As South Africans celebrated the Olympic triumph of Botswana’s Letsile Tebogo, tensions continued to rise between the two countries over trade matters.
Since June, Gaborone has imposed a unilateral ban on South African citrus produce, citing the need to grow its own domestic industry. On the face of it, it may seem an unprecedented move, but there is nothing new about it.
Currently, there are restrictions on South African vegetables, in place since 2021. This is part of a growing trend, all while the continent is pushing for ever-freer movement of goods under the umbrella of the African Continental Free Trade Agreement (AfCFTA), in addition to the Southern African Customs Union (Sacu).
Botswana might have a point when we look at the trade data between the two neighbours over the past five years. Citrus exports to Botswana by SA grew from R33-million a year in 2018 to R51.92-million last year.
Still, it might seem as though Botswana’s government is merely picking on its larger neighbour, and doing so in an election year on the home front. But such a move would be unnecessary and counterproductive for Gaborone, as South Africa stands as a key investor and has never directly provoked the 2.6-million citizen nation, many of whom have relatives across the border.
Looking at the data even more closely reveals why South Africa has been on the receiving end of the ban.
While South Africa sent nearly R52-million worth of citrus to Botswana in 2023, the country had total citrus imports worth R53.3-million.
This means the smaller country’s citrus products are drawn mainly from South Africa, indeed up to 97%.
Even in tonnage, South Africa’s citrus exports to Botswana have moved from 4,686 tonnes to 7,919, nearly double the total since the start of the Covid-19 pandemic. This should come as no surprise, as SA is the world’s second-largest citrus exporter, only behind Spain.
South African options
What should South Africa’s response to all this be? So far, the government has been silent on the matter, while seeking consultation with Botswana. Essentially, it has four options.
Pretoria could simply do nothing. As a $400-billion economy, a few million lost in trade to Botswana – whose own GDP is only around $20-billion – makes little difference to its annual overhead (though certainly not for the farmers who have toiled all season), and alternative markets can be sought elsewhere.
Botswana: A Hidden Gem Of Africa
A second option would be to take the matter to the World Trade Organization (WTO) as a contravention of the most favoured nation principle, among others.
Third, South Africa could retaliate with tariffs of its own.
Certainly, by Botswana’s logic, there are several products in which it enjoys a wide and growing surplus of its own within the agricultural sector, notably in livestock trade. Indeed, it is a regional powerhouse in that respect.
Between 2019 and 2023, South Africa exported between R2.7-million and R67.5-million worth of livestock to Botswana. By comparison, Botswana-sourced livestock exports to South Africa ranged between R652.8-million (2020) and R1.6-billion (in 2022).
Should South Africa use this as a pretext to introduce its own ban on Botswana livestock? Of course not, that would be detrimental to all involved.
A fourth option is to use Botswana’s grievance – no doubt fuelled by the political mood in that country as it heads for elections in October – to open up a fulsome review of the state of bilateral trade between the two countries (and their other neighbours) within Sacu.
Most notably, Botswana and Namibia’s diamond-dependent economies are undergoing strains unlike anything seen since their respective periods of independence.
The popularity of lab-grown diamonds, alongside an early 2024 decision by the G7 to ban Russian diamonds without clarity on how origins will be determined (and thus clear Botswana in an efficient and equitable way), have contributed to a potential decline in one of Africa’s most stable and prosperous economies.
Already, the IMF’s projections have revised the country’s 2024 growth rate from 5.5% to 2.4% – a still-enviable rate by South African standards, but one markedly down by Botswana’s.
Stress tests
The present tiff is a canary in the coalmine for the future of intra-African trade. As the continent pursues deepened integration through AfCFTA, it will undergo similar and bigger stress tests not only in the sub-region, but across the wider landscape.
Indeed, there was a border closure between the DRC and Zambia within the same week over somewhat similar reasons (unlike South Africa, Zambia took advantage of its neighbour’s near-landlocked circumstances and drove a hard bargain).
Overall, agriculture has always been the Achilles’ heel of free trade and customs union arrangements the world over, from the North American Free Trade Agreement/United States-Mexico-Canada Agreement to the WTO itself.
Somewhat surprisingly, despite forward thinking on challenges brought by climate change, the latest review round of Sacu (2023) has been silent on the bilateral challenges between South Africa and two of its neighbours which have been on display since at least 2021. The next review will be only in six years’ time.
Still, measures have been introduced which can be adapted to the Sacu region. There is merit in agricultural economist Wandile Sihlobo’s proposal of a coordinated production cycle, and classification of products which constitute threats to national security under the Sacu agreement’s Article 18(2)(f).
Additionally, a European Union-style common agricultural policy (CAP) arrangement may be worth exploring for common products to shield farmers from market forces unleashed by free trade and achieve fairer trade.
Essentially, it would be an expansion of Sacu’s already existing revenue-sharing mechanism, this time to subsidise farmers in both countries and share profits.
For both micro- and macroeconomic reasons, farmer support is badly needed across both countries and their neighbours. A pooled, targeted subsidy would be a form of investment in regional food security.
