South African Development Community - Essay Example

?South African Development Community (SADC) – South Africa in conjunction with ASDA 2nd December REPORT OUTLINE 1. Executive summary 2. Introduction 3. Experience in the South African markets i. Strategies for business friendly environment a. Elimination of import duties b. Harmonized systems c. Elimination of non- tariff barriers d. General exceptions and security exceptions e. National treatment f. Special agreement g. Transit traffic 4. Conclusion 5. Recommendation MAIN RESOURCES Dr. Victor E. C. Arnold (2010). How South African Companies Manage Executive Expatriate Staff in SADC Countries. Human Resource for Todays Workplace. Northgate. Europa Publications (2004). Africa South of the Sahara 2004. Europa Regional Surveys of the World 2004 Series. Routledge Publisher, 20 (3): 1338. Southern African Development Community. Consultative Conference (1997). Towards enhanced trade and investment in the Southern African Development Community (SADC): Southern African Development Community. Johannesburg, 5(2): 5-30. Europa Publications Limited (2010).The Europa world year book. Europa Publications Limited, University of Michigan. Vol 3: 3-30. GTZ, NBI (2007). Corporate social responsibility and the United Nations global compact in South Africa. A research report on CSR and the global compact in South Africa. EXECUTIVE SUMMARY South African Development Community (SADC) was formed in 1980 with an aim of orchestrating development projects to diminish economic dependence in southern Africa (SADC.CC, 1997). It was formed after the transformation of the then Southern African Development Coordination Conference (SADCC). South Africa as a member of SADC aims at strengthening and consolidating the long eminence social, cultural and historical affinities among the people of the community as well as to develop common political and to endorse self sustaining growth on the basis of communal self dependence and interdependence of states in the regional community. It also intends to avoid world slowdown and correct the consequences of credit crunch and financial crisis. SADC has given authority to companies like ASDA Stores Limited willing to invest within the regional markets in order to support local expertise. This can be achieved through creating a business friendly environment with no complexities hindering business transactions within the regional community. They have set strategies of investing with ASDA, a British supermarket which deals with clothing, retail food, general merchandise and toys. A harmonized system, a universal coding system, is used to reduce confusion to exporters. This is caused by uncertainties of tariff change in different countries. Elimination of custom duties creates free trade zone which ensures that the countries in SADC trade without complexity. Formation of the corporation between SADC countries and foreign countries will create a business friendly environment and hence good basis for international expansion. SADC also aims at reducing the barricades to intra regional trade and slacken the condition of local competition. In addition, it has formed National Treatment, which prevents regional, community countries from putting arduous requirements on imported goods. If the ASDA and SADC adapt this treatment, it would be possible to have international expansion. ASDA is considered very insightful and, therefore, the policies on trade have unique agreement for it (EPL, 2010). Taking a good example of ASDA whose marketing promotions are based on solely prices, it has taken over 16.5 % of the UK grocery market. Expansion of South Africa into ASDA Stores Limited will mark a good base for international trade. INTRODUCTION South African Development Community (SADC) was formed in 1980 with an aim of synchronizing development projects so as to diminish economic dependence on Southern Africa. It was formed as a coalition of 9 majority ruled states in Southern Africa called (SADCC) meaning Southern African Development Coordination Conference. It was signed to give a legal character to the heads of state and government. From then, coordinating conference was changed to development giving it a new name of SADC. The main objectives of SADC are to develop common political values, institutions and systems as well as to endorse self sustaining growth on the basis of communal self dependence and inter dependence of the states forming the regional community (Burgess, 2009). They also aim at strengthening and consolidating the long eminence social, cultural and historical affinities among the people of the community. In order to achieve this, they have set to harmonize social political policies and plans of the regional community and to secure cooperation, understanding, and support through mobilization of private and public resources (Servat, 2002). The regional community has some common agendas based on a range of principles, such as market integration, development orientation, promotion and facilitation investment and trade, and subsidiary. The common agendas include maintenance and consolidation of peace democracy and security, promotion of equitable and sustainable social economic and economic growth to alleviate poverty, and promotion of systems, common political values and other values transmitted broadcasted through an institution that are legitimate, democratic and effective. In order to eliminate exploitation, deprivation, backwardness and underdevelopment, with the regional community, economic integration and cooperation must be maintained. The member states agreed to achieve economic integration through full support of Southern Africa communities (Burgess, 2009). They also adopted a free trade area and a common market as a milestone to the attainment of the vision. This can also be done to ASDA Stores Limited to promote international expansion. The aim of compiling this report is to analyze the common future of the regional community to ensure well being of SADC and also improve the living standards as well as the quality of life not only as a vision but for the expansion locally and internationally. The vision of this regional community is attached to the common values and codes as well as the cultural and historical affinities that subsist among the South African communities as well as expansion in the international markets. Investing in ASDA Stores Limited will ensure quick achievement of the set goals. The report will be very effective as it will help to understand the ways in which South African’s economic and development growth can be achieved within the regional community and in ASDA Stores Limited. It can also ensure that the transfer, development and mastery of technology are promoted. The social and economic development will be understood clearly with the clear cut guidelines of ensuring the objectives are attained. In the report, issues to do with future prospect and expansion will be addressed as well as the strategies which can be adopted to ensure their vision is accomplished. The report also aims at mapping out the issues and approaches associated with communal support for volunteer achievement in SADC region. The report gives a conclusion on how to enhance more development and identifies key concerns for discussion and further manifestations. EXPERIENCE IN THE SOUTH AFRICAN MARKET South Africa has the most and first developed economy within the entire Africa continent. ASDA Stores Limited as well has the second largest market share in UK. From1990s, both of them have concerted their activities in the most go-ahead market in their regions. Depending on the mineral deposits and resources, service sector in South Africa has considerably grown to become the most momentous of all going to 65.5% of gross domestic product (Dr. Victor and Arnold, 2010). The formation of the regional community formed a basis for expansion and has helped in formation of ambitious infrastructure programs of investment. South Africa intends to avoid world slowdown and correct the consequences of credit crunch and financial crisis. This can be achieved through creating a business friendly environment with no complexities hindering business transactions within the regional community. SADC has also given authority to companies willing to invest within the regional markets in order to support local expertise. This will form a good relationship with ASDA Stores Limited because they work on achievable objectives. The regional community has used a number of strategies in order to create a business friendly environment. Strategies for business friendly environment Elimination of import duties Article three of their constitution outlines the policies for removal of custom duties on services and goods traded among the states of the regional community. An import duty, also a tariff means customs tax that is paid when products get into a country (Dr. Victor and Arnold 2010). Countries negotiate and come up with custom duties to be applied to goods. Custom tariffs are commonly used to protect domestic goods and as income for the government. High duties lower level of international trade because they cause an increase in the prices of the imported goods (Smith, 2003). By implementation of this article of the constitution, the member states decided to reduce the tariffs with an aim of creating a free trade zone. This is formed by a number of countries agreeing to do away with tariffs on goods traded within the region. At the beginning of the negotiation, the member states agreed that, developed countries like South Africa would do away with the duties earlier than other countries. They did this in year 2000 when the agreement was signed. If the same strategies are used, they will be very effective to ASDA Stores Limited as they will manage to get the products from South Africa affordably. Harmonized systems (HS) This is a universal coding system developed by countries to reduce confusion to exporters on tariffs. This confusion is brought about by the fact that individual countries set their own systems of classifying goods and paying of tariffs. World customs organization developed a coding system and a harmonized community description to be used world wide to avoid confusion. Today, it is used by more than one hundred and ninety countries in the world to facilitate international trade. SADC requires the member countries to kowtow to the harmonized system (Halley, 1999). The harmonized system has 6 digit codes which are based on predetermined rules. The SADC members have agreed to complement up to eight digits. Companies and business are able to settle on the tariff that applies to their code in every country. They refer to the product policy in every country’s available tariffs. Making ASDA Stores Limited aware of the prices every time will make them have full information of the market and hence good inter-trade. Elimination of non- tariff barriers Non tariff barriers are measures that obstruct the flow of international trade without the exports and import duties (GTZ. NBI, 2007). They include exchange controls, import quotas, subsidies, government purchase policies, custom delays, boycotts, custom calculations, voluntary restraints, technical barriers, and bribes. The regional community has decided to eradicate all the non tariff barriers. This should be extended from South Africa to ASDA Stores Limited for good market sharing. General exceptions and security exceptions SADC aims at reducing the barricades to intra- regional trade and slacken the conditions of local competition. Nevertheless, the trade protocol authorizes the member states to take on actions that limit trade if the rationale of the constraints is any of the following: To protect intellectual property rights, to tackle food shortages, to regulate the movement of silver, gold, semi precious or precious stones, to secure human morals, to control and prohibit the exportation or importation of second hand goods, to defend national historical caches, or to secure public morals (Albareda et al, 2008). If the member countries decide to adhere to this rules and regulations, they have to ensure that they are not applied in a manner which would result to indefensible favoritism between the countries in SADC. South Africa should also aim at using the same strategies to ASDA Stores Limited to ensure good inter trade. National treatment The member states have come up with an agreement that the imported goods should be subject to the similar policies, laws, procedures and requirements as locally produced goods. This forms national treatment (World Bank, 1996). If national treatment is not used, the regional community countries will put onerous requirements on goods that are imported but not one local goods. This can diminish trade and smash up competition. Here, every regulation that a country in SADC applies to overseas imports (ASDA Stores Limited) should not be rigorous or onerous than when it is applied to locally produced merchandises of the same type. Imported clothes, toys, and food stuffs from South Africa by ASDA Stores Limited should also undergo national treatment process. Special agreement South Africa and ASDA Stores Limited in the regional are very susceptible therefore, the etiquettes on trade has unique agreement for them. The protocol avows that the food and clothing markets highly imprecise by the textile and food stuff policies of other states. This will led to fall in prices of food stuffs and clothing than it would be if there was no global free trade. So as to defend textile and food producers in the regional community, the policies on trade include actions anticipated to increase support and cooperation for these producers in the region. All the members of SADC will be allowed to export a certain portion of the surplus food stuffs to ASDA Stores Limited with no custom tariff. Transit traffic Many countries in SADC regional community are landlocked. This means that in order for them to obtain goods from SADC members, they have to pass other countries that are close to landlocked countries. Such countries include Lesotho, Botswana and Zambia. The goods are carried through transit traffic or trans- shipment as they pass through different countries (EP, 2008). This simply means that the shipping cost would rise as trade reduces if all the countries that the goods pass impose the tariffs. Trade protocol in SADC aims at preventing this from happening to ensure smooth trade between the countries. Expanding to international markets by trading with ASDA Stores Limited will ensure good movement of the exports. The landlocked countries will pass their produces to South Africa which will later export them to UK. CONCLUSION In post- apartheid southern Africa, regional integration has not done well as hoped by states. Regional integration is a nice but a simple idea as Dr Rob Davies, the minister for trade and industry puts it. International regions are important tools for global influence in current jerky global hierarchies. Regions in the Middle West e.g. Russia, India, and Brazil have potential and new substitute power blocs in which southern Africa may find crucial economic and political alliances. Investing with ASDA Stores Limited will create good avenues towards reduction of poverty in the regional community as producers will get markets for their produce. A chief stumbling chunk that SADC has always faced is the inadequate access to steadfast business contacts, media and information dais to market, trade and communicate efficiently with each other. The WTC, meaning world trade center is an African initiative which is spotting Africa’s most important products and services that are capable of growing and expanding in SADC successfully. This is forming a good basis or international trade. It requires companies to register their goods and services to ensure that they are efficiently traded locally and internationally. There are a number of things that hinders countries in SADC from expanding. Some countries have not yet adapted to the policies set and this prevents trade outside the country. Import duties increase the prices of imported goods and thus restricting international trade. This makes people to buy few goods because the duties are set according to the quantities of the imports. Some countries have not yet created a free trade area in order to alleviate the tariffs imposed on imports. There is still more confusion caused to the exporters as they are not sure of the prices of goods. There are countries that have not started adapted the coding system as well as the harmonized system which gives certainty to exporters about the tariffs levied on imports. This limits international trade and hence the expansion in the international markets. Elimination of non- trading barriers ensures there is a flow of trade internationally and locally, that is, exclusion of export and import duties. There are many quotas, boycotts, bribes, technical barriers, custom delays, calculation procedures and government policies that are limiting expansion of SADC. They prevent international trade because they create complications of import and exports of goods. RECOMMENDATION Investing with ASDA Stores Limited, the world’s largest retailer will open channels for the regional community to sell their produce internationally. Clothing and toys from African nations are likely to do well internationally. International regions are important tools for global influence in current shuddering global hierarchies. Regions UK have potential and new substitute power federations in which SADC community may find crucial economic and political alliances. It is very crucial for the regional community to succeed in attracting foreign direct investments like ASDA Stores Limited. This will assist to conquer the small size of the national markets and imperfect efficient demand. Investments that are efficient seeking require efficient and adequate infrastructure services. This is workforce which has ability levels that allows for judicious and cost proficient production as well as liberation of goods to international markets. Increasing incorporation of capital markets has been the most imperative development in the international financial souks. SADC should be aware that, incorporation in ASDA Stores Limited will bring potential reimbursements in terms of increased markets competence, speeding up of the financial innovation process, entry to global allocation of stashes, the improvement of the ways in which countries will prevaricate their economies against asset price unsteadiness, and consenting to liquidity of financial markets (World Bank, 1996). SADC will also find sources of finance from ASDA Stores Limited which will allow them to expand internationally. Without the finances, the regional community will remain inactive in foreign trade and will only manage to operate locally and not internationally. ASDA Stores Limited is a very potential source of funds to help in the implementation of policies set by SADC that will help the countries trade with other foreign countries. Large financial markets attract foreign portfolio investments which helps in marketing of goods and services to international countries and hence a good basis for international expansion. In order to attract foreign investments in an environment that is highly competitive, South Africa in conjunction with ASDA Stores Limited should have some common goals as well as strategies which will allow movement of goods and services easily. If countries in SADC form corporation, some tariffs and duties imposed on imported goods would be reduced by creating a market free trade area. This zone will ensure that reduced import duties are levied on goods imported to the foreign countries. Through the formation of corporations, coding systems and harmonized systems would be used to promote international trade between ASDA Stores Limited and South Africa. This will reduce any confusion that can be caused to exporters through uncertainties in tariffs. ASDA Stores Limited will be able to identify the duties imposed on the goods traded and the expected exercise duties in the next trade period. They will also be covered by the national treatment which will remove or eradicate burdensome chucks on the goods imported hence reducing international trade. In addition, complexity of the tax admin in respect of the technique of dealing between tax investors and units wastes a lot of time and effort leading to rise in costs. This should be dealt with to cerate a good business environment to the investors. Customs incentives granted to investors should be associated or relative to the contribution of the investment. Foreign and collaborative investment strategies will be very effective to projects and development walkway for SADC community. They will be able to come up with measures that recognize growth hubs, target probable investors, and assemble industrial and financial aptitude of parastatals. This will create avenues for international trade and hence international expansion. Another thing that will lead to international expansion is budging of institutional dynamics in the post apartheid milieu. Cross border trade has great potential for achievement where there are burly economic and political relationships. ASDA Stores Limited and South Africa involved should introduce business cultures as one of the most important erratic in determining the potential for tactical alliances. REFERENCES Albareda L, Lozano J.M Tencati A, and Perrini F (2008).The changing role of governments in corporate social responsilbility. Business ethics Business in the community (1998). The role of employers in active communities. London. Dr. Victor E. C. Arnold (2010). How South African Companies Manage Executive Expatriate Staff In SADC Countries. Human Resource for Today’s Workplace. Northgate: Eric Servat,(2002). Regional Hydrology : Bridging the gap between research and practice. IAHS International Commission on Water Resources Systems. Vol. 274: 11 Europa Publications (2004). Africa South of the Sahara 2004. Europa Regional Surveys of the World 2004 Series. Routledge Publisher, 20 (3): 1338 Europa Publications Limited (2010).The Europa world year book. Europa Publications Limited, University of Michigan. Vol. 1: 25. Europa Publications Limited (2010).The Europa world year book. Europa Publications Limited, University of Michigan. Vol. 2: 3-30 GTZ, NBI (2007). Corporate social responsibility and the United Nations global compact in South Africa. A research report on CSR and the global compact in South Africa. Halley D (1999). A complete guide to employee community involvement for employers, employees and community organizations. Coordinating employee community involvement links Europe (Cecile) Network. Robert Burgess (2009).The Southern African Development Community's Macroeconomic Convergence Program: Initial Performance. International Monetary Fund. Capetown. Smith NC (2003). Corporate Social Responsibility: Not whether but now? London Business School. Southern African Development Community. Consultative Conference (1997). Towards enhanced trade and investment in the Southern African Development Community (SADC): Southern African Development Community. Johannesburg, 5(2): 5-30. World Bank (1996). World development report 1996. World Bank. Read More