The Economic Partnership Agreements (EPAs) and the Southern African Customs Union (SACU) Region- The Case for South Africa

EPAs between the EU and ACP countries can be viewed as being anti mercantilist and there has been a lot of speculations about their outcome. The aim of the study is to determine the effects of the Economic Partnership Agreements (EPAs) between the European Union (EU) and the Southern African Customs Union (SACU) members using Global Trade Analysis Project (GTAP) version 7. Two scenarios are analysed: first when the other SACU member states sign the EPAs with the EU excluding South Africa and secondly when the entire SACU member states including South Africa sign a full EPA with the EU. Results show that South Africa does stand to lose when the other member states sign. However, signing of the EPA of the SACU as a bloc, including South Africa result in welfare gain in the region. Significantly, there is an increased export of livestock and processed foods to the EU from SACU region meaning that the region stands to gain in promoting these industries after an EPA. Besides these two sectors, most of the other sectors tend to lose out. It should be noted that full benefits of trade liberalisation agreements depend on speed of industry reform and therefore can only be realised in the long run.Economic Partnership Agreements; South African Customs Union; Welfare gains; European Union; GTAP

The SADC Region and EPA/EBAI - Potential Winners and Losers

The aim of the paper is to investigate convergence tendencies in the SADC region and to determine whether the EPA/EBAI policies between SADC and EU_27 member states will promote such convergence tendencies. The analyses of the EPA/ABAI policies make further conclusion on SADC member states’ potential winners and losers from changes in trade profile brought about by these policies since individual SADC member states are heterogeneous in their trade profile. Therefore these policies outcome will likely have negative or positive effects on economic growth and convergence tendencies of individual member states of the SADC region. The study has found evidence of absolute convergence in the SADC region using income and GDP growth rates data for the year 2008 to 2015. Further analysis of the effects of the EPA/EBAI policies reveal that SADC LDC are likely to be winners except Madagascar and Tanzania while the SADC ACP countries are possible winners on condition they set up enabling environments that promote development of industries where they are likely to benefit more given their export profile which is an indicator of their comparative advantage. It is further concluded that overall the EPA/EBAI will likely promote convergence tendencies and be beneficial to the region as a whole.EPA/EBAI policies; SADC; EU_27; ACP; LDC; Convergence; GTAP

The SADC Region and EPA/EBAI - Potential Winners and Losers

The aim of the paper is to investigate convergence tendencies in the SADC region and to determine whether the EPA/EBAI policies between SADC and EU_27 member states will promote such convergence tendencies. The analyses of the EPA/ABAI policies make further conclusion on SADC member states’ potential winners and losers from changes in trade profile brought about by these policies since individual SADC member states are heterogeneous in their trade profile. Therefore these policies outcome will likely have negative or positive effects on economic growth and convergence tendencies of individual member states of the SADC region. The study has found evidence of absolute convergence in the SADC region using income and GDP growth rates data for the year 2008 to 2015. Further analysis of the effects of the EPA/EBAI policies reveal that SADC LDC are likely to be winners except Madagascar and Tanzania while the SADC ACP countries are possible winners on condition they set up enabling environments that promote development of industries where they are likely to benefit more given their export profile which is an indicator of their comparative advantage. It is further concluded that overall the EPA/EBAI will likely promote convergence tendencies and be beneficial to the region as a whole

Cointegration Analysis of Oil Prices and Consumer Price Index in South Africa using STATA Software

This paper investigates the concept of vector autoregression (VAR) and cointegration using a bivariate model of global oil prices and headline Consumer Price Index (CPI) in South Africa. The study aims to determine how much of inflation is driven by oil prices. Particular attention is paid to the theoretical underpinnings of cointergration analysis and the application of STATA software to undertake such analysis and perform test statistics. Contrary to the popular myth that a rise in global oil prices fuels inflation, this study has observed that global oil prices are not the drivers of inflation in South Africa. In this way, other macroeconomic indicators and policy developments need to be integrated in analyzing the determinants of South African inflation

The SADC region and EPA/EBAI – trade balance analysis

This paper investigates the potential trade balance outcomes of the EPA/EBAI policies in the SADC region using the GTAP7 model and database. The analysis of these policies therefore make conclusion on SADC member states’ changes in trade balance overall, per commodity groups and on overall welfare outcomes as a result of these policies. The study has found that although the EPA/EBAI initiative policies will potentially result in overall welfare gain in the SADC region this welfare gain will only be 6% of the EU27. Analysis of trade balance outcome reveals that the SADC ACP region will suffer a negative trade balance of US$1596.8 million with the EU on the other hand having a positive trade balance of US$105.61 million. Since a positive trade balance is important for sustainable development of nations, these results once again throw into doubt the potential sustainable economic growth benefits of these policies to ACP countries

Measuring Maize Price Volatility in Swaziland using ARCH/GARCH approach

This paper investigates maize price volatility in Swaziland as offered by NMC, an organization with a mandate of stabilizing prices in the country. Price volatility is analyzed using ARCH/GARCH modeling techniques. Results show that the organization has not been able to stabilize prices in the past years. This is likely because of exogenous global shocks in maize prices which are transmitted to the local market. These external shocks transmission are mainly because the organization imports a lot of maize to meet local demand. However, although prices have been volatile, the organization has been able to control persistence in volatility. Asymmetric analysis of the prices shows that prices have not reacted unequally to shock increase or decrease in prices. However, increase in maize prices has been seen as fueling volatility, which does not bode well for consumers. This analysis therefore has formed an important contribution to analysis of storage facilities and their role in stabilizing prices. Storage facilities will become important especially for third world countries with increased unpredictability in agricultural production due to climate change

The South African Bio ethanol blend mandate and its implications on regional agricultural markets and welfare

The paper aims to analyse the potential impact of South African Biothanol Blend mandate on SACU region’s maize and sugar production (referred to as bioethanol crops commodities), trade and overall welfare outcomes. The study has been necessitated by the importance of maize as a staple food for the Southern African region and the importance of sugar to some of the SACU countries’ economies especially that of Swaziland. The simulation experiment has been an artificial decrease in cereal and sugar cane output in South Africa due to their diversion to bioethanol production, with a corresponding increase in petroleum output by a factor proportional to the blend mandate in place. This simulation has been undertaken using the GTAP7 model and database. Simulations results show that South African production of bioethanol and its blending to fuel will not result in major negative welfare changes in South Africa. However, production of bieothanol from maize negatively affects the rest of SACU member states in terms of welfare outcome and cereal prices. On the other hand, South Africa experience the most welfare benefits from maize based bioethanol. Production of bioethanol from sugar cane improves welfare in the rest of SACU region, such welfare envisaged to accumulate more to Swaziland, one of the region’s major low cost sugar producer and exporter. Bioethanol crops commodities industry output and trade changes for the rest of SACU member states trend with the level of commitment of that commodity in the South African bioethanol production and blending programme as expected

Measuring Maize Price Volatility in Swaziland using ARCH/GARCH approach

This paper investigates maize price volatility in Swaziland as offered by NMC, an organization with a mandate of stabilizing prices in the country. Price volatility is analyzed using ARCH/GARCH modeling techniques. Results show that the organization has not been able to stabilize prices in the past years. This is likely because of exogenous global shocks in maize prices which are transmitted to the local market. These external shocks transmission are mainly because the organization imports a lot of maize to meet local demand. However, although prices have been volatile, the organization has been able to control persistence in volatility. Asymmetric analysis of the prices shows that prices have not reacted unequally to shock increase or decrease in prices. However, increase in maize prices has been seen as fueling volatility, which does not bode well for consumers. This analysis therefore has formed an important contribution to analysis of storage facilities and their role in stabilizing prices. Storage facilities will become important especially for third world countries with increased unpredictability in agricultural production due to climate change

COMESA’s Revealed Comparative Advantage in Common Agricultural Commodities

The paper undertakes an analysis of Revealed Comparative Advantage (RCA) for common agricultural commodities in the COMESA Region. The aim of the analysis is firstly, to determine the level of agro-processing in the region; and secondly, in support of the COMESA industrial policy and strategy, to identify commodities countries could focus on in setting up agro-food industries. To address these two issues, RCA is determined for selected agricultural commodities, which are divided into raw/semi processed and highly processed food stuff. Results reveal that many COMESA Member States show strong RCA in raw or semi-processed agricultural commodities with little or no corresponding RCA in highly processed derivatives of those commodities. In general, very few countries in the COMESA region show strong RCA in highly processed and diversified food commodities. This means that there is still a large scope for agro-processing, especially using the abundant traded raw materials. Countries can focus on agro-industries where they show strong RCA in the corresponding raw material base or precursor. Agro-industrialization can help reverse the negative trade balance in processed food commodities that the region is currently experiencing

National Income and Malnutrition in Africa: a Rapid Assessment

This paper pursues a simple analysis of a static relationship between national income and income distribution, and obesity/overweight and undernutrition in African countries. From intuition, a relation between national income (GDP/Capita) and malnutrition is expected. Countries that have higher income are expected to have higher prevalence of obesity/overweight. Likewise, countries with higher income should have lower levels of undernutrition. This paper tests this hypothesis using macroeconomic data. The paper also analyses the role of income inequality, as measured by the GINI coefficient, as a potential driver of malnutrition. In this case, countries that have high levels of income inequality are expected to have coexistent high levels of both obesity and undernourishment. Results of this analysis show that there is a correlation between income and malnutrition. However, this relationship is weak, with a correlation coefficient of less than 50% for both undernourishment and overweight/obesity. However, the signs are as expected, even when running a simple regression of the variables. Higher national income has a positive relationship with obesity and negative relationship with undernourishment. From the regression, only the coefficient on undernourishment is significant at 5% confidence level. No significant relationship was found between income distribution and malnourishment, even on the extended logistic model. These finding are not realistically surprising. Higher income does not guarantee good nutrition, although poorer countries are expected to have high level of undernourishment. Also, there is a friction in the response of undernutrition to growth in GDP. Given the low-income elasticity of demand for food, higher income is not expected to be strongly linked to obesity. This could also be an explanation for the low response of malnutrition to income inequalities, although this latter relationship needs to be tested further with data sets of longer duration, in a time series approach. As such, it is important to lobby governments to mainstream food and nutrition security in other initiatives that increase national income, and to promote direct interventions that reduce the prevalence of undernourishment as part of meeting the Sustainable Development Goals (SDGs). This will ensure that high national income translates to reduction in malnutrition prevalence across countries