SADC Trade: Challenges and Opportunities to the Regional Countries

Intra-SADC trade remains very low despite the shift in the focus of the regional body from being driven mainly by political objectives to a position where economic imperatives are accorded greater weight. By calculating the revealed comparative advantage indices for the regional countries, results from this paper suggest that relative competitiveness, to a larger extent, explains the pattern of trade within the region. The revealed structure of trade also shows that for the majority of the countries in the region, there is limited scope to move into the production of high value-added products by way of vertically diversifying their exports. Export supply capacities constraints are a major limiting factor for the smaller countries to exploit possible niche markets. The very fact that pockets of opportunities cannot be taken advantage of, due to supply constraints, the capacity of the smaller regional countries to generate foreign currency required to increase trade is also limited. Therefore increasing intra-SADC trade requires more than just eliminating trade barriers but also an improvement in the investment climate that will in turn boost production activities. However, greater efforts at liberalisation and the harmonisation of trade policies may result in a more efficient allocation of investment and better prospects for increased trade.