6 Regional Trade Integration in Eastern and Southern Africa

Albert Makochekanwa and Greenwell Matchaya Africa Agriculture Trade Monitor / Report 2019 This chapter also highlights the possibility of usingincreasedThis chapter also highlights the possibility of intraregional trade within member states are mostlytrading withthird countries, rather thanwithregional counterparts. may beattributable tohightrading costsintheregion. There isalsoevidencethat COMESA Intraregional trade flowsare still lowevenwhenICBT statistics are taken intoaccount, andthis trade costindicators reveals that COMESA islaggingbehindothercontinentalcounterparts. trade arrangements didnotachievethedesired outcomes. bothtrade flowsand Analysis of theregionalThe blocsinESA originsof date tothe1960s. However, wefindthat the regional mechanisms inorder toimprove them. exist intheESA region. The objectiveistounderstand thestrengths these andweaknesses of using thelimiteddata available, anddocumentedthemajorICBT monitoringmechanismsthat Consequently, the study also examined informal agricultural the magnitude and trends trade, of totaltradefraction (Gelanetal. of 2010). in some studies, which have shown that informal trade may sometimes constitute a significant various otherindicators. This pointisimportant, especiallywhenevaluated againstthefindings trade, balanceof statistics necessaryforthecomputation national of accountscompilation, and informal cross-border trade (ICBT)data canprovide completeandcomparable external trade Countries engageinbothformalandinformaltrade intheESA region. When available, integration process. trade arrangements intheregion, provides important information formonitoringtheregional Analyzing trade flowsandtrade costsindicators, aswelltracing theregional experiences of costs, toseewhetherthere wasprogress trade flow expansion andcost intermsof reduction. the periods1960–1993and1994–2018. trade flowsandtrade Italsoanalyzesindicators of (ESA) region, notablytheCommon Market forEasternandSouthern Africa (COMESA), for regionaldocuments theexperiencestrade of arrangements intheeastern andsouthern Africa There is, therefore, aneedtomonitorandevaluate regional integration processes. This study globalization challenges. Regional trade countriesisregarded cooperation of byUNECA asakey strategy toconfront vulnerability through increasing bargaining powerand, inturn, improves living. standards of countriesprovides ahugemarketof fornewindustrialdevelopmentwhichreduces external fostering intraregional trade, infrastructure, andinvestment(McCarthy 1996). Cooperation asserted that regional integration promotes economicgrowth andindustrialization through development andincrease theirparticipation intheglobaleconomy. Inaddition, UNECA has that regional integration andtrading blocsare criticalfor African nations toachievesustainable integration. The UnitedNations EconomicCommission for Africa (UNECA, 2017)hassuggested makers, researchers, andpoliticalleaders that Africa coulddevelopfasterthrough regional developing countries in the last three decades (Jones 2002). There is consensus among policy levels, economic cooperation the fundamental policy options for many has been one of increased national incomeandbargaining power(Balassa 1961). At regional andsubregional parallel newindustriesandminimizesexternal marketshocks through forthedevelopmentof Regional integration isoften seenasapowerfuldevelopmentstrategy that provides alarge Introduction This chapterhasbeenupdatedsinceitsinitialpublication. member countries, evenundercurrent production conditions. COMESA as a means toraise domestic food markets theresilience to shocks of across their Chapter 6-Regional Trade Integration inEasternandSouthern Africa 134 1

that grew outsidetheLPA include: Border Initiative (CBI) are theblocs that fit into the LPA. The regional integration arrangements importance placed upon them for political and socioeconomic reasons. The PTA and the Cross- the LPA (Table 6.1). The regional existence blocsbefore of andoutsidetheLPA indicates the into theLPA adoptedin1980, andthosethat were eitherinexistence orcameaboutoutside The regional arrangements inthe ESA region canbedividedintotwocategories: thosethat fit by COMESA in1994. theLPA,of thePreferential Trade Area (PTA) wasformedin1981andeventuallyreplaced Communauté EconomiquedesPays desGrands Lacs)in1976. Following therecommendations theGreat theEconomicCommunity of Lakesand of Countries (CEPGL fortheFrench acronym: (EAC) in1967, theSouthern African CustomsUnion(SACU) of in1889(revamped in1969), LPA in 1980, theESA region hadalready witnessedthecreation theEast African Community of Africa, allcharacterized bymultipleandoverlappingmembership. the Before thelaunchof The ESA region registered regional economiccommunities(RECs)in thehighestnumberof Central Africa, andtheGreat Lakes region. vergent andoverarching regional arrangements infour African subregions: ESA, West Africa, African Unity(nowthe of )in1980. This ledtothecreation separate butcon- of UNECA promulgated Action (LPA) theLagosPlanof whichwaslaunchedbytheOrganisation thecontinentintoregionsdevelopment andproposed inthe1960s. thedivisionof As aresult, UNECA regional integration becamethechampionof economic in Africa forthepurposesof Africa ments in in eastern and southern regional tradeHistory of agree- food markets are explored insection6.9. We concludethechapterinsection6.10. trade regional expansion isprojected thevolatility of insection6.8andtheimplications of the scopeforcross-border trade expansion insection6.7. The future outlookforintraregional trade tostabilizefoodmarkets ispresented insection6.6. Itisfollowedbyanassessmentof section 6.5 isICBT.dedicated to the importance of the potential for regional An analysis of ICBT intheregion, andasmanyinitiatives havebeenlaunchedtomeasure thisphenomenon, costs insection6.3, andonebasedon trade flowsin section 6.4. Asthere isconsiderable 6.4 provide measurementstrade integration of intheregion, usingameasure basedontrade regionalSection 6.2presents trade ahistory of agreements (RTAs) inESA. Sections 6.3 and similarly modestincrease incrop yields, barrierstotransborder ortheremoval of trade. food markets wouldbeboosted through amodestreduction trading, intheoverall costof a It demonstrates expanding regional that thepaceof trade andcreating more resilient domestic • EAC; replaced bytheSouthern African DevelopmentCommunity (SADC)in1992; • The Southern African Development Coordination Community (SADCC), whichwas • SACU; Chapter 6-Regional Trade Integration inEasternandSouthern Africa 135

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 Table 6.1Regional trade arrangements ineastern andsouthern Africa regions Framework, whichwasannouncedin2008. The otherstate-of-the-art regional trade arrangement istheCOMESA-SADC-EAC Free Trade SADCC its associated monetaryunion(the Common Monetary Area, CMA), theCEPGL 1976, of andthe Within the ambit of the PTAWithin the ambit of forthe ESA region were theEAC and Southern Africa Region from 1994to2018 Regional Experiences of Trade Arrangements intheEastern Source: Compiled byauthors. 3 - The SADCC wassetupasarelatively informal organization by“frontline states”, anditsaimwastoreduce dependence onSouth Africa. Community (1967–1977). theEast 2 -ConsistingAfrican HighCommission of (1948–1961), theEast African Common ServicesOrganization (1961–1967), andtheEast African Outside LPA Action (LPA) Lagos Planof • The IndianOcean Commission (IOC). • CEPGL;and superseded bytheIntergovernmental Authority onDevelopment(IGAD)in1996; • The Intergovernmental Authority on Drought andDevelopment(IGADD), whichwas 3 of 1980. of These RECswere already inexistence whentheLPA waslaunched in1980. 1 (EAC I)1967 Community East African Monetary AreaCommon 1969 (originally1889) Customs Union(SACU) Southern African 1960s and1970s Chapter 6-Regional Trade Integration inEasternandSouthern Africa 136 Commission (IOC)1984 Indian Ocean (SADCC) 1980 Coordination Conference Development Southern African 1980s (PTA) 1981 Preferential TradeArea (IGADD) 1986 and Development Authority onDrought Intergovernmental 2 of 1967, of 1969 with theSACU of (SADC) 1992 Development Community Southern African 1993 Cross Border Initiative (CBI) (COMESA) 1994 Eastern andSouthern Africa Common Markets for (EAC II)1999 II Zone) 2008 Trade Area (AfricaFree Trade COMESA-SADC-EAC Free Development (IGAD)1996 Authority onDrought and Intergovernmental 1990s and2000s Table 6.2Regional trade arrangements ineastern andsouthern Africa, 1960s–1993 is givenin Table 6.2. the regional trade arrangements intheESA region andtheirachievementsstatus by1993 1993, summarizingthetrade arrangements each memberstate concluded. all A summaryof the regional trade arrangements withinthegeographical area thePTA of fortheperiod1960– on Drought andDevelopment (IGADD)in1986. This sectionaddresses theexperiences of thePTASome membersof later joinedthe IOCin1984ortheIntergovernmental Authority IOC1984 PTA 1981 SADCC 1980 1976–1994 CEPGL (originally 1889) SACU 1969 year formed Regional bloc 1967–1977 EAC 2 Somalia Zimbabwe Tanzania Zambia Namibia (1990) Malawi Mozambique Eswatini Lesotho Angola DRC Burundi, Namibia (1990) Lesotho Eswatini Botswana Uganda Tanzania Kenya Seychelles Madagascar Mauritius Comoros Countries involved and monetaryaffairs communications, agriculture, transport and customs, industrialization, particularly trade and areas economicactivities, of integration coveringall Promote cooperation and impact with national and regional projects andprogramsof South Africa.Implementation dependence onapartheid Reduce memberstates’ international trade personsand movement of member states through free social developmentamong Promote economicand outside SACU thecountriesfrom any of ongoodsentering nal tariff goods withacommonexter Duty-free movementof balanced economicgrowth publicservicestoachieve of customs tariff, andarange common market, acommon member states through a political tiesbetweenthe Strengthen economicand and trade on diplomacy, environment, opment through cooperation Promote sustainabledevel- Main objective/aim Chapter 6-Regional Trade Integration inEasternandSouthern Africa 137 - 1993 Superseded byCOMESA in persons. vehiclesand movement of checks tofacilitate Yellow Card andtravelers’ declaration document. Single road customstransit interstate infrastructure. Rehabilitate andupgrade Reduction intariffs by60%. community (SADC)in1992 effective andrecognized Transformation toan Admitted Namibiain1990. community. a regional integration Formed foundation for trustamongthem lack of member states, leading to conflicts withinandbetween Collapsed in1994owingto Admitted Namibiain1990 1974. etary Area establishedin Union, andaCommon Mon- Fully operational Customs lasted until1999 November 1993which Co-operation Treatyin Signed theEast African political disparities. Collapsed in1977 owingto initiatives to implementregional regional infrastructurelack of capacity, connectivityand been madeby1993;limited No significantprogress had Achievements/ statusby1993

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 communications, andmonetaryfinancialcooperation include: thePTAAchievements of trade liberalization intermsof andpromotion, transport and (7) promoting industrialization andagricultural development. arrangements topromote trade; (6)developingcoordinated andcomplementarypolicies; treatment; (4) granting transit rightstoalltransporters; (5)introducing clearing andpayments regulations; origintodeterminewhichgoodsshouldreceive (3)introducing preferential rules of barriers; (2) simplifying and harmonizing customs and trade documents procedures and To achievetheseobjectives, thePTA strategy included:(1)reducing andeliminating trade contribute totheprogress allothercountriesin Africa. anddevelopmentof goods,2000 to allow the free movement of capital, and labor within the subregion; and (4) region byfosteringcloserelations amongmembers;(3)create acommonmarket bytheyear natural resources, the and monetary affairs; the people of (2) raise livingof the standards of economic activity, inparticular trade, customs, industry, transport, communications, agriculture, thePTAThe objectivesof were to:(1)promote cooperation anddevelopmentinallfieldsof treaty establishingtheESA PTA wassignedby16countries Zambia, successfullynegotiated atreaty thePTA fortheestablishmentof fortheregion. The The Multinational Programming andOperational Centres (MULPOC)forESA, basedinLusaka, cratic theCongo. Republic of Indian Ocean Commission, IGADD=Intergovernmental Developmenton Drought andDevelopment, DRC=Demo- toms Union, SADCC =Southern African DevelopmentCoordination Conference, PTA =Preferential Trade Area, IOC= and Southern Africa, CEPGL =Communauté EconomiquedesPays desGrands Lacs, SACU =Southern African Cus- Notes: EAC = East African Community, ESA = Eastern and Southern Africa, COMESA = Common Market for Eastern Source: Compiled byauthors. Zambia, andZimbabwe. 4 -Burundi, Comoros, Djibouti, Eswatini, Ethiopia, Kenya, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Somalia, Eswatini, Tanzania, Uganda, IGADD 1986 introduction of asingleroadintroduction customstransit of declaration document; • Simplification and harmonizationroad customstransit of documentsthrough the the PTA third-party motorvehicleinsurance scheme(Yellow Card) in1987; • Facilitation vehicles withinthesubregion through movementof theimplementation of of links; • Rehabilitation interstate roads, andupgrading of railways, ports, andtelecommunications country’s exports, imports, andtenders; points ineach memberstate providing information onenterprises ineach country, andthe acomputer-based• Establishmentof subregional trade information network, withfocal is at least 45percent; criteria havebeenappliedwithacommodityoriginating itsvalueadded inthesubregion if themajoritylocalequityandmanagementclause.investment; deletionof Value-added • Streamlining theProtocol of Origintofacilitate intraregional ontheRules of trade and originating withinthesubregion; could betraded at reduced rates, tariff resulting inpreferential allcommodities exchange of theCommon Listwhichstated• Elimination theproducts of ineach memberstate that • A 60percent average reduction tariff ongoodsoriginating inthesubregion; Uganda Somalia Sudan Ethiopia Kenya (1993) Djibouti Eritrea on foodsecurity Africa subregion withafocus development across East in managingdrought and Provide coordinated efforts Chapter 6-Regional Trade Integration inEasternandSouthern Africa 138 4 inLusaka in1981. mitment bymemberstates com- to conflictandlackof been madeby1993owing No significantprogress had decision Treaty while allowingotherstojoininlater onareciprocal basis. Whereas thePTA emphasized more memberstates canagree toaccelerate the specificprovisions theimplementation of of Eswatini. COMESA multi-speeddevelopmentbywhichtwo or isbasedontheconceptof 1994. COMESA isthelargest trading blocin Africa and has21memberstates, from Tunisia to about fullmarket integration, thePTA beginningwiththetransformation of toCOMESA in to cooperate inbringingaboutsustainable growth and development. Itaimedtobring The strategy for the 1990s was based on past experiences andmember states’ determination are detailedin Table 6.3. COMESA memberstates in1994–2018. The each regional experiences of trade arrangement This the regional sectiondocumentstheexperiencestrade of arrangements involving held inBujumbura theeconomiccommunity. in2007decidedtorelaunch theactivitiesof inactivity, underpressure CEPGL from Ministersof theinternational community:theCouncil of and entered intoforce in July 2000. The CEPGL wasregenerated after more than13years of and 2007, respectively. The EAC wasre-established after a treaty wassigned in November 1999 created in 1993–1994. The EAC and the CEPGL, which had collapsed, were regenerated in 1999 PTA whileIGAD replaced IGADDin 1996. SADCreplaced SADCC in1992andtheCBIwas regional economicintegration intheESA region. COMESA wascreated in1994toreplace the The periodfrom 1994to2018witnessedsignificantcreation and interestresurgence in of and Southern Africa Region from 1994to2018 Regional Experiences of Trade Arrangements intheEastern economies tendingtomaximizetheirexports weaker at theexpense of nations. the members, militating againsttheregional integration process; andmore advanced economic integration; (3)disparitiesintheeconomicactivitiesand(4)developmentof complementarity inproduction, trade, andconsumptioninthePTA, retarding trade and Some challengesremained: (1)hightransport costsandborder tolls;(2)lackof sustainable growth. to address problems andsoenhancemarket integration andeconomictransformation for thePTA• Adoption of Trade andDevelopmentStrategy in1992toenablememberstates theirbusinesstoit;and companies cede10percent of foreign paymentsoverseas. outflow of exchange intheformof Zep-Re demandedthat thePTA• Establishmentof Reinsurance Company (Zep-Re) inSeptember1992tocontrol process; paving the way for monetary union establishment to facilitate the regional integration thePTA• Launchof MonetaryandFinancial Harmonisation Programme inNovember1990, subregion totravel withouthavingtouseforeign currency; PTA• Introduction of travelers’ checks, UAPTA, in August 1988 toenable citizens within the facilitate theclearing operations housebyestablishingrelationships of betweenbanks; • Formation thePTA of CommercialAssociation of Banks (BAPTA) inNovember1987to 1985; thePTA• Establishmentof Trade andDevelopmentBankforESA (PTA Bank)inNovember aclearing housein1984; • Establishmentof Chapter 6-Regional Trade Integration inEasternandSouthern Africa 139

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 in thePTA: Court Justice. of COMESA embodiesthefollowingprincipalelements whichare notcontained COMESA thePTA, maintainedthestructures of althoughthe Tribunal wasreplaced bythe COMESA atwo-thirds majoritywillprevail where consensuscannot bereached. by consensus(andsoprograms were peggedtotheslowest-movingmemberstates), under over 500motorvehiclescrossed theborder betweenEthiopiaandDjibouti using Yellow involved andover200,000 interstate motoristsusethe Yellow Card. For instance, between a successstoryforCOMESA market integration. More than200insurance companiesare • The Yellow Card scheme, providing regional third-party motorinsurance cover, whichis Market Exchange System (CEMES). Facilitation System (CVTFS)andtheonlinetrading systemknownastheCOMESA Electronic resulting in drastic doing business: COMESA reductions in the cost of Virtual Trade newtrade facilitation instrumentsthat• Launchof are creating aborderless economy, implemented. • In2009, COMESA being launchedthecustomsunion whichwasintheprocess of other African trade blocs, theEAC, andtheSADCtoforman African free trade zone. • In2008, COMESA agreed toanexpanded free the trade zoneincludingmembersof Comoros andLibyain2006, Seychellesin2009, and Tunisia andSomaliain2018. Mauritius, Sudan, Zambia, andZimbabwe). Rwanda andBurundijoinedin2004, the • Nine member states formed a FTA in 2000 (Djibouti, , Kenya, Madagascar, Malawi, Regional Investment Agency, inadditiontothoseadoptedfrom thePTA. in BusinessEasternandSouthern Africa (FEMCOM); COMESA BusinessCouncil; and such astheCOMESA CourtJustice; Federation of National of WomenAssociations of theinstitutionsthat support regional• Establishmentof integration across memberstates, the COMESA regional bloc. • Increasingmemberstates from thenumberof 19to21, whenSomaliaand Tunisia joined the followingsinceitsinceptionin1994: environment forbusinesstoinvestandproduce more efficiently. The blochasachieved regional integration.advantages of memberstates seektocreate Governmentsof an COMESA isdesignedspecificallytosupport thebusinesscommunityintakingmaximum settlement. lishment and(eventually)therightof • Free persons and common visa arrangements, estab- movement of including the right of • aCOMESAA paymentsunionandeventualestablishmentof monetaryunion. domestic investment. more favorable environment forforeign direct investment, cross-border investment, and • Free capitalandfinanceacommoninvestmentprocedure movementof tocreate a acommonexternal onimports tariff fromand theadoptionof non-COMESA countries. • A customsunioninvolvingzero tariffs onallproducts originating inthecommonmarket, barriers. non-tariff goodsandservicesproduced withinthecommonmarketment of all andremoval of • A fullfree trade area (FTA) involvingtrade liberalization underwhichthere isfree move- Chapter 6-Regional Trade Integration inEasternandSouthern Africa 140

1994 to2018 Table regional trade arrangements intheeastern andsouthern 6.3Experiencesof Africa region from be workingagainstregional integration efforts: Although COMESA achievements, hasamassedanumber of thefollowingchallengesseemto SACU 1969 SADC 1992 IOC 1984 year formed Regional bloc integration through interconnectivity hasbeenlow. • investmentsininfrastructureThe levelof andenergy toenhancesocialandeconomic treatment in the corresponding memberstates. reciprocity, where onecountryrelaxes itsvisarulesbuttheirnationals donotenjoysimilar people(Burundi,movement of Rwanda, Kenya, andZimbabwe). This isduetotheissueof people.free movementof Onlyfourmemberstates free havesignedtheprotocol of as memberstates are tooslowtoratify protocols already inplacethat shouldallowthe • Free people between member states remains movement of a challenge, not impossible, if COMESApulling outof forfailingtocuttieswithotherblocs. to COMESA aims. This hasalsoledtosomeformermemberstates (suchas Tanzania) variouscountriesislimitingfullattention andcommitment • Overlappingmembershipof adigitalFTA,• Launchof itskindin Africa. thefirstof Djibouti fortheperiod2012–2017(COMESA 2014). Cards andoverUS$3millionincompensation hasbeenpaidtoroad accidentvictimsin Countries involved Zambia Zimbabwe Africa Tanzania Seychelles South Mozambique Namibia Malawi Mauritius Lesotho Madagascar Comoros Eswatini Angola Botswana Seychelles Madagascar Mauritius Comoros South Africa Namibia Lesotho Botswana Eswatini Chapter 6-Regional Trade Integration inEasternandSouthern Africa the southern African region and eradicate poverty within Achieve regional integration environment, and trade cooperation ondiplomacy, development through Promote sustainable outside SACU thecountriesfrom any of ongoodsentering nal tariff goods withacommonexter Duty-free movementof Main objective/terms 141 - in 2017) 15 to16(admitted Comoros Increased membershipfrom Gender andDevelopment. Adopted theProtocol on zone in2008. Joined the Africa free trade in 2008. Launched afree trade area IGAD, andCOMESA Programme includingEAC, Regional Integration Support Madagascar. between Mauritiusand Preferential trade regime 2002 common industrialpolicyin and regional policies, e.g., national Harmonization of union. customs unionandmonetary Established free trade area, Achievements by2018

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 IGADD =Intergovernmental Authority onDevelopment, DRC=Democratic theCongo. Republic of Common Market forEasternandSouthern Africa, CBICB= Cross-Border Initiative, IOC=IndianOcean Commission, Countries, SACU =Southern African CustomsUnion, SADC =Southern African DevelopmentCommunity, COMESA = Notes: EAC =East African Community, ESA, EasternandSouthern Africa, CEPGL theGreat =Community of Lakes Source: Compiled byauthors. CEPGL 2007 COMESA 1994 EAC 1999 IGAD 1996 CBI 1993 Rwanda DRC Burundi Zimbabwe Uganda Zambia Sudan TunisiaSomalia Mauritius Seychelles Madagascar Malawi Lesotho Kenya Ethiopia Eritrea Eswatini Djibouti Egypt DRC Burundi Comoros South Sudan(2016) Uganda Tanzania Rwanda (2007) Kenya Burundi (2007) Uganda Somalia Sudan Ethiopia Kenya Djibouti Eritrea (1993) Zambia Zimbabwe Tanzania Uganda Rwanda Seychelles Mauritius Namibia Madagascar Malawi Eswatini Kenya Burundi Comoros Chapter 6-Regional Trade Integration inEasternandSouthern Africa international trade personsand movement of member states through free development among economic andsocial Promote peace and itspeople standards of and programs toraise living macroeconomic policies activity andadoptionof economic in allfieldsof Promote jointdevelopment balanced economicgrowth public servicestoachieve customs tariff, andrange of common market, common member states through and politicaltiesbetween Strengthen theeconomic cooperation through increased achieve regional integration efforts memberstates to of and complementingthe and integration byassisting Promote peace, prosperity, labor, andcapital goods,flows of services, barriers tocross-border activity byeliminating Facilitate cross-border 142 region people andgoodswithinthe Facilitation movementof of Great Lakes countries. Sustainable peace inthe Somalia 22 byadmitting Tunisia and Increased membershipto area. Launched digitalfree trade 2009. customsunionin Launch of 2008. COMESA Free Trade Zone in Agreed totheSADC-EAC- Proposed acustomsunion. Free trade area in2000. trade zone Acceded to Africa’s free eration by2013. elected apresident forfed- ing presidency in2011, and Established a3-year revolv- union, andcommonmarket. Free trade area, customs states member ing environments of investment, trade, andbank Initiatives toimprove the establishing free trade area. Significant progress toward ration form single goodscustomsdecla- and Transit Documentanda Road Customs Launch of charges. roadHarmonization transit of - so far. FTA. IGADhasproposed implementingtheFTA, butnosignificantprogress hasbeenmade SADC only Angola andtheDemocratic Congo Republic(DRC)are of notparticipating inthe In COMESA, 21memberstates are 16of already participating intheestablishedFTA, whilein integration compared tootherRECs. COMESA andSADCare yettoachieveafullFTA status. The analysissuggeststhat EAC andSACU havemade significantstridesinpromoting regional Development. Community, COMESA =Common Market for EasternandSouthern Africa, IGAD=Intergovernmental Authority on Note: EAC = East African Community, SACU = Southern African Customs Union, SADC = Southern African Development Source: Compiled byauthors. Africa region Table overall regional progress economiccommunitiesintheeastern andsouthern 6.4Summaryof of The overall progress theRECsinESA issummarizedin of Table 6.4. Political Pact Currency Union Common Market Customs Union Free TradeArea Activity Visa free - - 2018 Proposed for - 2009 Launched in Progressing COMESA - - 2015 Proposed for 2010 Proposed for Progressing SADC Proposed for2016 Chapter 6-Regional Trade Integration inEasternandSouthern Africa 143 2023 Proposed for 2018 Proposed for 2015 Proposed for Fully inforce Fully inforce EAC 2024 Proposed for - - - Stalled Proposed IGAD - - - - Fully inforce Fully inforce SACU participate Four countries

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 expansion. members intotheblocs. SACU, IOC, CEPGL, andCBIhavenotexperienced membership and IGADhaveexperienced other agrowth inmembershipas they witnessedadmissionof thePTAof COMESA) (aprecursor whichwantedtoregain of itsstatus inthebloc. SADC, EAC, constraints asthemajorcausesforwithdrawal from COMESA. Somaliawasaformermember revenue implications,because of andNamibiacitedunfairtrade competitionandfinancial also joinedthebloc(Egypt, Libya, Seychelles, Somalia, and Tunisia). Tanzania withdrew (Angola, Lesotho, Mozambique, Namibia, and Tanzania), whilefivenewmemberstates have COMESA is the onlyRECthat has experienced the departure fiveformer memberstates of theCongo.Republic of Market forEasternandSouthern Africa, IGAD=Intergovernmental Authority onDevelopment, DRC=Democratic Note: EAC =East African Community, SADC=Southern African DevelopmentCommunity, COMESA =Common Source: Compiled byauthors. Table thechangesinselectedregional blocsintheeastern andsouthern 6.5Summaryof Africa region (Table 6.5). tradeA arrangements numberof intheESA region are expanding theirmembership regional economiccommunities Changes inthemembershipof regional economiccommunities Membership of COMESA Angola 1994–2007 Namibia Tanzania Mozambique Lesotho 1994–1997, Former states Somalia 2018 Libya 2006, Egypt 1999, Joined later Zambia, Zimbabwe Burundi, Comoros, Founding states1994 1994–2004, 1994–2000, 1994–1997, Tunisia 2018, Seychelles 2001, Rwanda, Sudan, Malawi, Mauritius, Madagascar, Ethiopia, Kenya, Eritrea, Eswatini, DRC, Djibouti, SADC Comoros 2017 Madagascar 2005, (withdrawn Seychelles 1997 DRC 1997, Mauritius 1995, 1994, South Africa Namibia 1991, Joined later Zambia, Zimbabwe Tanzania, Angola, Botswana, Founding states1980 re-joined 2008), 2004–2007 and Mozambique, Lesotho, Malawi, Eswatini Chapter 6-Regional Trade Integration inEasternandSouthern Africa 144 EAC South Sudan Rwanda 2007, Burundi 2007, Joined later Uganda Tanzania, Kenya, Founding states 2016 2001 IGAD South Sudan Eritrea 1993, Joined later Sudan, Uganda Kenya, Somalia, Djibouti, Founding states 2011 Ethiopia, 1986

Area, DRC=Democratic theCongo. Republic of for EasternandSouthern Africa, ESA =EasternandSouthern Africa, CBI=Cross Border Initiative. FTA =Free Trade IGAD=Intergovernmental Authority onDevelopment, CMA =Common Monetary Area, COMESA =Common Markets ern African CustomsUnion, SADC=Southern African DevelopmentCommunity, IOC=IndianOcean Commission, Notes: EAC =East African Community, CEPGL =Communauté Economique desPays des Grands Lacs, SACU =South- Source: Compiled byauthors. Table each regional economiccommunityintheeastern andsouthern 6.6Membershipof Africa region Mozambique, belongstomore thanoneREC. overlapping membership. Table 6.6showsthat everycountryintheregion, except for ESA registered RECsin Africa, thehighestnumberof allcharacterized bymultipleand Overlapping membershipintheeastern andsouthern Africa region Burundi Kenya Ethiopia Eswatini Eritrea Djibouti Botswana Angola DRC Comoros Mozambique Mauritius Malawi Madagascar Lesotho Rwanda Namibia Tanzania South Sudan Sudan South Africa Somalia Seychelles Total members Tunisia Libya Egypt Non-ESA countriesthatjoinedtheRECsinESA region Zimbabwe Zambia Uganda Countries × (FTA) × (FTA) × × × × (FTA) × × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) 21 × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × COMESA × (FTA) × (FTA) × × × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) × (FTA) 16 × (FTA) × (FTA) SADC Chapter 6-Regional Trade Integration inEasternandSouthern Africa × (CMA) × × (CMA) × (CMA) × (CMA) 5 SACU 145 × × × 6 × × × EAC × × × 7 × × × × IGAD × × × 3 CEPGL × × × 4 × IOC × × × × × × × × 14 × × × × × × CBI

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 states. exports from Egypt, Tunisia, andMalawifacehigherdutiesgloballycompared toothermember products) facerelatively highduties:11.7percent and12.6percent, respectively. Agricultural crude oilandpetroleum, whileexports from Kenya andMalawi(whichare mostlyagricultural duties globally. Exports from Libyaface0percent globallybecausetheyconsistprimarilyof concluded that merchandise exports from Libya, Eritrea, DRC, andZambia facethelowest When evaluating theaverage duties faced byexports from the COMESA region, itcanbe at 46.7percent, 45.3percent, and36percent, respectively. With respect totheagricultural sector, Egypt, Tunisia, andSeychelleshavehighimport duties historical role asatrading post, itseconomy. aswelllimitedproduction inmanysectorsof restrictions inDjiboutiare quiteinteresting andsomewhat counterintuitivegiventhecountry’s (21.7 percent), Tunisia (16.5percent), Sudan(15.6 percent), andDRC(15.4percent). High open inallsectorscompared toothermembers. Protection ishighincountriessuchasDjibouti by exports forCOMESA memberstates. Analysis showsthat LibyaandMauritiusare relatively Bouët, Laborde, andCosnard (2017)calculate theaverage duties appliedonimports andfaced imports. This impliesthat average import dutyonextraregional imports washigh. high at 6.9percent, ECCAS evenif andECOWAS charged higheraverage import duties onall (0 percent). However, inCOMESA theaverage import dutyonallimports remained relatively Centralthan in the EconomicCommunity of African States (ECCAS) (1.6 percent) and inEAC CommunityWest of African States (ECOWAS) (5.6 percent in 2015, 0percent now), but greater 1.9 percent, onaverage, whichislowerthaninSADC(3.8percent) andintheEconomic Chapter 3hasshownthat in2015, COMESA implementedlowtariffs onintraregional trade: Tariffs trade costindicators intheCOMESAsection givesananalysisof region. regional integration, buttheydonotmeasure theactualrealization regional integration. of This for regional integration are satisfied intheESA region. These indicators giveafirstof proxy process. thesecostsgivesaclear picture Examination of astowhethertheconditionsnecessary Tariffs, measures, non-tariff andtransportation costscandirectly impedetheregional integration Based on Trade Costs Measurement of Trade Integration the region. After RTAs presenting thehistoryof inESA, trade integration wenowevaluate thelevelof in regional convergence processes intheblocs. The multiplemembership hadresulted individedattention amongmembers, whichslowed 5 - These average importdutiesare for2007. Chapter 6-Regional Trade Integration inEasternandSouthern Africa 146 5 Figure 6.1Frequency index valuesandcoverage ratios bycountry(percentage) imports that are subjecttoNTMscompared tootherregional counterparts. Analysis showsthat Burundi, Egypt, Kenya, products andUgandahave highershares and of Figure 6.1showsthefrequency index valuesandcoverage NTMsforeach ratios country. of coverage ratio captures imports thepercentage that are of subjecttooneormore NTMs. index simplycaptures products thepercentage that of are subjecttooneormore NTMs. The index valuesandcoverage ratios for63nations overtheperiod2010–2012. The frequency and Development(UNCTAD) database (Gourdon 2014). The database coversfrequency database measures NTMsbasedontheUnitedNations Conference theincidenceof on Trade The Centre d’EtudesProspectives etd’Informations Internationales (CEPII)’s NTM-Map Uganda hasthelowestNTMs, at 0.1percent, followedbyRwanda (0.75percent). Tunisia NTMsonallmerchandise havehigheraverages aswellonagricultural of products. governments toprotect humanhealth byimposingfoodsafetyregulations. Egypt, Sudan, and are present intheCOMESA region. This supports thehypothesisthat NTMscanbeusedby Kee, Nicita, andOlarreaga (2009)andBouët, Laborde, andCosnard (2017) show that NTMs measures related tointellectualproperty origin. rightsandrulesof to trade (TBT), export measures, priceandquantitycontrol measures, trade remedies, and health. NTMsare sanitaryand phytosanitarymeasures Examplesof (SPS), technicalbarriers may applythemforpublicpolicyreasons aswell, humanandplant suchasfortheprotection of measures (NTMs). Although theseNTMsare appliedforprotectionist purposes, governments With regional economic integration, conventionaltariffs decrease, givingrisetonon-tariff MeasuresNon-tariff Source: Gourdon (2014). Coverage Ratio Frequency Index 0 20 40 60 80 100 120 Burundi 80 34 Egyyt Frequency Index 60 44 Chapter 6-Regional Trade Integration inEasternandSouthern Africa Kenya 82 63 Coverage Ratio 147 Madagascar 40 13 Mauritius 52 25 Uganda 98 69 Tunisia 31 13

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 fluctuating intheperiod2005–2017. intraregional trade inaregion’s totaltrade. Figure 6.2showsthat intra-COMESA trade hasbeen The simplestregional integration indicator, andtheonemostoften used, istheshare of Trade Shares Intra-Common Market forEastern andSouthern Africa measure theregional COMESA. integration of superior orrefined indicators that are usedforinternational comparisonsare alsousedto This sectiondiscussesintraregional trade flowsasmeasures regional integration. of More Based on Trade Flows Measurement of Trade Integration challenges that significantly reduce trade volumesinthe region. sexual harassment, stigmatization, extortion, andbriberybycustomsofficials. These are critical Zindiye (2012);andFAO (2017). The analysisindicates that, inparticular, thesetraders face Subregional Support Initiative forthe WomenAdvancement of (2012);Chiliya, Masocha, and sexual harassment facedbysmall-scaletraders hasbeen documented bytheEastern African that there small-scaletraders, isahighprevalence of especiallywomen. The highlevelsof abuse, theirpossessions. andconfiscation of Research conductedintheESA region alsoshows often amongvulnerable groups across thecontinent, astheysuffer sexual harassment, verbal small-scale traders are female: up to 70 percent–80 percent in some cases. Women traders are down procedures. According toBrenton and Soprano (2018), Africa’s thevastmajorityof share theclearance area withtrucks andothervehicles, whichincreases insecurityandslows Border infrastructure rarely small-scaletraders, caters fortheneedsof often forcing themto member states toimprove trade volumes(World Bank, 2019). to 336hours. Costs, range from US$60toUS$3,039. Efficiency issuesneedtobeaddressed for Border anddocumentary compliancetimewhenexporting orimporting ranges from 2hours Business indicators showsthat there ishighheterogeneity efficiency. intheregion intermsof a container, whereas ittookonly3hoursandcostUS$134 in Eswatini. Further Doing analysisof efficient. InDRC, in2018, ittook336hoursandUS$3,039inborder compliancecoststo import Eswatini andMauritiusare themostefficient countriesinthe region, andDRCistheleast compliance, anddomestictransport. According tothe World Bank“DoingBusiness”indicators, and imports in Africa. These includecostandtimespent ondocumentarycompliance, border There isalarge literature pointingouttheconsiderable timeandcostassociated withexports Chapter 6-Regional Trade Integration inEasternandSouthern Africa 148 Burundi, UgandaandZambia. regional aggregate share looks lowascompared totheintra-COMESA trade shares inRwanda, acustomsunionin2009.may beexplained bythelaunchof Table 6.7alsoshowsthat this to 14percent in2011and18percent in2015(Table 6.7). The regular increase intrade share Total intra-COMESA trade totalCOMESA asapercentage of trade rose from 9percent in2008 Source: Authors’ calculations from COMTRADE (2019). Figure 6.2 Total intra-common market exports foreastern andsouthern Africa (2005–2017) Value US$ millions 10000 12000 1400 2000 4000 6000 8000 0 2005 200620072008200920102011201220132014201520162017 Chapter 6-Regional Trade Integration inEasternandSouthern Africa 149

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 Comparison betweenregions is possible. Moreover, the indicator increases, when the valueof itmeans that trade introversion increases. to theirsummation. A positivefigure showsthat the region ismore introverted than extraverted. presentation). thedifference Itistheratio of between intra- andextraregional intensity indexes and compares aregion’s share intrade theworld (see Chapter 3 for a detailed with the rest of This both intra- index is based on modifications and extraregional of trade intensity indices, Regional Trade Introversion Index thesecountriesiswithtradingtrade partners of outsidetheCOMESA region. intra-COMESA trade hasbeenbelow5percent forEgypt, Ethiopia, the andLibyaasthebulkof and Zambia hadarelatively trade highshare withotherCOMESA of memberstates. Incontrast, by UgandaandZambia at 21percent. For theperiod2008–2015, Rwanda, Burundi, DRCongo, Rwanda havingthehighestshare at 30percent in2015, followedbyBurundi(23percent), and The intra-COMESA share of trade intotalcountrytrade differs from countrytocountry, with and Southern Africa. DRC=Democratic theCongo. Republic of Note: Somaliaand Tunisia notincludedsincetheyjoinedCOMESA in2018;COMESA =Common Market forEastern Source: Authors’ calculations from COMTRADE (2019). (2008–2015) Table 6.7Intra-common market trade foreastern andsouthern totaltrade bycountry Africa asashare of COMESA Zimbabwe Zambia Uganda Sudan Seychelles Rwanda Malawi Mauritius Madagascar Libya Kenya Ethiopia Eswatini Eritrea Egypt Djibouti DRC Comoros Burundi 9% 7% 20% 19% 4% 7% 38% 8% 5% 3% 1% 13% 5% 15% 8% 3% 6% 16% 3% 26% 2008 11% 7% 19% 20% 6% 5% 29% 8% 7% 5% 1% 11% 4% 18% 22% 3% 10% 20% 5% 26% 2009 12% 7% 22% 21% 6% 5% 27% 12% 7% 6% 2% 12% 5% 5% 32% 4% 7% 21% 7% 26% 2010 Chapter 6-Regional Trade Integration inEasternandSouthern Africa 150 14% 6% 22% 21% 5% 4% 28% 15% 8% 5% 3% 12% 5% 4% 10% 3% 7% 19% 3% 15% 2011 12% 6% 19% 21% 7% 4% 31% 10% 5% 4% 2% 10% 4% 3% 6% 3% 5% 19% 4% 14% 2012 15% 7% 23% 21% 8% 7% 25% 8% 5% 4% 2% 13% 3% 4% 9% 3% 6% 25% 11% 17% 2013 16% 5% 21% 20% 6% 6% 30% 9% 6% 5% 3% 10% 3% 3% 5% 3% 5% 18% 4% 17% 2014 18% 6% 21% 21% 6% 9% 30% 10% 12% 5% 3% 10% 2% 5% 8% 3% 6% 16% 3% 23% 2015 does not receive the level of attentiondoes notreceive itdeserves, thelevelof andmonitoringefforts are scant. information onitsdimensions.be apaucityof sufficientThe data absence of means that ICBT The nature ICBT, of nevertheless, makes itsdata availabilitychallenging andthere continues to (Crush 2015). it remains asignificantfeature regional trade of andinternational mobilityinsouthern Africa trade regimes (FAO 2017). ICBTprevalence of inESA variesbetweencountries, butit iscommonwhere there are restrictive Uganda2016),Bank of whichunderscores itsimportance inUgandaanditsneighbors. The Uganda2010;UBOSand Uganda 2005;UBOSandBankof trade flows(UBOSandBankof regional trade, andaccountsfor between25percent formalintraregional and 40percent of UgandahaveestablishedthatStatistics ICBT andtheBankof isanimportantUganda’s part of in somecasestheproportion maybemuchlowerthanthis. SurveysbytheUgandaBureau of flows represent official upto90percent flows of (LesserandMoisé-Leeman 2009), although Cross-Border trade trade surveysindicate that, insome African countries, informal regional totalintra-SADCof trade, US$17.6billion(FAO withanestimated valueof 2017). 2015). For example, intheSADCregion, ICBT makes upanestimated 30percent–40 percent role inpoverty alleviation, foodsecurity, andhouseholdlivelihoodsinsouthern Africa (Crush There casestudyevidenceconfirmingthat seemstobeagrowing ICBT bodyof playsacritical elsewhere. are wellrecorded andthat canbetraced through national data systemsat border pointsor enterprise, andjobcreation. Formal trade describesthoseinternational transactions that smuggling, taxevasion(Lesser andMoisé-Leeman 2009), and illegality thanwithinnovation, trade or smuggling. In government circles, for example, ICBT is more often associated with 1996; Macamo1998;MindeandNakhumwa1998). Insome cases, ICBT isreferred toasparallel through official routes butare intentionallyunder-reported ormisreported (Ackello-Ogutu unofficial routes andavoid customs controls. The term also includes transactions that pass customs agenciesnorinacountry’s official trade data. Traders engagedinICBT often use ICBT describestrade transactions that, foronereason oranother, are nevercaptured byofficial cross-border trade The informal importance of Comoros andEthiopiawasdecreasing fortheperiod2000–2013. the introversion forcountries suchasEgyptandEritrea has beenincreasing, the whilethat of to betheleast introverted memberstate compared totheothers. Itcanalsobeconcludedthat Kenya, Rwanda, Uganda, and Zambia are more introverted toward the region. Libya appears memberstatesthe introversion toward of theregion fortheperiod2000–2013. Burundi, DRC, Bouët, Cosnard, andLaborde (2017)estimate regional COMESA introversion indicesof and regional blocs. than extroverted. The the introversionArab of Maghreb Union(AMU)istheleast amongthe indicators are veryclose forall African RECs, andthat alltheseRECsare more introverted selected African regional communitiesfortheperiod2005–2017. The analysisshowsthat these thisreport,In Chapter3of Figure 3.8illustrates theregional trade introversion indicesfor Generally, though, ICBT is significant in the EAC (Ogalo 2010), and Chapter 6-Regional Trade Integration inEasternandSouthern Africa 151

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 trade data, buttheseare often incomplete(Gelanetal. 2010). monitors The systemconsistsof humanitarian responses, andstrategic foodimport decisions. FEWSNET collectssomeinformal foodaid,in foodcommoditiesand toapplythisinformation and analysistotheplanningof FEWSNET wassetupin2004southern Africa tobetter understandregional trade flows countries. commodities across borders inMalawi, Zambia, Mozambique, Zimbabwe, Tanzania, andother (WFP), and theFood and Agriculture Organization (FAO) variousagricultural totrack pricesof efforts bytheFamine Early Warning Systems Network(FEWSNET), the World Food Programme themethodsabovenonethelessexist.combination of Inthesouthern Africa region there are compared withthedrivetocollectformaltrade data, several initiatives utilizingadifferent Although thedrivetomonitorandcollectICBT data isnotwidespread intheCOMESA region, The Famine Early Warning Systems Networkinitiative Intergovernmental Initiatives informal trade usingtheseapproaches are provided below. trade activitydeclinesappreciablyof (Ackello-Ogutu 1996). initiatives tomeasure Detailsof 1996). This approach iscombinedwithborder observation onnon-market dayswhenthelevel the neighboring countries.of This is done each day over all the selected days (Ackello-Ogutu and export goodsbrought figures tothemarket basedonthevolumeof bytraders from each along thefrontier roads betweencountries. The techniquerequires netimport quantification of Finally, thestocktaking techniqueismore suitableforopenborder markets commonlyfound official customs records (Ackello-Ogutu 1996). This provides anestimate forunrecorded trade. entry tothedeclared destination withtheintentiontocompare thefindingswiththosein through selectedborders, andsubsequentlycargo movementsare traced from theport of may beconductedonlyonasmallsample(forinstance, thetrucks 10percent)passing of thedocumentation proceduresmanipulation of (Ackello-Ogutu 1996). To achievethis, tracking unrecordedthe volumeof trade that passesacross theborder through misrepresentation or The tracking techniquecancomplementborder observation. The formeraimstoestimate under-declaration the goods being transported the true values and volumes of across borders.of Border observation alonemaynotgivearealistic unrecorded picture of trade asitmaymiss between twotrading partners (Ackello-Ogutu 1996). use suchestimates toapproximate unrecorded theannualvolume and valueof trade flows The secondstepistoestimate average monthlytrade volumesfrom observedfigures andthen weeks from12months(Ackello-Ogutuselected numberof each1996). monthoveraperiodof census techniquestocovermajoragricultural andindustrialcommoditiesduringarandomly enumerators.the postingof The monitorsmaythencarryoutborder monitoringbyapplying In general, border observation requires popularandaccessibleborder sitesfor selectionof the circumstances. open markets. These techniquesare appliedeitheralone, orincombination, dependingon border large monitoring;(2)tracking transport movement of vehicles;and(3)stocktakingat recommends three techniquesforcollectingprimaryICBT data: (1)border observation or because thetraders avoidcustomauthoritiesforonereason oranother. Ackello-Ogutu (1996) business.one countrytoanotherintheirnormalcourseof ICBT, however, isdifficult tocapture placed at variousofficial borders haveadutyandcapacitytocapture thetransactions from countries andovertime. Formal trade data are readily available becausecustomauthorities An inherent ICBT challengethat underminestheavailabilityof data ishowtomonitorICBT across Chapter 6-Regional Trade Integration inEasternandSouthern Africa 152 FEWSNET-ACTESA collaborative arrangement. constraints. The mapinFigure 6.3illustrates where borders are currently monitored withinthe crossing pointsorcrops that are considered criticalare currently monitored, owingtoresource quantities, andvalue)inthesameareas that FEWSNET monitors. However, notallborder Thus ACTESA works withFEWSNET countryoffices ICBT toenhancethetracking of (prices, through theInformalCross Border Food Trade MonitoringSystem (ICB-FTMS)initiative. 2011, ACTESA beencollaborating with WFP andFEWSNET incross-border trade monitoring initiatives instrategically important agricultural valuechains, trade, andinvestment. SinceMarch Understanding(MoU)withCOMESAof toserveasanimplementinginstitutionforregional COMESAagency of and was establishedin2008. In2010, ACTESA signedaMemorandum The Alliance for Commodity Trade in Eastern and Southern Africa (ACTESA) is a specialized informal cross-border foodtrade monitoringsystem The Alliance for Commodity Trade inEasternandSouthern Africa evaluation bodiesbi-annually(FEWSNET 2012). FEWSNETcountry nodesof present ICBT reports tofoodandnutritionsecuritymonitoring trends feedintoFEWSNET Regional andGlobalPrice Watch Bulletins(FEWSNET 2011). The Agriculture. Ministriesof feed intothefoodbalancesheetsof At theregional level, theICBT list withcopiespostedontheFEWSNET andotherwebsites. At thecountrylevel, thedata team produces monthlyorquarterly reports whichare disseminated through adistribution and thentransmits ittotheFEWSNET regional office. Atthe regional level, aFEWSNET/WFP country focalpoint. The focalpointpersonconsolidates thedata, makes apreliminary analysis, commoditieswhere possible,of andsubsequentlytransmit thedata weeklytotheFEWSNET border points. themonitorsistocollectdailyimportThe andexport jobof volumesandprices and humanitarian responses, andhence the approach relies on monitors placed at various better understandingregional(1996) withtheobjectiveof trade flowstohelpplanfoodaid FEWSNET collectssuchdata usingtheobservation techniquedescribedin Ackello-Ogutu disseminated. A monthlyreport isproduced at theregional levelusingthedata collected andiswidely research institutions, andinternational trade monitorsandhumanitarianagenciesforplanning. feeds into national and regional food balance sheets. It is also used by agro-business planners, the main food commodities. informal trade flows of Oncevolumes collected,of the information Zimbabwe, andSouth Africa. theinitiativeThe istoobserveandrecord goalof pricesand being placedat key border postsshared byMalawi, Mozambique, Zambia, Tanzania, DRC, Chapter 6-Regional Trade Integration inEasternandSouthern Africa 153

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 Table 6.8Borders monitored undertheFamine Early Warning Systems Networkprogram center isnotfullycaptured. foodshortages.of The result, unfortunately, trade that isthat takes theamountof placeinthe north, isthegrain Malawi. basket of FEWSNET chosetheseborders basedontheexpectation thelandislessfavorableis prone tofarming. tofamineasmostof The center, followedbythe being monitored inthenorthern region. The agrarian structure inMalawiissuchthat thesouth borders are inthesouthernregion; onlytwoare beingmonitored inthecenter, andthree are Table 6.8presents theborders that are beingmonitored byFEWSNET in Malawi. the Mostof The FEWSNET program monitorsmanyborders inMalawi, Zambia, Mozambique, and Tanzania. Source: FEWSNET 2015. Figure 6.3Borders monitored bytheFamine Early Warning Systems Network Source: FEWSNET 2015. North Chiponde/Kalanje—Mangochi/Mozambique Tengani—Nsanje/Mozambique Marine—Nsanje/Mozambique Marka—Nsanje/Mozambique Mkumaniza—Chikwawa/Mozambique Mwanza—Mwanza/Mozambique South Mqocha—Mzimba/Zambia Songwe—Karonga/Tanzania Mbirima—Chitipa/Tanzania Malawi border points Chapter 6-Regional Trade Integration inEasternandSouthern Africa 154 Center Nayuchi—Machinga/Mozambique Kolowiko—Phalombe/Mozambique Naminkhaka—Phalombe/Mozambique Muloza—Mulanje/Mozambique Makhanga—Nsanje/Mozambique Sankhulani—Nsanje/Mozambique South Dedza—Dedza/Mozambique Mchinji—Mchinji/ Zambia which would be inlinewithfi ndings from FAO (2017). regionalthe effect integration of (which encourages formal trade) inthe southern Africa region, ascribed todata collectionchallengesforICBT formaize. The observeddeclinemaypointto Figure6.5 givestheinformal maizeexports byorigin country. The seeminglylowerlevelmaybe trade accounts for between 4 percent and 15 percent and has been on the decline over time. Figure 6.4alsoshows that informalcross-border maizetrade expressed formal asashare of between cereal production andannualrainfall (see, forexample, Nhamo etal. 2019). explained by the erratic rainfall patterns over time, considering that there is a close relationship from under250,000metrictons(MT)in2009toaround 3millionMT in2011). This maybe general trend formal maizetrade hasbeenvolatile isthat overtime(ranging thevolumeof In general, informal agricultural trade data are scant and are available only from 2004. The MT forMetric Tons Note: ICBT forInformalCross-Border Trade; SADCforSouthern African DevelopmentCommunity; Source: Authors’ computation based onFEWSNET (2019). 2004-2013 Africa intotheSouthern African DevelopmentCommunity/Common Market forEasternandSouthern Africa, Figure 6.4Informalandformalmaizeexports byMalawi, Mozambique, Tanzania, Zambia, Zimbabwe, andSouth data. the availabilityof into SADC/COMESA. coverage are countriesandtheperiodof This determinedby sampleof formal maizeexports byMalawi, Mozambique, Tanzania, Zambia, Zimbabwe, andSouth Africa monitoring. Itshowstheinformalmaizeexports informalmaizeexports aswelltheratio to of Figure 6.4presents maizequantities, bothasreported formallyandastracked through ICBT constitutes thelargest thetotalquantity. share of Nevertheless, thekey commoditiesthat are fullyreported are maize, rice, andbeans. Maize soy, wheat, wheat fl our, green gram, European potatoes, cotton, maizeseed, andfertilizers. cassava, sweetpotatoes, millet, sorghum, pigeonpeas, cow peas, groundnuts, sunfl ower, commoditiesmonitoredThe include:maize, listof maize fl our, rice, beans, fresh cassava, dry Trade Volume -MT 1000000 1500000 2000000 2500000 3000000 3500000 500000 0 2004 200520062007200820092010201120122013 Ratio ofinformal/toformal(%) Formal maizeexports-MT Chapter 6-Regional Trade Integration inEasternandSouthern Africa 155 ICBT SADCexports(MaizeMT) 0 2 4 8 10 12 14 16 6

Share s%

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 sample, butdoes notcoverallborders theyear. orcollectdata everydayof Rwanda (NBR),National Bankof and WFP (FSNWG2017). The group monitors arepresentative and DRC. Data are provided bytheEast Africa Grain Council (EAGC), FEWSNET, FAO, the Tanzania, Burundi, Rwanda, Uganda, Kenya, Somalia, Djibouti, Ethiopia, Sudan, SouthSudan, on regional foodsecurity(FSNWG2017). Itmonitorsinformaltrade across selectedborders of monitors theICBT88foodcommoditiesandlivestock ineastern Africa toquantifytheimpact of The market the Food analysis sub-group of Security and Nutrition Working Group (FSNWG) Working Group The market theFood analysis sub-group of SecurityandNutrition sustainability mayalsobecalledintoquestion. As theprogram isdonorsupported andhasnotyetbeendomesticated innational budgets, its assorted itemspacked inthesamebags, aconsideration that data. compromises thequalityof example, at night, whentrade alsocontinues. Furthermore, itisnotpractical toexamine all not reveal allICBT. There are alsoother times that FEWSNET monitors cannot collectdata: for The program borders inthesecountries, coversalimitednumberof sothedata collectedmay price changesmaybeusefulfordecisionmaking. refl ICBT, ectthetotalityof thetrends computedfrom suchdata maystillbeinformative andthe the southern Africa region. trade captured the amount of under the program Even if may not The FEWSNET program isagoodeffort toward understandingICBT andpricedynamicsin Note: MT=Metric Tons Source: Authors’ computation basedonFEWSNET (2019) Figure 6.5Informalcross-border maizeexports intotheSouthern African DevelopmentCommunity, 2004-2013 Volume-MT 100000 120000 140000 160000 180000 200000 20000 40000 60000 80000 0 04 05 06 07 20 20 00 21 21 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Malawi Zambia Mozambique Zimbabwe Chapter 6-Regional Trade Integration inEasternandSouthern Africa 156 Total South Africa Tanzania using monitors. Uganda(BOU)collaborate inmonitoringeffortsof at themainborder thecountry, crossings of Revenue Authority (URA)andotherauthorities. To collectthesedata, theUBOSandBank Rwanda, Tanzania, andSudan)that are notincludedintheofficial theUganda records of Uganda, ICBT surveyscollecttrade data betweenUgandaandher neighbors (Kenya, DRC, theUgandaBureauStatistics (UBOS)andtheCentral Under theleadership of Bankof National Initiatives theyear couldbecoveredall daysof owingtoresources constraints. and Nakhumwa1998). Shortcomings includedthat notallborders couldbecovered andnot and values. For comparability, allthecountrystudiesadoptedsamemethodology(Minde months. Trade volumesand valueswere obtainedby aggregating theweeklytrade volumes Zambia, andZimbabwe. 12 Monitoringwasdonefor2weeks permonthforaperiodof routes, andcrossing pointsalongtheborder regions inKenya, Malawi, Mozambique, Tanzania, The studybyMindeandNakhumwa(1998)involvedmonitoringfrontier markets, informal (Crush 2015). over5,500traderstransactions withcustomsofficials of andinterviewedover4,500traders 85,000 traders—passed through theborder postsbeingmonitored. The monitorsrecorded commodities. theexercise,of Duringthecourseof more than205,000people—including using an “origin and destination” survey tool which sought to trace origins and destinations goods declared andduties paid.and volumes of traders (3)Monitors interviewed a sample of tradersobserved theinteractions withcustomsofficials of and recorded thetypes, values, were monitored overa10-dayperiod, ICBT andthenumberof traders counted. (2)Monitors using athreefold methodology. (1) All peoplecrossing through theselectedborder posts The SAMP survey covered 20 land border posts connecting 11 southern African countries the nature ICBT informaltraders of and thecharacter across of theSADCregion (Crush2015). datasets were combined intoasingleregional dataset. This provides important insightsinto was produced bytheproject. For theGrowing InformalCitiesReport, theindividual country on migration, development, andpoverty reduction. individualcountryreportsA seriesof cross-bordera majorregional survey of trade insouthern alargerAfrica aspart project of In 2007–2008, theSouthern Africa Migration Program (SAMP)plannedandimplemented The Southern Africa Migration Program 6 -https://www.bou.or.ug/bou/publications_research/icbt.html. mode of transport Uganda 2005). mode of amongothers(UBOSand Bankof frontier in counter books or specially designed forms, specifying the item, quantity, value, and that are notrecorded bycustomsauthoritiesare captured crossing at thecustoms thepointof to enablethemrecord thecountry. allmerchandise movingintoandoutof All traded goods The direct observation technique entails enumeratorsstrategic atpositioning of border posts gathering data at border posts where conditionsare farfrom ideal. quantities forsomeselecteditems. The methodsusedare themostcost-effective wayof clearing agents, revenue officers, andsecuritypersonnel, and through weighingto ascertain Ogutu (1996)and, where necessary, verification isdonethrough inquiriesmadetotraders, The approach todata collectionat UBOShinges ondirect observation asdescribedin Ackello- 6

Chapter 6-Regional Trade Integration inEasternandSouthern Africa 157

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 provided below. account fornight trading activities. the trendsA ininformalcross-border snapshotof trade is border points. Currently allagencies monitorICBT between6am and7pm, andhencedonot unrecorded trade causedbyunder-reporting valueorvolume of ormisclassification at official informal trade can easily go unrecorded.volumes of Some ICBT surveys do not consider the Official border pointstend tobelocated next tounofficial border routes, hencesubstantial Malawian“surplus”maize intheearly 1980swasMozambican. and that muchof maizewere tradedof informallyannuallyfrom Zambia toDRC, costingZambia US$3million, extremely highinESA. For instance, Ackello-Ogutu (1996) estimated that 30,000–60,000tons Uganda 2016).and Bankof There were indications that unrecorded (informal)trade wasstill theinformaltrade over90percent transactions of betweenUgandaanditsneighbors(UBOS of By 2016, theICBT survey covered 20border pointsand4busterminals, representing coverage Source: Uganda2017. Adapted from UBOSandBankof Figure 6.6Border pointsmonitored Uganda2005)(Figuredays monitored) in10months(UBOSandBankof 6.6). Sudan andUganda–Tanzania 140days(each borders having14 formonitoringoveraperiodof the Uganda–DRC border, 2 along the Uganda–Rwanda border, and 1 each along the Uganda– The initialsurveysinvolved 14border stations: 4alongtheUganda–Kenya border, 6along statistics Uganda2005). intheBOPcurrent account(UBOSandBankof grossly informaltrade tooverall understate the contributionof international merchandise trade statistics. thesesurveys, Intheabsenceof estimates byBOPandnational accountscompilers Uganda2005),statistics (UBOSandBankof national accounts, payment(BOP) andbalanceof trade betweenUgandaandherneighborsinorder toimprove external trade thecoverage of unrecorded thesesurveysistoestablishandtrackThe themagnitudeof mainobjectiveof

Chapter 6-Regional Trade Integration inEasternandSouthern Africa 158 2004-2013 Figure Uganda’s 6.7Comparison of formal andinformal exports andimports–trade withneighbors – allgoods informalimports.declaration of formalimports.for asmallershare of Itisnotclear whetherthisdifference isduetounder- exports accountformore formalexports, than10percent of althoughinformal imports account Increasing informalexports canplayarole inreducing itstrade deficit. Interestingly, informal viewpoint, there isaneedforUgandatomanageitsimports tostabilizeitstrade balance. are dominated byformalimports. Inpassing, onecouldargue that, from amacroeconomic imports hasbeenunder10percent throughout theperiod, implyingthat Uganda’s imports under 10percent in2005 tojustover40percent in2009. The informalimports share tototal of at around 15percent. Prior to2011, informalexports theshare intotalexports of rose from informally. Generally, informalexports theshare intotalexports of hasstayedstablesince2011 totaltrade.for asmallbutsignificantshare of Uganda, however, exports more thanitimports that Ugandarunsatrade deficitannuallyanditisontheincrease. Informaltrade accounts important tonotethelarge andyetwidening gapbetweenexports andimports, whichimplies Although bothimports andexports have increased overtheperiodfrom 2005to2016, itis billion in2005tooverUS$62014before slightlydecliningtoUS$5billionby2016. 2016, whereas totalimports forallgoodsintoUgandahaveincreased from justaround US$2 over time. Total exports have increased from US$1 billion in 2005 to almost US$3 billion in Figure 6.7showsthat Uganda’s totaltrade (bothexports andimports) hasbeenincreasing Source: Authors’ computation Uganda(2005,2010, from UBOSandBankof 2016). Trade Volume-Million USD 1000 2000 3000 4000 5000 6000 7000 0 04 05 20 07 20 09 2010201120122013 2009 2004 200520062007 2008 Shares ofinformalexportsintotal (%) Total informalexports(millionUSD) Total exports(allgoods)(millionUSD) Chapter 6-Regional Trade Integration inEasternandSouthern Africa 159 Total informalimports(millionUSD) Total imports(all)(millionUSD) 0 10 20 30 40 50 60

Trade Shares-%

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 percent. The percentage iscomparable informalagricultural totheshare exports of intotal informal imports andhavebeenincreasing overtime. The thisshare range is20percent–60 of informal exports, informalagricultural imports accountformore thetotal than20percent of previously. While wenoteinthissectionthat totalinformalimports are much lowerthantotal government may be undertaking to reduce the conspicuous total trade deficit highlighted Increasing informalcross-border agricultural exports couldfurther complementanyeffort the informal agricultural imports, implyingthat Ugandahasaninformalagricultural trade surplus. have been increasing over time. It alsonotes that informal agricultural exports supersede Figure 6.8 clearly shows that both informal agricultural exports from and imports into Uganda mattresses, Uganda2016). etc.)(UBOSand Bankof soybeans, maize flour, etc.)andindustrialgoods(shoes, clothes, petroleum jelly, beers, The goodstraded informallyacross borders includeagricultural goods (maize, groundnuts, Source: Authors’ computation Uganda(2005, from UBOSandBank of 2010, 2016). 2005-2016 Figure informalagricultural trade 6.8Evolution (invalueandinshare) betweenUgandaandneighbors of worth US$790millionandUS$520million, Uganda2016). respectively (UBOSandBankof these countriesin2006. In2009and2010Ugandaninformalexports toitsneighborswere Sudan, and Tanzania represented itstotalrecorded US$224 millionor83percent of trade to Uganda2005,Bank of 2010and2016). Ugandaninformalexports toDRC, Kenya, Rwanda, exports, whereas informalimports official amount to about12.5percent imports of (UBOSand implies that informal(unrecorded) exports amounttoapproximately official 85.3percent of thesurvey formalimports withthefiveneighboringcountriesduringsameperiodof of million. formal(recorded)A comparisonwithUS$189.7millionof exports andUS$432.5million to US$162.0million, whereas informalimports were approximated tobeashighUS$54.2 The surveysforICBT intheinitialyears (2004–2005)showedthat informalexports amounted

Volume-Millions USD 100 150 200 250 50 0 2005 20062007200820092010201120122013201420152016 Share ofinformalagricultureimportsintotal(%) Shares ofinformalagricultureexportsintotal(%) Informal agricultureimports(millionUSD) Informal agricultureexports(millionUSD) Chapter 6-Regional Trade Integration inEasternandSouthern Africa 160 0 10 20 30 40 50 60

Shares-%

country coefficients are normalized bydividingthem by the regional coefficient. thetrend-corrected itsmembercountries(Koester,of variation coefficients of of 1986). Finally, regional cereal production volatility isderivedfortheCOMESA region asaweighted average is calculated asameasure cereal of production variabilityat countrylevel. Then anindex of through greater market integration. For that purpose, atrend-corrected variation coefficient of countries, againsttheregional average, toillustrate thepotentialforlocalmarket stabilization cerealThis the variability of production section presents in individual a simple comparison of pricevariation.likely amplitudeof shortage supplyingmarketsreducing and hencedecreasing duringperiodsof thecostof the to respond tofuture neededcarryoverstocks, shocks; and(3)lowering thesizeof thereby capacities andactivitiesinthemarketing sector, theprivate sector whichraise thecapacityof shocks;the effects (2)providing of incentivestoinvestinmarketing services, andexpanding increasing demandandsupplythat canbeadjustedtorespond thevolumeof toanddampen to absorblocalpricerisks by:(1)enlarging theareasproduction andconsumptionthus of regionalIntegration markets of through increased trade domesticmarkets raises thecapacityof domestic foodmarkets wouldreduce supplyvolatility andpriceinstabilityinthesemarkets. 2014). that isthecase, If expanding cross-border trade andallowinggreater integration of can beexpected tobemore stableat theregional thanat individualcountrylevels(Minot, other. To theextent that suchfluctuations are lessthanperfectlycorrelated, foodproduction individual countries. Moreover, fluctuations innational production tendtopartially offset each in policydecisions, etc.)are suchthat anentire region islesslikely tobeaffected thanare creditinefficiency andinsurance of markets, international prices, volatility of uncertainty low-income countries. productionThe variability (climate causesof variability, water availability, Variability indomesticproduction isamajorcontributortolocalfoodpriceinstabilityamong through trade domesticfoodmarkets tion of Regional potentialforstabiliza- Uganda2005). Bank of calendar year. This isnotpossibleinmanycases, owingtofinancial constraints (UBOSand that wouldcapture seasonal patterns, itwouldbedesirable that thesurveyscoverwhole single border. Nighttrade, forexample, islikely tobemissed. To generate realistic estimates every day. Thus, itisnotpossibleto collectdata onallthetrade that flowsthrough evena crossing, there would have to be a dedicated monitors 24 hours a day, monitor or group of Monitoring ICBT isresource intensivebecause, forcompletecoverage at aninformalborder trade. surveys undertaken insomeregions reveal that itrepresents alarge officially share of recorded trade intotaltrade. Although there are intra-Africa nosystematic trade, statistics onthisformof Adding ICBT toofficial figures forintra-Africa trade wouldincreaseof intra-Africa theshare et al. 2010). is due to the under-declaration informal imports often of reported in such studies (e.g., Gelan again, it isnot clear whether the differential in shares for informal imports and informal exports signifying that Uganda is increasingly relying on neighbors to meet its food demands. Once informal exports. Informalimports, therefore, are dominated by agricultural informalimports, Chapter 6-Regional Trade Integration inEasternandSouthern Africa 161

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 greater than0.75(12.5percent). This explains thedistributionwithin DRC’s bar. countries (12.5percent) forwhichthiscoefficient isbetween0.65and0.75, and2forwhichitis correlationcoefficient thesecountriesandDRCislessthan0.65, of betweenproduction of 2 are between0.65and0.75. For example there are 12 countries(75percent) forwhichthe moderatelysegment istheshare correlated of countryproduction levelswithcoefficients that highly correlated production fluctuations, withcoefficients that are higherthan0.75. Themiddle country’s ownproduction movements. The topsegmentrepresents countrieswith theshare of the region withproduction fluctuations that wedefineas relatively weakly correlated withthe correlationthe percentage of coefficients that are 0.65orless, othercountriesin ortheshare of production levelsforeach regional group. For each country, thebarshows the lower segmentof Figure correlation 6.10presents the distributionof coefficients betweenindividualcountry Source: Adapted from BadianeandOdjo, 2016. at least fivetimes higherthan the regional level (Eswatini, Malawi, Mauritius, DRC, Egypt, andUganda), andahigh-volatility regional sub-group withvolatility levelsthat are lessthantwicethe normalized coefficientsregional average of (includingBurundi, Comoros, level volatility. COMESA countriescanbedividedintoarelatively low-volatility sub-group with The figure showsthat, inallcountries, national production volatility islarger than regional 1) orless(normalizedcoefficient lessthan1)volatile thanproduction inthe COMESA region. how muchindividualcountryproduction levelsare more (normalizedcoefficient greater than In Figure 6.9, thebarsrepresent variation, thenormalizedcoefficients of whichindicate by 7 Mauritiushasacoefficient thatismore than18timesthe regional averageof clarity. andisnotshownonthefigure forthesake (1980–2010) Figure 6.9Cereal production instabilityincountriesthecommonmarket foreastern andsouthern Africa the othercountriesinregion are lesscorrelated. potential here describedwillbegreater itsproduction whenthefluctuations andthoseof of supplies. However, thelikelihood that agivencountrywillbenefitfrom thetrade stabilization increasedthe biggestbeneficiariesof greater domestic regional trade intermsof stabilityof volatility.levels of The countries in the moderate- and high-volatility sub-groups would be Zambia, andZimbabwe). Betweenthetwogroups are Kenya andMadagascarwithmoderate

Normalized trend-corrected coefficient of variation 0 1 2 3 4 5 6 7 8 ...... 0 0 0 0 0 0 0 0 0 Chapter 6-Regional Trade Integration inEasternandSouthern Africa 162

Eswatini 7 Rwanda, Sudan,

resource bases, withlittle room forfuture specialization. countries wouldexhibit similarproduction andtrading similaritiesin their patterns because of in production andtrade withinthe region. Often, itisassumedthat neighboringdeveloping trade flows acrossand of borders. This supposes that there is sufficient scope for specialization transborder trade; thesemeasures regional wouldstimulate theexpansionsupplycapacities of potential pointedoutabovewouldrequire measures tolowerthebarriersandbiasagainst regional markets from intraregional sources. The theregional exploitation stabilization of factors behindtheselowlevels.be ahostof These supplying factorsmayraise thecostof Despite recent upward trends, intra-Africa andintraregional levelsof trade are low. There may culture regional trade expansion inagri- The scopeforspecialization and Source: Adapted from BadianeandOdjo, 2016. and southern Africa (1980–2010) Figure production correlation coefficients 6.10Distributionof betweencountriesinthecommonmarket for eastern increase cross-border trade, aquestionthat isexamined inthenext section. and foodmarkets. Butthat isonlyonecondition:theotherthat there isactualpotentialto are suchthat increased trade maybeexpected tocontributestabilizingdomesticagricultural general, production thepatterns fluctuations anddistributionof across countriesinthe region reap alarge benefitfrom increased domesticmarketregional trade stabilization. intermsof In highvolatility andweakcombination correlation of suggeststhat countriesinthisregion would thecorrelation60 percent of coefficients for anygivencountryinthebelow 0.65category. The Figure weakly 6.10showsahighconcentration correlated of countryproduction levels, with

% share of corr. coefficients 100% 20% 40% 60% 80% 0% Sh Sh a a r r e e of of c c or or r r e e l l a a t t i i on on c c oe oe f f fi fi c c i i e e n n t t s s < > 0.65 0.75 Chapter 6-Regional Trade Integration inEasternandSouthern Africa Sh a r e of c or 163 r e l a t i on c oe f fi c i e n t s b e t w

e  e n 0.65an d 0.75

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 compared countries within the region forallrelevant pairs of products ismeasured andranked. each product importanceThe or positionof isthen levelof in everycountry, therelative theproduction individualagricultural importance andtrade of of shocks. The firsttwoindicators are theproduction and export similarityindicesthrough which, between national production levelstoreduce domesticfoodmarkets thevulnerability to of for transborder trade expansion asastrategy toexploit theless-than-perfectcorrelation agricultural production andtrade. This willalsoallowustoseewhetherthere isreal scope Consequently, indicators specialization toassesstheactualdegree in weuse aseriesof of countries, thesefactors. are theinfluenceof agoodillustration of compared Sahelian totherestWest of Africa, Kenya orof compared toothereastern African as itresponds tolocaldemand. The relatively different Senegal specialization patterns of of patterns as wellother consumer preferences that affect localproduction the structure of distance to, andopportunity totrade with, distantmarkets; and(3)differences indietary accumulatedthus thelevelandstructure production of capacitiesandskills;(2)theeconomic countries. These factorsinclude:(1)differences inhistoricalinvestmentstechnologiesand There are, however, several factorsthat maylead todifferent specialization patterns amongsuch 8 SeeKoester, 1986. Source: Adapted from Badianeand Odjo, 2016. Africa, 2007–2011 Figure production patterns amongcountriesinthecommonmarket 6.11Similarityof foreastern andsouthern trade patterns, andhencescopefortransborder trade expansion intheregion. therefore, suggestthat there exists sufficient dissimilarityincurrent countryproduction and values. countrypairsfallwithinthe0–50range.The vastmajorityof The estimated index values, bar represents country pairsthat fallwithinthecorresponding index thenumberof range of indices usingFAO 150products. data fortheperiod2007–2011andcoveringatotalof Each Figures production 6.11and6.12present thecalculations andexport theresults of similarity of trade expansion. interpreted asindicating specialization patterns that are of compatible withhigherdegrees of specializationdegree betweenthetwocountries. around of Index 50andbeloware valuesof countriesbeingconsidered.the pairof theindices,The smallerthevalueof thegreater the 100,value of production whichwouldreflect ortrade completesimilarityof patterns between Number of country pairs 1 1 2 2 3 3 0 5 0 5 0 5 5 0 0 0 0 0 0 0 0 0 - 1 0 10- 2 0 20- 3 0 3 0-40 Chapter 6-Regional Trade Integration inEasternandSouthern Africa Pr 164 o d u ctio 40- n 5

0 s imila r 50-6 ity in 0 d ex 60- 8 . The indiceshaveamaximum 7 0 70-8 0 80- 9 0 90- 100

the Common Market forEasternandSouthern Africa, average 2007–2011 Table 6.9 The 20products withhighest normalizedrevealed comparative advantageindex valuesincountries scope fortrade expansion. the region. This suggeststhat countryspecialization patterns are sufficiently distincttoallow products, spread 19membercountries, across 9of accountforthehighest20indicators for reflect cross-country thedegree specialization of withinthe COMESA region. For instance, 13 All theproducts listedin Table 6.9havenormalizedRCA valuesabove0.98. The rankings tends toward 1. greater than 1andnegative otherwise. values are presented in Table 6.9. The normalizedRCA ispositiveforRCA indicators that are 70 percent haveavaluehigherthan1. The 20products withthehighestnormalizedRCA index 600 RCA indicators estimated forvariousproducts exported bydifferent COMESA countries, thecountryinexportingthe stronger theconsidered theperformanceof product. thenearly Of considered countryperformsbetter thantheworldaverage, andthat thehighervalueis, thesameproductwith that intotalworldexports. of A valuegreater than1indicates that the (Balassa, 1965) compares a given product the share in a given country’s of export basket tradeassess the degree specialization among of countries within the region. The RCA index A third indicator, the revealed comparative advantage (RCA) index, is computed to further Source: Adapted from BadianeandOdjo, 2016. 2007–2011 Figure trading patterns amongcountriesinthecommonmarket 6.12Similarityof foreastern andsouthern Africa, 9 The formulaforthenormalized RCA is(RCA-1)/(RCA+1), followingLaursen(2000). Cloves Commodity Coffee husks andskins Vanilla Vanilla Number of country pairs 1 2 3 4 5 6 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -1 0 1 0 -2 0 2 0 -3 0 3 0 -4 Chapter 6-Regional Trade Integration inEasternandSouthern Africa 0 E 9 x For veryhighRCA indicators, thenormalized value p o 4 r 0 t -5 s imilarity 0 165 5 0 index -6 0 6 0 Country Uganda Madagascar Comoros Comoros -7 0 7 0 -8 0 8 0 -9 0 9 0 -1 0 0

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 transborder trade withintheregion. countries outsidetheregion. Byredirecting suchflows, countriesshouldbeableto expand being imported (exported) byother COMESA membercountries, butinbothcases toandfrom countries. Inotherwords, somecountriesare exporting (importing) thesameproducts that are overlapping regional trade flows must, therefore, befrom different importing and exporting found inBadianeetal. (2014). cases, In thevastmajorityof theyare significantlyless than1. The TOI valuesobtainedbydividingcountry TOI valuesbythe TOI valuefortheregion canbe 25 percent for Africa aswholeandmuch21percent fortheCOMESA region. Normalized Table 6.10. Figure 6.13indicates that there isaconsiderable overlappingtrade degree flows: of The resultsTOI of and TEI calculations usingFAO trade data are presented inFigure 6.13and imports thesameproduct. (exports) of thecountry’sthe percentage of exports aproduct (imports) that of are matched bythecountry’s country bothexports andimports alltraded products byanequal amount. The TEI indicates exported oronlyimported bythecountry. Itwillbe1intheunlikely situation inwhichthe by acountry. The TOI variesbetween0and1. each individualproduct Itwillbe0if isonly where E individualproducts foracountryortheregion.of The TOI and TEI are calculated as: country ortheregion asawhole, whilethe TEI measures theoverlappingtrade flows at thelevel imports at the same time. The TOI measures the overall overlapping trade degree flows for a of trade patterns. They measurethesameproduct agivencountryexports howmuchof and are calculated to examine the potential to expand trade within the region based on current Two finalindicators, the Trade OverlapIndicator (TOI) andthe Trade Expansion Indicator (TEI), specialization inproduction agricultural andtrade products of among countrieswithinCOMESA. So far, dissimilarpatterns theanalysisinthissectionhasestablishedexistence of of Source: Adapted from BadianeandOdjo, 2016 Tea Skins, sheep, drysalted Cotton carded, combed Broad beans, horsebeans, dry Oilseeds, nes Tobacco, unmanufactured Sesame seed Cotton carded, combed Goat meat Coffee husks andskins Coffee, substitutescontainingcoffee Skins, sheep, drysalted Sesame seed Coffee husks andskins Oil essential nes Cloves ik andM ik denote the values of theexports anagricultural andimports product denotethevaluesof of Chapter 6-Regional Trade Integration inEasternandSouthern Africa 166 Rwanda Rwanda Burundi Ethiopia Ethiopia Malawi Eritrea Uganda Ethiopia Kenya Rwanda Ethiopia Ethiopia Burundi Comoros Madagascar Table 6.10 Trade expansion indicators, average 2007–2011 Note: COMESA =Common Market forEasternandSouthern Africa. Source: Adapted from BadianeandOdjo, 2016. Figure 6.13 Trade overlapindicators, average 2007–2011 scope fortransborder trade expansion intheregion. The factthat products withhigh TEI valuesalsohavehighRCA indicator valuespointstoareal the sameproducts presented inBadianeetal. (2014)are allgreater than1, except forbananas. highest TEI value for the region. The lowest indicator value in the region is 0.57. RCA values for overlapping tradebased on the degree flows. of Table 6.10 lists the20 products with the The TEI indicates whichproducts havethehighestpotentialforincreased transborder trade Waters, ice, etc. Anise, badian, fennel, coriander Cereal preparations Pineapples Cake, cottonseed Groundnuts, shelled Fruit, prepared Sugar, raw centrifugal Spices Cigarettes Juice, fruit Vegetables, preserved Sugar confectionery Beans, dry Commodity

Trade Overlap Index 0 0 0 .2 .1 .0 0 0 0 . . . 5 5 5 3 2 1 0 2 0 0 7 2 0 0 8 Chapter 6-Regional Trade Integration inEasternandSouthern Africa

A fr i c a 2 0 167 0 9 CO M E S A 2 0 1 0 TEI value 0.655 0.655 0.665 0.677 0.680 0.700 0.703 0.716 0.716 0.782 0.819 0.819 0.821 0.825 2 0 1 1

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 on intraregional trade. base year, and2025. The changeincross-border exports theimpact isusedasanindicator of the-board 10percent increase inyields. These changesare to take placebetween2008, the cross-border trade barriers (that is, a reduction equivalent to 0); and (3) an across- in their tariff 10percenta reduction trading intheoverall across of costof all theeconomy;(2)aremoval of following three different changestoexamine theirimpactsonregional setsof trade levels:(1) changes undertheremaining threeimpact of scenarios. The latter scenariosintroduce the cultivated areas, outputs, and GDP until 2025. It is used later as a reference to evaluate the assumes that current each countrymaintainsacontinuation trends of inpopulation, yields, Four different scenariosare simulated usingtheEMM. The firstisthebaselinescenario, which Model (EMM)describedinBadianeandOdjo(2016). changes areSimulations carriedout usingIFPRI’s of regional Economy-wideMultimarket trade. This sectionsimulates theimpactonregional changesinthat direction. trade flowsof measures trading tolowerthegeneral and remove costof additionalbarriers tocross-border countries. A strategy toexploit theregional stabilization potential, therefore, hastoinclude infrastructure, trade thelevelanddirection are among of majordeterminantsof African movinggoodsacross domesticandtransborderof markets, andoutwardly biasedtrading regional trade domesticmarkets toenhancetheresilience tosupplyshocks. of The highcost The preceding analysis presents evidence showing that African countries could use increased under alternative scenarios border trade andmarket volatility The outlookforregional cross- scenario that wouldcontinuethesetrends. trade flowsupto2025historicaltrendslevel andvolatility of andoutcomesunderabaseline alternative policyscenariostoboostintraregional trade, andbycomparingtheeffects onthe regionalon thevolatility foodmarkets of overthenext decade. This isdonebysimulating chapter, therefore, analyzestheoutlookforintra-trade expansion and theexpected impact beyond current levels, even with current production and trade patterns. The this remainder of These a findings point to the realexistence of potential to expand intra-trade within COMESA included, astheyrelate tore-export trade. Note: Two products withhightrade expansion indicators (TEI)butwhichare notbeingproduced intheregions are Source: Adapted from BadianeandOdjo, 2016. Orange juice, singlestrength Pepper Tobacco products Bran, wheat Bananas Cheese, wholecows’milk Chapter 6-Regional Trade Integration inEasternandSouthern Africa 168 0.566 0.578 0.586 0.586 0.592 0.604 Figure 6.14Regional exports outlook, baseline, 2008–2024 general. result insmallerchangesincentives. Cereals seemtorespond better thanotherproducts in equivalent tariffs producer constituteasmallerfraction prices;hence, of changesinbarriers and yieldsthantochangesincross-border barriers. This maybeexplained bythefactthat the baseline. Intraregional trade seemstorespond more trading tochangesinoverall costsof regional tradeof ismuchhigher, ranging from 1millionMT tomore than5millionMT above in proportional termsbut, initiallyhigherlevels, becauseof theaccumulated additionalvolume community cereals trade levelsinCOMESA tendtorespond lessthantrade inroots andtubers roots andtubers, themainfoodcrops, inresponse tochangesintrading costsandyields. Intra- MT. The results invariablyshowconsiderable increases inintraregional trade incereals andin thebarsindicate thecorrespondingand thenumbersontopof absolutechangesinthousand trade barriers, andanincrease inyields. The barsrepresent theproportional changesinpercent the baseline, whichwouldresult from areduction intotaltrading cost, transborder removal of Figure 6.15showsthecumulated changesinintraregional export levelsby2025compared to declines insomecountriesare eventuallyoutweighedbyincreases inothers. from 2019forEthiopia. The result isaU-shapedpattern inCOMESA cereals exports, asexport Ethiopia, results inrisingexports from thesecountries, starting from 2011for Tanzania and Malawi. At thesametime, fastergrowth inseveral othercountries, particularly Tanzania and continuingdeclineinexportsis aresult from of thetwomaintraditional suppliers, Egyptand regionalthe sources exports. of The fallinregional theperiod trade levelsat thebeginningof The thecereals projected evolutionof trade reflects different countrydynamicsandashift in in trade volumeswouldbereversed, butnotenoughtobringthembacktheirinitiallevels. would continuetostagnate, cereals. except inthecaseof Even inthelatter case, thedecline population, andnon-farmincomeare sustainedto2025, intra-COMESA thelevelsof trade 2008 to2025are shown in Figure 6.14. thecurrent growth rates If inyields, of cultivated areas, The results are presented inFigures 6.14and6.15. The the baselinescenariosfrom results of Source: Adapted from Badianeand Odjo, 2016

Thousand metric tons 1000 1200 1400 1600 200 400 600 800 0 2008 CE R E A LS 2010 R O O TS 2012 O TH E R

FO 2014 . Chapter 6-Regional Trade Integration inEasternandSouthern Africa OD CR O P S 2016 169 A LL STA 2018 P LE CROP S 2020 O TH E 2022 R

CR O P S 2024 M E A T

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 Figure 6.15Changesinintraregional exports by2025resulting from three costandyieldscenarios the three scenarios. the x-axis country positions to the left Theindicates of tilted distribution of compared tothebaseline. The different different dotsindicate thepositionof countriesunder exports thetrade andproductivity (y-axis) byindividualcountriesundereachof of scenarios exports by individualcountries. Figure 6.16 shows changes in volatility levels (x-axis) and shares volatility, changes inthelevelof by thecombinedeffect of cross-border aswellbyshares of intraregional changesinthelevel of direction trade volatility andmagnitudeof are determined productivity scenariowithexpected volatility levelsunderthebaseline scenario. Furthermore, the comparison is, therefore, tocontrast changesunderthetwotrade policyscenariosandthe volatility levels inthe region are expected to declinecompared tohistorical trends. A better intraregionalThe current risingvolumesof numbersalsoshowthat trends trade if continue, of historical trends. changes is,The magnitude of however, rather small across all three scenarios. seen from thenumbersintable, volatility levelsare lowerunderallscenariosthan volatility,with thehistoricallevelsof withthedifference expressed inpointchanges. As canbe (ITC, 2016). In Table 6.11, simulated volatility levels under the various scenarios are compared under historicaltrends are basedontheInternational Trade Center’s Trade Mapdatabase thealternative scenarios,in each of are reported in Table 6.11. Calculations volatility levels of cross-border volatility of tradelevels of infoodstaplestheregion underhistoricaltrends, and futurean indexexport of volatility at countryandregional levels. The historicalandsimulated Under each scenario, intraregional model-simulated quantities of exports are used to estimate alternative policyscenarios Regional market volatility under and nuts. the following crops: fruits and vegetables,include all or a subset of cotton, sugar, cocoa, coffee, tea, tobacco, spices, Note: Figures bars indicate cumulative increases on top of in regional export supply in 1,000 metric tons. Other crops Source: Adapted from BadianeandOdjo, 2016. % of baseline quantity -10 10 20 30 40 50 60 70 80 90 0 10% r 1933 e duc CE t 1077 R i on E A i LS n 5259 t r a d e c os 134 t s R O 33 O TS 165 R e m oval O 448 Chapter 6-Regional Trade Integration inEasternandSouthern Africa of TH c 170 CR E r o R 161 s O

s FO P -b S O or 633 D d e r trade 2514 A b LL STA a CR r r 1271 i O e r P s P S LE 6129 O 40 TH 10% E R 456 i

CR n c r O e 204 a P s S e i n c r op 145 yi e M l d 46 E s A T - 32

countries to changes in the level of volatility in regionalcountries tochanges inthelevelof foodmarkets. individual The thesechanges determinethecontributionof magnitudeanddirection of exports,well asinthelevelof andhenceintheshares inregional trade foreach country. patterns resulting from the simulated policy actions lead to changes in both the volatility as Only countriesthat haveexported historicallyare considered. Changes incountryproduction the scenariosare reported in Table A6.1 andpresented inFigures A6.1 to A6.3 in the Annex. The combined changes in export share and volatility for individual countries under each of Source: Adapted from BadianeandOdjo, 2016 Figure 6.16Changesincountryexport shares andvolatilitycompared tobaselinetrends Source: Adapted from BadianeandOdjo, 2016. scenarios (2008–2025) Table 6.11Changeinvolatilityintra-common market foreastern andsouthern Africa trade underalternative obstacles totransborder trade, staplecrops orraise inmembercountries. yieldsof policies that wouldreduce trading, theoverall costof eliminate administrative andregulatory that exportsvolatility underregional bymostcountrieswouldexperience alowerlevelof trend ity from historical Change involatil- Volatility index -2.0

10% r e duc -1.5 � on (1996–2012) Historical i n trend t r a 0.682 d e c os t -1.0 (2008–2025) Baseline R e trend s m Ch −0.132 h oval ar an Chapter 6-Regional Trade Integration inEasternandSouthern Africa 0.55 e g of i e n c i % n r

o p ex s -0.5 s oin (2008–2025) p reduction in -b trade costs or or ts t d 10% −0.178 e 171 r 0.505 trade b -8.0 -6.0 -4.0 -2.0 ar 0.0 2.0 4.0 6.0 r Removal of cross-bor Removal of i e 0.0 r der trade barriers s (2008–2025) 10% −0.132 i n 0.551 c r v e Ch ol a s a� an 0.5 e i - n g l ity c e r in 10% increase incrop

op yields (2008–2025) i n

ex

yi p oi p e l or n d s ts t −0.234 1.0 0.449

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 bigger picture. a particular country, asinaccuracy canlead tooveremphasis elsewhere the at theexpense of to identifykey borders in amannerthat canaccurately represent informaltrade in theextent of Monitoring allborders hasfinancialimplications; hencethere isneedfor monitoringagencies specific borders between countriesmaybehelpful. surveysof one-off be valuable. To establish solid baselinesforfuture monitoring, implementing comprehensive required. Thus, makingadeliberate effort theexisting tostrengthen initiatives could aspectsof informal trade,assessment of along-termmonitoringprogram at manyborder postsis thetradetrade data remain butmuchof unrecorded. Itwould appear that, foraquantitative A fewagenciesandsurveys in theregion havemonitored orattempted tomonitorinformal regional counterparts. evidence that COMESA memberstates are mostly trading withthird countries, rather thanwith compliance requirements, small-scaletraders andharassment intheregion. of There isalso attributable tohightrading costs, asevidencedbytariffs, NTMs, thepresence of strictborder Monetary Community (CEMAC). Intra-trade flows are stilllowinthe region, andthiscouldbe behind other continental counterparts such as ECOWAS andthe Central African Economicand bothtradeThe flowsandtrade analysisof costindicators reveals that COMESA islagging against thedesired progress, asweaker states loseouttostronger states ineach bloc. memberstates.the cooperation of The states heterogeneity alsoseemstobeworking of achieve thedesired outcomes, owingtoproblems suchasmultiplemembership, whichlimited the COMESA-SADC-EAC free trade zonein2008. The regional trade arrangements didnot operational intheSACU bloc. COMESA launchedacustomsunionin2009after accedingto arrangements, only COMESA, SADC, and SACU have FTA status, but these are only fully that collapsedintheprevious periodbeingregenerated. theestablishedregional trade Of The RECsintheESA period1994–2018sawgrowth region, inthenumberof withthose formally recognized regional communityin1992. these were inheritedfrom thecolonialera. SADCwasalsotransformed from aconference toa Eritrea in1993). We alsolearn that onlySACU achievedfullFTA andcustomsunionstatus: except forSACU andSADC(whichadmitted Namibiain1990), andIGADD(whichadmitted 1994, theregional trade almostnoneof arrangements recorded membership expansion, some RECs, forinstanceEAC andCEPGL, whichfellapart in1977and1994, respectively. Before between themselves. These conflictsledtosluggishperformanceandeventhecollapseof political rather than economic reasons, thestates had conflicts withinand asthe majority of The regional trade arrangements that existed betweenthe1960sand1993were created for cooperation ineconomic, social, andpoliticalspheres. feature among all the RECs is that their main aims converge toward regional integration and on private sectorinvolvementinpolicyformulation andimplementation. The common CBI wasestablished by 14countries in 1993as an approach toregionalism, with an emphasis IOC, whichwasfoundedin1984. SADCC, SADC, aprecursor of wasestablishedin1980. The PTA were alsojoinedbyIGADDin1986;thiswasreplaced in1996byIGAD, aswellbythe the EAC, SACU, andCEPGL groupings existed before theLPA 1980. of the The membersof created theLPA asaresult of toservetheESA region. Within thegeographic areathePTA, of those that grew outside theLPA. The PTA, whichwassupersededbyCOMESA in1994, was The RECsintheESA region canbedividedintotwocategories: thosethat fitintotheLPA, and Conclusions Chapter 6-Regional Trade Integration inEasternandSouthern Africa 172 Secretariat. COMESA. 2014. AnnualReport: Inclusive andSustainable Industrialization. Lusaka: COMESA traders trading in South Africa: A literature. review of Chinese Business Review, 11(6): 564-570 Chiliya, N., R. Masocha, andS. Zindiye. 2012. Challenges facingZimbabwean cross-border How itShouldBeSupported.” BridgesAfrica, 7(4):4-6. Brenton, P., andC. Soprano. 2018. “SmallScaleCross-border Trade Africa: Why itMatters and Discussion Paper 01667. Washington, DC:International Food Policy Research Institute. Bouët, A., L. Cosnard, andD. Laborde. 2017. Measuring Trade Integration in Africa. IFPRI Manchester School33.2:99–123. Balassa, B. 1965. “Trade Liberalisation and“Revealed” Comparative Advantage.” The Balassa, B. 1961. “Towards a EconomicIntegration” Kyklos 14.1:Theory of 1-17. Knowledge Support Systems. Washington DC. in Africa. ResilienceAnnual Trends andOutlookReport. Regional Strategic Analysis and Badiane, O., T. Makombe, andG. Bahiigwa. 2014. Promoting Agricultural Trade toEnhancing 007%2F978-3-319-28201-5 10.1007/978-3-319-28201-5_16. Chapter 16, pp. 385-412. http://link.springer.com/book/10.1 Kalkuhl etal. (eds.), Food Price Volatility andItsImplications forFood SecurityandPolicy, DOI Badiane, O., and S. Odjo. 2016. Challenges. UK:Palgrave Macmillan. Asante, S. K. B. 1997. Regionalism and Africa’s Development:Expectations, Reality and SD Publication Series. SustainableDevelopmentBureau Office of for Africa. Neighbors MozambiqueanditsNeighbors. Technical Paper No. 29. Washington, DC:USAID and Southern Africa: Kenya/Uganda Border Tanzania anditsNeighborsMalawi Ackello-Ogutu, C. 1996. MethodologiesforEstimating InformalCrossborder Trade inEastern References domesticfoodmarketsvulnerability toshocks. of to promote transborder trade wouldreduce volatility inregional markets andhelplowerthe to transborder trade. More importantly, simulation results alsosuggestthat suchpolicyactions trading,the overall costof asimilarlymodest increase incrop yields, barriers ortheremoval of contribution tocreating more resilient domesticfoodmarkets, through amodestreduction in reveal thatregional trade it is possible to significantly boost the pace of expansion, and thus its trends intraregional wouldsustainthe expansion of trade flows inthe region. The findingsalso localfoodmarkets.of The themodelingexercise results of indicate recent that continuation of suggest that itisindeedpossibletoraise cross-border trade instability toreduce thelevelof specializationpatterns inproduction agricultural of andtrade products of across countries, member countries. The distributionandcorrelation production volatility, of aswellthecurrent COMESA asameans toraise domesticfoodmarkets theresilience toshocks of across their This chapter has also examined the existing potential to use increased intraregional trade within Regional trade and volatility in staple food markets in Africa. In Chapter 6-Regional Trade Integration inEasternandSouthern Africa 173

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 http://dx.doi.org/10.1787/225770164564. Reform inSub-Saharan Africa. OECD Trade Policy Papers No. 86. Paris: OECDPublishing. Lesser, C. and E. Moisé-Leeman. 2009. InformalCross-Border Trade and Trade Facilitation from Advanced Countries, Cheltenham:Edward Elgar. Laursen, K. 2000. Trade Specialisation, Technology andEconomicGrowth: Theory andEvidence countries. IFPRI. Research Report 53. Washington DC. Koester, U. 1986. Regional cooperation toimprove foodsecurityinSouthernandEastern African Economic Journal 119:172–199. Kee, H. L., A. Nicita, andM. Olarreaga. 2009. “Estimating Trade Restrictiveness Indices.” Development Review 14(1):18–47. Jones, B. 2002. “EconomicIntegration andConvergence Per of Capita Incomein Africa.” African Index.aspx ITC. 2016. Trade Statistics forInternational BusinessDevelopmemt. https://www.trademap.org/ Internationales. Measures. Gourdon, J. 2014. CEPII NTM-MAP: A Non-tariff Tool for Assessing the Economic Impact of Africa (ReSAKSS-ECA). USAID bytheRegional Strategic Analysis andKnowledgeSupport System, EastandCentral A Methodology for Tracking Trade In Selected Staple Food Products. Nairobi: Project Report for Gelan, A., S. Gbegbelegbe, J. Wanjiku, and J. Karugia. 2010. Intra-Regional Trade inCOMESA: FSNWG. 2017. East Africa Cross-border Trade Bulletin. Nairobi: FSNWG. FEWSNET (2019). http://fews.net/fews-data/337, accessedon April, 1st, 2019. southern-africa/food-security-outlook-update/june-2015 ———. 2015. Southern Africa Food SecurityOutlookUpdate September. africa/food-security-outlook-update/september-2012 ———. 2012. East Africa Food SecurityOutlookUpdate September2012http://fews.net/east- price-watch-may-2011-food-prices FEWSNET. 2011. Price Watch –May2011Food Prices. https://reliefweb.int/report/world/global- impacts. Rome: FAO. FAO. 2017. Formalization informaltrade in of Africa. Trends, experiences andsocio-economic Community: An Action Research. EASSI, , Uganda. Women InformalCross Border Traders: Opportunities andChallengesintheEast African Eastern African Sub-regional Support Initiative forthe WomenAdvancement of (EASSI). 2012. Migration Programme (SAMP). : International Migration Research Centre (IMRC). Crush, J.2015. http://comstat.comesa.int/Home.aspx. COMTRADE, 2019. http://data.un.org/browse.aspx?d=ComTrade, accessedon April, 1 Working Paper 2014–24. Paris: Centre d’Etudes Prospectives et d’Informations Calibrating InformalCross-border Trade inSouthern Africa.Southern African Chapter 6-Regional Trade Integration inEasternandSouthern Africa 174 http://fews.net/fr/ st , 2019.

Washington, DC: World Bank. World Bank. 2019. DoingBusiness2019:Measuring Regulatory QualityandEfficiency. Bank,Development AddisAbaba,Ethiopia Trade Area About, United Nations EconomicCommission for Africa, African Union and African UNECA, 2017, Assessing Regional Integration in Africa VIII: BringingtheContinental Free ———. 2017. InformalCross Border Trade SurveyReport 17, UBOS, Kampala. ———. 2016. InformalCross Border Trade SurveyReport 2015–2016, UBOS, Kampala. ———. 2010. InformalCross Border Trade SurveyReport 2009–2010, UBOS, Kampala. UBOS, Kampala. Uganda.UBOS and Bank of 2005. Informal Cross Border Trade Survey Report 2005–2006, Development. Working paper. Nairobi: CUTS African Resource Centre. Ogalo, V.,2010. Southern Africa, Agriculture(9),1-17 (2019). Cereal Production Trends underClimate Change:Impactsand Adaptation Strategies in Nhamo, L., Matchaya, G., Mabhaudhi, T., Nhlengethwa, S., Nhemachena, C., andS. Mpandeli Policy 45 (2014):45-56. Minot, Nicholas. “Food price volatility in sub-Saharan Food Africa: Has it really increased?.” Neighbours. Technical Paper No. 90. AMEX International, Inc, USAID, Washington D.C. Minde, I., and T.O. Nakhumwa. 1998. Unrecorded Cross-border Trade BetweenMalawiandher ed., Africa now:Policies, People, Institutions.London: James CurryLtd. McCarthy, C. 1996. Regional Integration: Part theSolutionorPart of theProblem?, of inEllis, S., for EasternandSouthern Africa: USAID, Washington D.C., Technical Paper. Neighbours: Implications for Food Security. Regional Economic Development Support Office Macamo, J.L.1998. Informal Cross-Border Trade inEAC Implications forRegional Integration and Estimates of UnrecordedEstimates of Cross Border Trade betweenMozambiqueandher Chapter 6-Regional Trade Integration inEasternandSouthern Africa 175

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 Table stapleexports underalternativescenarios,A6.1 Changesinvolatilityandshare of 2008–2025 Annex Congo, MD=Madagascar, MW=Malawi, SW=Eswatini, ZB=Zambia, ZW=Zimbabwe Note: EG=Egypt, ER=Eritrea, ET=Ethiopia, KN=Kenya, LY=Libya, SD=Sudan, DRC=Democratic the Republic of Source: Adapted from Badianeand Odjo, 2016. Figure A6.1 Changesincountryexport share andvolatilityunder10%reduction intrade costscompared tobaseline Note: DRC=Democratic the Congo Republic of Source: Adapted from BadianeandOdjo, 2016.

Zimbabwe Zambia Malawi Madagascar DRC Sudan Libya Kenya Ethiopia Eswatini Eritrea Egypt -1.6 reduction in trade −0.039 −0.170 −0.107 −0.162 −0.182 −0.001 −0.002 −0.129 Change involatilitycompared tobaseline 0.007 0.006 0.052 0.075 10% cost -1.1 trade barriers cross-border Removal of Removal of −0.290 −1.464 −0.757 −1.423 −1.232 −0.020 0.037 0.081 0.005 0.043 0.001 0.071 (points) DRC s Ch M h D ar an -0.6 Z e B g i e n % Chapter 6-Regional Trade Integration inEasternandSouthern Africa i n Z

poi crop yields W ex increase in 176 p -0.543 -1.168 -0.557 -1.695 -0.730 -0.004 -0.016 -0.102 n 0.020 0.041 0.125 0.547 or 10% ts t M LY E W G -0.1 -5.0 -4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 Change inshare compared tobaseline(%points) duction in trade cost 10% re- −1.456 −0.009 −0.091 −4.669 −0.007 2.557 0.030 0.002 0.781 0.007 0.004 2.315 E T SD SW 0.4 trade barriers E cross-border R Removal of Removal of −0.918 −0.114 0.368 0.453 0.004 0.014 0.003 0.001 0.001 0.000 0.001 0.701 KN v Ch ol ati an l g i ty e

i i n n

ex p oi 0.9 p or n increase in crop yields ts t

-2.175 -0.016 -0.203 -7.018 -0.008 -0.022 4.261 0.000 0.005 0.006 0.360 1.876 10%

Figure A6.3 Changesincountryexport share andvolatilityunder10%increase incrop yieldscompared tobaseline go, MD=Madagascar, MW=Malawi, SW=Eswatini, ZB=Zambia, ZW=Zimbabwe Note: EG=Egypt, ER=Eritrea, ET=Ethiopia, KN=Kenya, LY=Libya, SD=Sudan, DRC=Democratic theCon Republic- of Source: Adapted from BadianeandOdjo, 2016. to baseline Figure cross-borderA6.2 Changesincountryexport share andvolatilityunderaremoval trade of barrierscompared Congo, MD=Madagascar, MW=Malawi, SW=Eswatini, ZB=Zambia, ZW=Zimbabwe Note: EG=Egypt, ER=Eritrea, ET=Ethiopia, KN=Kenya, LY=Libya, SD=Sudan, DRC=Democratic the Republic of Source: Adapted from Badianeand Odjo, 2016. -1.6 -1.6 Z Z B B M M D D DRC DRC -1.1 -1.1 M M W W -0.6 -0.6 s Ch s Ch Chapter 6-Regional Trade Integration inEasternandSouthern Africa h

h ar ar an an e e g g i i e e n % n % Z Z W W i i n n

poi poi ex ex p p n n or or E E ts ts G G t t 177 -0.1 -5.0 -4.0 -3.0 -2.0 -1.0 -5.0 -4.0 -3.0 -2.0 -1.0 -0.1 0.0 1.0 2.0 3.0 4.0 5.0 0.0 1.0 2.0 3.0 4.0 5.0 LY LY E E E E T T R R SD SD SW SW 0.4 0.4 KN KN v v Ch Ch ol ol ati ati an an l l g g i i ty ty e e

i i i i n n n n

ex

ex p p oi oi p p 0.9 0.9 or n or n ts ts t t

Africa Agriculture Trade Monitor / Report 2019 Africa Agriculture Trade Monitor / Report 2019 changes observed in China and the United States after April 2019. The chapter further clarifies However, total African exports toChinawould fallunderascenariothat reflects thetariff under ascenariobasedon thechangesintariffs observed from January 2018to April 2019. Clearly, African countriescould increase theirexports toboththeUnitedStates andChina model, thechapter findsthat thetrade theimpacton war. Africadependsontheintensityof 5 focusedonthetrade warbetweentheUnited States andChina. Usingaglobaleconomic Assessing thelikely emerging effects protectionist of threats on Africa’s worldtrade, Chapter exports is mainly driven by non-African demand for unprocessed and semi-processed products. is decliningincoffee andgrapes. The chapterindicates that theincrease in African agricultural some valuechains, suchassesameseedsandlegumespulses, butcomparative advantage or semi-processed products and notinprocessed products. Competitiveness isveryhighin UMA,than that of CEMAC, orECCAS. The continentisgenerally competitiveinunprocessed years. This trend ECOWAS, mainlyreflects theperformanceof SADC, and COMESA rather showing that Africa’s comparative advantageinagriculture hasstrengthened inveryrecent competitivenessin keyChapter 4examined commodityvaluechains in theevolutionof Africa, and ECCAS theleast introverted. extraverted, finding SADC, ECOWAS, ECA and COMESA to be the most introverted, and AMU Asian counterparts. Chapter3confirmsthat Africa’s agricultural trade ismore introverted than same REC isrelatively high. As a result, African RECs face lengthier times to export than their the in intra-African NTMsfacedinaRECandimposedbycountriesof trade andtheextent of port infrastructure, isbelowtheworldaverage levelsacross allRECs. Strikingly, NTMsabound the-border barrierstotrade. tradeThe andtransport-related qualityof infrastructure, including boosted intraregional trade duetodeficientinfrastructure, costlyNTMs andimplicitbehind- perspective, that is, at the REC level. Across all RECs, low applied tariffs have not significantly These findingsare confirmedinChapter3, whichinvestigated Africa’s trade from aregional relatively low. integration, withadministrative barriers playing an important role, barriers are whiletariff concludes that measures non-tariff (NTMs)are themainobstacletoimproving Africa’s trade lowerGDPlevelsin poorintegrationAfrica. butalso(andespecially)of not onlyof The chapter economic activity, and other factors. The low intra-African trade share is therefore theresult intraregionalof trade intotaltrade dependsnotonlyontrade barriers, butalsoongeography, that African trade ismore introverted thanextraverted. Chapter2demonstrates that theshare compared withotherregions, intra-African trade thelevelof appears relatively high, meaning intraregional trade in Africa isadmittedly lowasaproportion totaltrade, of especiallywhen relatively products, smallnumberof generally raw orsemi-processed commodities. Although theworld.with therest of African trade ischaracterized exports byahighconcentration ina of trends are linked tothefastpopulation andeconomicgrowth rates in Africa ascompared in globalagricultural GDPhasbeenincreasing since1995, asshowninChapter2. These Africa’s agricultural trade deficithasbeendecliningsince2012, andthecontinent’s share trade among African countries. findings and recommends policyactionsthat couldimprove regional integration andboost emergingperformance inthecontext protectionism. of This chaptersummarizesmajor trade, broader andevaluated integration thepotentialimpactof onthecontinent’s trade effective regional trade arrangements havebeeninboostingintegration andintra-African This 2019 AATM Africa’s hasassessedtheperformanceof agricultural trade, explored how Summary andconclusions 178 reduction. trade integration,success intermsof economicactivity, growth of development, andpoverty investment inreform willnewregional integration initiatives, suchasthe AfCFTA or TFTA, bea cost created byNTMsandthuslead toeasier andmore efficient implementation. Onlywith crucial tomake rulesandprocedures more transparent oncustomswebsitestoreduce the origin,harmonizing therulesof standards, andproduct normsacross different RECs. Itisalso but will require ambitious reforms barriers by non-tariff such as addressing the issue of In sum, strengthening regional integration in Africa canbringconsiderable economicbenefits to theCOMESA-SADC-EAC free trade zonein2008. fully operational intheSACU bloc. COMESA launched acustomsunionin2009after acceding regional trade arrangements, only COMESA, SADC, and SACU have FTA status, and this is only grew, withthose that collapsedintheprevious periodbeingregenerated. theestablished Of in 1977and1994, respectively. From 1994to2018, RECsintheESA region thenumberof someRECs,performance andeventhecollapseof notablyEAC andCEPGL, whichfellapart thestates facedconflictswithinandamongthemselves.of These conflictsledtosluggish between the1960sand1993were created forpoliticalrather thaneconomicreasons, asmost region. The chapterindicates that theregional trade arrangements that existed intheregion Chapter 6focusedonregional integration experiences intheEasternandSouthern Africa challenge tomultilateralism from thenewprotectionist USpolicy. because, inadditiontothetrade disputebetweenChinaand theUnitedStates, there isaclear increase. Deeperintegration within Africa wouldbeparticularly important inthisscenario fall significantly, with SACU the mostaffected region, although intra-continental trade would Furthermore, theworldwere tobecomemore much of protectionist, if African exports would regional integration, suchastherecently signed African continentalfree trade agreement. thecontinentadoptsaproactive strategyAfrica couldbeamplifiedif that includesdeeper thenewopportunities intheUSandChinesemarkets.of More interestingly, thegainsfor that developing countries outside Africa (mainly Asia) are likely to be the main beneficiaries 179 SUMMARYCONCLUSIONS AND

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