Challenges for agricultural diversification in Botswana under the proposed SADC-EU Economic Partnership Agreement (EPA)

Abstract

Botswana has been pursuing the economy-wide objective of economic diversification for the past three decades. This paper examines the challenges Botswana's Agriculture is likely to face under the EU/ACP Economic Partnership Agreement (EPA). While the sector has witnessed some diversification in the past, such success was, however, induced by the provision of government grants to investors and the use of import controls to minimize cross-border competition. It is argues that, since they involve trade liberalization, EPAs should theoretically reverse the progress so far made in diversifying the country's agriculture. It is further argued, however, that Botswana being a member of the Southern African Customs Union (SACU), hence a de facto member of the Trade and Cooperation Development Agreement (TCDA) between South Africa and the EU, it is currently exposed to the gradual trade liberalization under the TCDA. Thus, if import controls are to be removed under SACU, where they are currently being challenged, the TCDA impacts will trickle fully into the Botswana market even in the absence of EPAs. Furthermore, it would be imprudent for Botswana to negotiate and implement a different tariff reduction structure with the EU when the TCDA is already in existence. The paper concludes that policymakers should opt to promote the utilization of the EU development assistance to strengthen local institutions and promote the development of sustainable diversification activities within the sector.