circles, where people refer to the Secretariat as a ‘powerless postbox’ that is ‘weighed down with red tape’ and ‘lacks capacity or will to hold member states to account’.
Angola formally joined the negotiation process for the “Cape to Cairo” Tripartite FTA in October 2008, attending meetings in various member states and even hosting some SADC-focused discussions in its capital Luanda. However it is very difficult to see Angola joining the TFTA while it continues to maintain that the country lacks the ‘conditions’ to be a part of the SADC FTA. If Angola is holding back from joining the SADC FTA over fears of being flooded by a large productive economy like South Africa, then what can it think of the TFTA, whose proposed membership will include dynamic actors like Egypt, Sudan, Ethiopia and Kenya? Given that Angola had signed the SADC PoT without seemingly planning to ever implement it, few hold expectations that it will join the TFTA, despite the country appearing to take an active part in the negotiation process.
It is hard to know whether Angola’s economic diversification programme would have advanced more quickly – or if its trade with SADC would have increased substantially in volume, given its limited export basket – if it had already implemented the PoT. What is clear though, is that by staying outside the FTA Angola has kept its trade with the region at a minimum (with an exception of South Africa) and is instead maintaining its focus firmly on longer-distance partners like China, Portugal and Brazil, and having everything very much on its own terms.
Louise Redvers is a freelance journalist.
Article based on SAIIA’s Occasional Paper 152, August 2013, http://www.saiia.org.za/occasional-papers/angola-the-reluctant-sadc-trader
This article was published in GREAT Insights Volume 2, Issue 7 (October 2013).