Regional Trade Integration, Economic Growth and Poverty Reduction in Southern Africa

8 Conclusions and policy recommendations

8 Conclusionsandpolicyrecommendations MosesTekere Conclusions The main conclusion of the study is that the SADC region has recorded impressive growth in its trade and economy in general over the past decade. However, its linkage between trade liberalisation and growth and poverty reduction is not automatic, but multiple, complex and indirect. Accordingly, three sets of conclusions are drawn from the findings:„ The SADC FTA has had no significant impact on poverty eradication.„ The SADC FTA has had a direct and indirect positive impact on poverty eradication.„ There are more challenges related to income distribution. TheSADCFTAhashadnosignificantimpactonpovertyeradication First, more trade is associated with lower levels of poverty, as evidenced by Malawi and Mozambique, which experienced both increasing trade and a reduction in poverty between 2000 and 2008. While between 1990 and 2000, Zambia and Malawi experienced an increase in the poverty rate and a decrease in trade, between 2000 and 2008 the reverse situation was true, mainly due to other factors like good economic governance and high economic growth resulting from an upsurge in commodity exports. So, the evidence from these countries also supports the notion that more trade is positively associated with poverty reduction, while less trade is associated with higher levels of poverty. The unanswered question that arises from this study is the link between the level of trade and povertyreducing products. 250 REGIONAL TRADE INTEGRATION, ECONOMIC GROWTH AND POVERTY REDUCTION IN SOUTHERN AFRICA Second, countries implementing the SADC FTA have excluded sensitive products from tariff liberalisation. These are dominated by agricultural products, thus limiting the impact on poverty reduction. Primary data evidence proves that the countries protected sectors with national development interests and opened up sectors that benefit consumers and local producers. As the countries have high internal tariffs on agricultural products , there is fear arising from the study of increasing poverty, given the supply-side constraints within the region. There is no clear link between trade liberalisation and poverty eradication per se. Trade liberalisation was not designed for poverty reduction, as products that reduce poverty, for example maize, are not liberalised in the 85 per cent substantially all trade, but reserved in most countries as sensitive products. There is no complete and free maize trade liberalisation in the SADC region, as countries still invoke export bans on maize, even though maize is the key poverty-reducing product consumed in the region. TheSADCFTAhashadadirectandindirectpositiveimpactonpovertyeradication Notwithstanding the lack of liberalisation on the maize trade, the FTA has impacted positively on poverty reduction, as the inflow of foodstuffs has increased within SADC, particularly from South Africa. Specifically, perceptions as regards poverty levels are that poverty has reduced in the region during the period 2000 to 2008; however, the extent of reduction should show a correlation with the country’s involvement in the SADC FTA for the study to conclude that the FTA has had a significant impact on poverty eradication. There appears to be a positive relationship between trade, growth and poverty reduction, which would need to be proved from primary data collected , particularly growth in investment, infrastructure and employment. If a positive link between the change in trade volume and growth rates can be established through the data analysis, then a conclusion and strategies can be drawn on the study linking trade liberalisation to poverty eradication . This should be a matter of concern to policy makers in the nations and the region. Careful country intervention, such as the fertiliser subsidy initiatives the Malawian government has undertaken in the tobacco, maize and cotton sectors, would ensure that the benefits of the FTA trickle down to CONCLUSIONS AND POLICY RECOMMENDATIONS 251 the poor. New indirect opportunities for poverty reduction are arising, even within agriculture, particularly in untapped agricultural potential for biofuels in Angola and Mozambique. There is evidence in the study that growth in both subsistence and commercial agriculture has a greater impact on poverty reduction than growth in other industries, as most of the poor are involved in agricultural production. Regardless of the findings, the country studies present a much more complex picture of the changes that trade liberalisation is likely to trigger and of the resulting consequences. It seems that the effects on the poor may be country and situation specific, and require a strong social welfare environment to ensure that the majority of the poor benefit. Although the SADC Trade Protocol (TP) is being implemented in the region, there is a big knowledge gap requiring publicity on the implementation of...