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Opinion - Economic benefits, challenges of free movement

2023-03-01  Josef Kefas Sheehama

Opinion - Economic benefits, challenges of free movement

The agreement between the Namibia and Botswana governments to launch the use of national identity cards as travel documents has been seen as a significant milestone in the relationship between the two nations.

Both Namibia and Botswana are among the safest countries in Africa. 

The Kalahari Desert covers a sizable chunk of territory of both countries with savannahs, wetlands, deserts, and saltpans among the much larger diversity of landscapes found in both, making the neighbours tourist favourites. However, I think Namibia has more diversity. Namibia not only has world-class wildlife parks, but also Tiras Mountains, Spitzkoppe, Fish River Canyon and Skeleton Coast. And don’t forget Swakopmund has beaches and plenty of adventure activities. 

Furthermore, Namibia and Botswana once had a border dispute in 1992 because of the uninhabited Sedudu Island (known as Kasikili Island in Namibia). In December 1999, the International Court of Justice (ICJ) declared that Botswana was the rightful owner of the island. In terms of infrastructure, Namibia is slightly ahead of Botswana as the roads are better and there are more restaurants, supermarkets, hotels, and hostels. Therefore, both Namibia and Botswana offer a great variety of activities and, more importantly, is much easier and more enjoyable to travel independently. The signed agreement is expected to bring about significant progress in the development of both Namibia and Botswana, as they work together to achieve their mutual goals.

It is beyond any doubt that the launching of national identity cards as travel documents implied a very important step forward in the long process towards regional integration, not only when seen from an economic point of view, but also politically. The potential benefits of increased movement between Namibia and Botswana cannot be overstated. What is more, free movement between these two states can attenuate some of the major challenges that Namibia and Botswana labour markets face. 

It can plug skills gaps, while enabling them to fix skills mismatches in their labour markets. With more people able to move freely, business can much more easily find the necessary talent and skills that they need; this is critical to driving productivity, which in turn, has an impact on the economic growth. President Hage Geingob said the move is a key step towards integration among countries of the Southern African Development Community (SADC), and ultimately the entire continent. The Botswana president, Mokgweetsi Masisi said introducing the use of identity documents for travel is necessary to foster unity between the two neighbours and other southern African states. Furthermore, Masisi revealed that the authorisation of the use of national identity documents to cross national borders is a clear demonstration to foster social cohesion among citizens, as well as enhance regional cooperation and integration.

Moreover, despite the benefits, free movement brings its own challenges such as the fears over possible job losses and dampening of wages for local workers. In addition, while remittances are of significant benefit to country of origin, concerns over brain drain and the consequent loss of working-age individuals persist. The potential increase of violent incidents driven by xenophobia as well as the countries’ mounting security threats such as Botswana’s adopted shoot-to-kill strategy in 2013 as a measure to curb the mass slaughter of wildlife in the country is another concern. The case of the Nchindo family should be addressed. Therefore, the security challenges cannot be addressed in isolation, but as the result of a collective effort.

Going forward, the gross domestic product (GDP) in Botswana was worth US$17.61 billion in 2021, according to the World Bank. Furthermore, the GDP in Namibia was worth US$12.31 billion in 2021. In 2020, Namibia exported $498 million to Botswana whilst Botswana exported $64.9 million to Namibia. Therefore, in the last 20 years, the exports of Botswana to Namibia have increased at an annual rate of 12.9%, from $5.7 million in 2000 to $64.9 million in 2020. For Namibia, a country that aspires to become industrialised, prosperous, and economically competitive by 2030, there is a need to consider the contribution of free movement between these states. We cannot overrule a competitive advantage between Namibia and Botswana. Hence, in an economic model, a comparative advantage over others in producing a particular good if they can produce that good at a lower relative opportunity cost, at a lower relative marginal cost prior to trade is crucial.

 

It is important to note that the free movement amongst Africans will significantly increase intra-African trade. These developments will indeed have important implications for the competitiveness and growth prospects of the African market. The African Continental Free Trade Area (AfCFTA) agreement is the first step to realise free movement. The implementation of the AfCFTA is viewed as a catalyst for long-term continental prosperity and integration. The adoption for national IDs shows that the countries are highly knowledgeable on the role of integrating free movement in Africa for economic development that include, enhancing currency stability, reduction of financial risks, reduction of transaction cost, reduction of exchange rate fluctuation, enhancing price transparency and reduction of inflation that impact on trade within the region. 

The reduced barriers to cross-border trade and investment are likely to encourage more and more small and medium-sized companies which have traditionally been active only in the domestic market to enter the markets of the neighbouring countries. These microeconomic factors are likely to contribute to improved competition and resource allocation within the African market. We need to trade among ourselves. Movements of capital and goods go together. The importance of a free movement is highlighted in the African Union decision to consider it for the entire continent. This is because a free trade will aid the realisation of the objectives of the AfCFTA. There is a need to put into place a mechanism of implementing the free trade integration in all 54 states.

To that end, it requires plenty of energy, patience and political leadership. It goes hand in hand with various doubts, disagreements and setbacks. However, the objectives of the integration, the improvement of competitiveness and greater prosperity is not only between Namibia and Botswana, but also in Africa, as well as joint control over the domination of market forces.

As a longer-term vision, one should see African integration as a step towards better global co-operation and securing peaceful and balanced development. 

Therefore, these are the foundations for achieving continental monetary policy harmonization leading to a free trade and the smooth implementation of the (AfCFTA).


2023-03-01  Josef Kefas Sheehama

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