Articles for Trade Policy

Effective implementation of the Border Management Authority for better trade

Posted: 25-Mar-2021

South Africa is embarking on a journey of a centralised border authority. See what Siwapiwe Madubela and Lauralyn Kaziboni think this could mean for trade in South Africa Read Article

Understanding the (+ve and -ve) Effects of the Temporary Bans on Alcohol Sales in South Africa

Posted: 18-Feb-2021

The temporary alcohol bans in South Africa has resulted in great controversy. The country has undergone three bans on the sale, dispensing, distribution and transportation of liquor since March 2020, equivalent to 15 weeks of zero sales. This article explores the costs and benefits associated with the alcohol sales bans, specifically looking at the health and economic aspects. Such a discussion is critical given the known social and health harms associated with alcohol consumption and the industry’s significant contribution towards revenue, jobs, and gross domestic product. Read Article

Unpacking South Africa’s GDP and employment stats for early to mid-2020

Posted: 24-Nov-2020

Statistics South Africa (Stats SA), the country’s official provider of national statistics, is tasked with producing reliable data on a regular basis. The COVID-19 pandemic, and the related lockdown measures, have caused a severe economic contraction in 2020, but have also resulted in confusion over the degree of the pain felt by the real economy in the second and third quarters of 2020. This note briefly unpacks the method employed by Stats SA to estimate the reported changes in GDP and unemployment to better understand how the statistics office has arrived at these GDP and employment numbers. Read Article

Using Yearly Data for Responsible Forecasting: The Impact of COVID-19 on Real GDP and Employment in South Africa [Part 1 of 2]

Posted: 12-Aug-2020

Modelling macroeconomic trends across many African countries is extremely challenging, given the lack of up-to-date data available for public use. This modelling challenge is exacerbated by the uncertainty surrounding the magnitude of the economic impact of COVID-19. Instead of not modelling with this limited data, I believe that there is room to model innovatively and responsibly by creating a hybrid forecasting model that relies on a mixture of yearly data and literature. This model suggests that, in the worst-case, South African real GDP will decline by as much as 8% in 2020, and roughly 1.2 million jobs will be shed. These estimates from this model fare well in comparison to more sophisticated forecast models, making them integral tools for development economists wanting to understand the trajectory of other African economies with limited data availability. Read Article

What impact do import tariffs have on the domestic market – the South African poultry experience?

Posted: 09-Jul-2020

In November 2019, the Department of Trade, Industry and Competition (DTIC) published the Poultry Master Plan. The Plan is South Africa’s latest effort to revive the poultry sector and outlines the specific actions that are needed to stimulate local demand, boost poultry sector exports, and protect the local industry. Whilst there are many tools available to the DTIC to improve the functioning of the sector, this blog focuses on the use of import tariffs. The blog considers the impact of an import tariff on the domestic market in respect of consumers, producers, and government. Read Article

South Africa’s Battle with COVID-19, what has happened and what is next?

Posted: 21-Apr-2020

The COVID-19 pandemic is global, highly infectious, and deadly. The crisis is largely unprecedented, at least in living memory and most governments, including the South African government, have been caught woefully unprepared. South Africa is in a state of lockdown, which has already been extended once at the time of writing (21 April 2020). The South African response has been commendable, and the data seem to show that the lockdown has reduced the spread of the virus. This is a positive first step, and we should take heart from it, but it is hardly the end. The COVID-19 pandemic is a problem with many moving parts, and in a globalised world, South Africa cannot move them alone. What is next for South Africa? Read Article

A Scenario Analysis for Covid-19 in South Africa

Posted: 16-Mar-2020

COVID-19, better known as the coronavirus, is a highly infectious and deadly disease. It is spreading rapidly across the world, taking its toll on the global economy and leaving thousands dead. The pandemic has spread to South Africa, but what does this mean for the country? What can we expect from the virus going forward? Can we contain it and why should we try? By looking at the virus' spread across the globe, we try to provide some answers Read Article

Understanding the Policy Position of the South African Reserve Bank- A Structuralist Trilemma

Posted: 16-Aug-2019

There is much debate surrounding the mandate of the South African Reserve Bank (SARB). This arises when focusing on the trade-off that the SARB faces in terms of either stabilizing inflation, or growing output in the short term. This blog looks to expand on the understanding of this trade-off, by looking at how changes in SARB policy might influence income distribution. Read Article

PREPARING JOBS FOR TECHNOLOGICAL ADVANCEMENTS

Posted: 05-Dec-2019

Digitalisation has undoubtedly created new industries accompanied by unique job opportunities. However, technologies such as robotics and artificial intelligence (AI) are rendering a significant proportion of the existing jobs obsolete. This blog discusses the potential impact of technology on certain high risk jobs, and suggests a public-private sector approach to maxisimising the opportunities brought about by digitalisation. Read Article

Unbundling Eskom – A silver or lead bullet?

Posted: 31-Jul-2019

The recent plan by the government of South Africa to unbundle the state electricity provider into three arms - Generation, Transmission and Distribution - has raised various questions. One of the more important question pertains to how the R400 billion debt will influence the unbundling. This article draws on international experiences as a way of preempting which outcomes (both negative and positive) the unbundling will result in, taking into account Eskom's performance over time. While our analysis is not definitive, it does infer that in order to minimise the negative externalities, and maximise the positive gains from unbundling, there is need for government to have a well-considered action plan that balances the interests of the private and public sector. Read Article

Informal settlement dwellers take matters into their own hands

Posted: 26-Sep-2018

Recently, formal institutions and services have begun to emerge in townships, usually through mall-style retail spaces.This has included many financial sector institutions.In doing so, it was expected that the close proximity of banks would lead to an uptake of financial services from the unbanked population based in informal settlements with close proximity to townships. However, the available evidence suggests that this has not occurred, and a number of regulatory barriers have been identified as rendering the use of formal institutions prohibitive for the poor. Read Article

Who is brewing my tea – tea brokers and dominant tea processors?

Posted: 05-Apr-2018

The Kenyan and South African tea cases show that although competition adjudications are made to protect and promote fair competition among companies, competition authorities also protect and promote fair price setting for the benefit of consumers. Consumers should be protected from paying excessive prices for inferior goods, and should be given the freedom to choose from multiple, high quality and innovative products.

What is fair SACU customs compensation to the BLNS?

Posted: 15-May-2017

There has been slow progress in SACU negotiations, with possible changes to the revenue sharing formula a sticking point. In this context, the "fairness” of the current formula used to distribute SACU’s customs collections is examined. The brief, high level, analysis suggests that the compensation the BLNS receive for loss of tariff policy independence is much larger than what could be considered "fair”. Acceding to this argument may be in the BLNS’ best interest if they wish to have greater influence in SACU’s trade and industrial policy in future.

Preparing for the Continental Free Trade Area negotiations – what can we learn from economics?

Posted: 08-Nov-2016

In our work on trade and regional integration, DNA Economics regularly meets with trade negotiators and other interested parties. Based on these discussions, our overall sense is that progress towards the CFTA has been slow, and most countries remain unprepared for the up-coming negotiation process. This bodes badly for the likely outcome of the CFTA negotiations. What more can regional trade negotiators do to prepare for these engagements and contribute towards a positive and meaningful agreement?  And what lessons can we draw from our study of economics which may assist countries in these negotiations.

Should South Africa be concerned about Brexit?

Posted: 11-May-2016

The world is a turbulent place; ripples from ‘events’ in one country can have destabilising effects on other countries and people. The decision by the UK to leave the EU (‘Brexit’) is a case in point. The shock-waves are likely to extend well beyond the British Isles. But is it something that South Africans should worry about in advance? Read Article

Should Nigeria, instead of South Africa, be Africa’s representative?

Posted: 06-Jun-2014

On 6 April 2014, Nigeria replaced South Africa as the largest economy in Africa in terms of Gross Domestic Product. However, many analysts argue that such claims do no harm to South Africa’s status within and outside of the continent. South African GDP per capita is more than twice that of Nigeria; and South Africa has superior infrastructure, a more sophisticated financial sector, and even better social indicators. Nonetheless, the Nigerian economy has been growing faster than the South African economy over the past 5 years and has attracted more foreign direct investment. This must have geo-political ramifications for the African continent. Together, Nigeria and South Africa can work collaboratively to represent Africa (and other emerging countries) in multilateral institutions. But in those institutions (e.g. G20) that have just one African representative, it is no longer certain that South Africa can lay claim to this seat. Read Article

Humbled by the data

Posted: 05-Nov-2014

Roman Grynberg’s most recent diatribe in the Mail and Guardian demands a response. His main point seems to be that South Africa depends on its exports to Botswana, Lesotho, Namibia and Swaziland (BLNS) to fund its trade deficit with the rest of the world and for this reason it is prepared to go to extreme lengths to hide its trade data and pay-off the BLNS through the SACU revenue sharing agreement. Read Article

Making SACU work for trade

Posted: October 07, 2013

One of the fundamental reasons for the creation of a customs union is to facilitate intra-union trade, specifically through the removal of border controls on goods between member countries. The removal of border posts not only facilitates trade but can catalyse the development of regional value chains and unlock new industries as the costs of transport and logistics fall. The oldest customs union in the world, SACU, has nevertheless made no progress in dismantling border controls between its member countries over a period of 100 years. To the contrary, national customs authorities are currently investing in strengthening existing facilities and procedures to the detriment of both freight and people. SACU’s ambition should not be to establish more effective internal border posts; it should be to eradicate them in their entirety. This blog describes how this might be done. Read Article

Identifying the offensive interests of African countries in services negotiations

Posted: October 07, 2013

As tariffs on goods become less onerous, trade negotiators have shifted their attention to the services sector, where international trade is growing rapidly and barriers to trade are much more complex. Whereas the interests of developed countries in services negotiations are usually substantive and clear, it has been much more difficult to identify how developing and least developed countries (LDCs) might benefit from a more open services environment. DNA Economics was commissioned by the iDEAS Centre in Geneva (link here) to identify the potential offensive (export) interests of African LDCs across the services sector and to assess how they might make the most of a recent WTO concession in this area. The results are not encouraging. Read Article

Ten truths about tariffs

Posted: April 22, 2013

One of the consequences of the global financial crisis and the resulting slowdown in economic growth has been a rise in protectionism. Prospects for export-led growth have diminished and countries are desperately looking to safeguard what they have left. Import duties, which seemed destined for the WTO waste-bin five years ago, are once again emerging as a policy option of choice. Whereas the benefits to specific firms from increased tariff protection are clear, the wider economic impact of tariff decisions are often misunderstood and easily neglected. Before leaping to the protection of an individual applicant, the following ten truths should be borne in mind by trade policy makers.Read Article

The myth of South Africa's manufactured exports

Posted: June 22, 2012

It has become accepted wisdom and the mantra of politicians and economists alike that South Africa exports truck-loads of manufactured goods to the rest of the continent. From Government Ministers (including those responsible for trade), the National Planning Commission as well as the research units of South Africa's leading Banks, we learn that Africa accounts for a large and rapidly rising chunk of our value-added exports. But has anyone actually done the maths?

According to trade data published by the South African Revenue Services, these claims seem true. South Africa's exports to the continent (beyond SACU) have increased quickly to more than R108 billion in 2011. A disproportionate share of these exports (in excess of 65% in 2011) is accounted for by secondary and manufactured goods. So, at a superficial level, the numbers seem to hold up. It is however always dangerous to take trade data at face value and greater introspection might be required before making broad policy pronouncements.

Why Greece doesn't matter...and does.

Posted: February 23, 2012

Following a second bailout of Greece earlier this week, the likelihood of immediate default and contagion effects have diminished in the short-term, though the EU region's structural debt problems along with the possibility of a future default remain. The Greek (and EU) debt crisis will have a significant impact on South Africa's economic prospects through various different channels.  Most directly, South African exports to Greece are likely to suffer.  But does this really matter?  Read Article

Tripartite FTA: does it make economic sense?

Posted: June 13, 2011

Heads of state from COMESA, the EAC and SADC met on 12 June 2011 to launch a substantive programme to harmonize the trade arrangements amongst the three regional economic communities (RECs), with a view to establishing a single Free Trade Area (FTA) encompassing all member states by 2013.  

The objectives of the 'Tripartite' integration process are necessarily ambitious and the planned FTA is an important first step in bringing large parts of Africa together into a sizeable economic and trading area.  But there are a number of practical building blocks that need to be put in place for such an arrangement to work; and a number of pre-conditions that need to be met for it to make economic sense.   Read Article

2011 AGOA Forum: Assessing the impact of AGOA

Posted: May 11, 2011

The 2011 AGOA Forum will be held in Lusaka, Zambia, on June 9^th and 10^th. This year's event marks the 10^th anniversary of the AGOA Forum and is an opportune time to reflect on the impact that AGOA has had over the past decade.

AGOA was launched in 2000 as the U.S's flagship Africa trade initiative, offering duty-free access for over 7,000 products from eligible African countries to the U.S. market. At face value, AGOA seems to offer extreme advantages to African exporters, and much noise has been made about its intent. What then has AGOA actually achieved over this period?Read Article

Making a meal out of food prices

Posted: July 16, 2009

There has been much comment, recently, about the pricing of foodstuff in South Africa.  Government has launched various investigations yet the reasons for the high cost of basic foods, relative to other parts of the world, remains largely unexplained.  Strangely - no-one seems to have mentioned the fact that Government policy, in the form of high customs duties on many agricultural goods, may be a contributing factor.  Read Article

Some more New Year's wishes

Posted: February 19, 2008

(and previously published as part of their Geekonomics column in the Business Day)

The Geeks begin this year as they did the last two - with some economic policy wishes for the next 12 months. We hope that the new ANC leadership is listening because the last lot paid us scant attention. Despite our monthly commentary and advice there has been virtually no progress on any of the issues raised in our previous two wish lists. To aid the reader and make our own task that much easier, let's recap.Read Article

Talking about trade

Posted: December 03, 2007

(and previously published as part of their Geekonomics column in the Business Day)

The Ministers of Finance and of Trade and Industry have started a surprisingly and refreshingly public discussion about trade and industrial policy.

In his budget presentation to Parliament the Minister of Finance cut to the heart of the issue by posing the key question: how can trade and industrial policies best promote the global competitiveness of South African companies, thereby increasing overall economic growth and job creation. Read Article

How does Rural-Urban Migration Influence the Risk of Depression?

Posted: 12-Apr-2021

Rural-urban migration is an integral component of the development process. While it is important to understand the factors driving the mobility of people, exploring the consequences of this mobility are equally, if not more, crucial. While rural-urban migration is often associated with improved economic opportunities, the migration process may also present new mental health risks. These risks are often introduced through prolonged periods of elevated stress, isolation, and loneliness. The following blog reflects on the impact of rural-urban migration on the mental health of the sampled South African migrant group. Read Article