Africa is the rising economic giant with a growth trajectory that has begun to astonish the world.  The McKinsey Quarterly reported a 4.9 per cent economic growth rate per annum, from 2000 to 2008, in the total gross domestic product (GDP) on the continent.  Africa's collective GDP, at US$1.6 trillion in 2008, was roughly equal to that of Brazil and Russia, making the continent amongst the rapidly growing economies in the world.

Africa's 2012 GDP growth forecast has been set at around 4.5 per cent by the African Development Bank ('the Bank').  According to the Bank, the continent's economy will grow by a further 4.8 per cent in 2013.  The key factors behind this growth trend include active steps taken by African states to improve macroeconomic conditions, and the implementation of macroeconomic reforms to create a business climate conducive to international trade and investment.  The practical measures include:

  • the opening of trade
  • the lowering of corporate taxes
  • the strengthening of regulatory and legal systems
  • the provision of physical infrastructure to facilitate trade

According to the 2012 International Monetary Fund Economic Outlook, sub-Saharan Africa, at a 5.5 per cent growth rate, is second only to developing Asia in its expansion.  The Southern Africa Development Community (SADC) is undoubtedly a focal point for conducting business on the continent.  SADC is comprised of the following member states: Angola, Botswana, Democratic Republic of Congo, Lesotho, Malawi, Madagascar, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.  SADC's market represents a growing economic grouping within the continent.  Internationally, this has been referred to as the entry point to doing business in Africa; we call it the doorstep to doing business at home.

Free trade

In terms of the SADC Protocol on Trade ('the Protocol'), the member states agreed to introduce various policies that would lead to the liberalisation of trade within the SADC jurisdiction.  With the Protocol acting as the binding legal document, the Council of Ministers of SADC also adopted the Regional Indicative Strategy Development Plan (RISDP) as a blueprint for regional integration.

Undoubtedly, the biggest achievement to date of these initiatives is the implementation of the SADC Free Trade Area (FTA) in 2008.  Through its implementation, 85 per cent of intra-SADC trade received duty-free treatment.  In 2012, the final year of the Protocol's implementation, almost all tradable goods are duty-free.  In accordance with the RISDP, the member states are currently in negotiations to set up the SADC Customs Union, where the members will agree on one external tariff regime to be applied.

In 2004, the Protocol was notified to the World Trade Organisation (WTO) under Article XXIV of the General Agreement on Trade and Tariffs.  An examination of the provisions of the Protocol reveals a close connection between the rules set out under the Protocol and the rules found in the WTO, with a number of rules on different disciplines having been adopted directly from the WTO.  This harmonisation with the WTO is beneficial to facilitating international business relations in Africa. The Manufacturer.

Trade facilitation

SADC member states implement measures to facilitate the simplification and harmonisation of trade documentation and procedures.  These measures include reducing the cost of all trade documentation and procedures by aligning intra-SADC and international documentation of the United Nations Layout Key, and reducing the number of documents required to a minimum.  Member states are also required to standardise the documents by using internationally accepted standards, practices and guidelines as a basis for designing their documents and the information required to be in them.

Despite not being obliged to conduct negotiations as a unit, members are exhorted to coordinate their trade policies and negotiating positions in respect of relations with third countries or groups of third countries and international organisations. This appeal can be seen in the negotiations with the EU regarding Economic Partnership Agreements (EPAs), where a group of SADC countries - Angola, Botswana, Lesotho, Mozambique, Namibia, South Africa and Swaziland - negotiated as a group.

Infrastructure development

The transport corridors are among one of the main infrastructural focuses for the SADC region.  In this regard, the SADC Secretariat, supported by TradeMark Southern Africa and the Development Bank of Southern Africa, has begun the implementation of a Regional Infrastructure Development Master Plan (RIDMP).

The RIDMP, to be implemented over a 15-year period, is set to provide an important strategic framework within which infrastructure projects, in areas such as energy, water, ICT and transport, would be identified and regulated under a single system.  According to the SADC Secretariat regional integration deputy executive secretary, Joao Caholo:

"there is broad consensus that unless, and until, the region has fully managed the issue of access to enabling infrastructure, no significant development will be realised, despite immense investments".

There have already been significant infrastructural developments across the SADC region.  One of these is in respect of member states' ports:

  • In South Africa, the Port of Ngquara in Port Elizabeth was opened in March 2012. The port is the deepest container terminal in sub-Saharan Africa, and will accommodate the new generation of giant container ships traversing Africa's southern tip.
  • Port Maputo in Mozambique is of critical importance for SADC trade, owing to its position as southern Africa's nearest port entrance for the rapidly developing Asian markets. Situated on the east coast of southern Africa, this historic port has received substantial investment in terms of Mozambique's economic recovery plan. The Maputo Port Development Company (MPDC) was established in 2003 in an effort to restore the port to the appropriate condition of a world-class commercial port.
  • Walvis Bay is the biggest commercial port in Namibia and is also subject to expansion in the near future. The Namibia Port Authority (NAMPORT) has unveiled plans to spend more than N$3 billion on the expansion of a new container terminal at the bay.

Africa will continue to profit from rising global demand for oil, natural gas, minerals, food and arable land. In short, a strategy that includes Africa must be a priority for any business entity intending to expand internationally, taking advantage of the programmes developed to facilitate foreign participation.

This article originally appeared in the November 2012 edition of "The Manufacturer".