SA move costs Botswana jobs

Johannesburg - South Africa's resoluteness regarding an export incentive scheme for textile manufacturers is forcing Botswana's largest textile company to close its doors in December.

About 5 000 jobs will be lost at Caratex Botswana, one of the neighbouring country's major earners of foreign exchange, when the company ceases trading at year-end, managing director and owner Craig Chow told Sake24.

Chow said the decision had been taken because of the procrastination in arriving at a decision about the export incentive scheme. Ever since March manufacturers in the Southern African Customs Union (Sacu) have been in the dark as to which products would finally qualify for the scheme.

There is also a lack of clarity about which programme, if any, will replace the export incentive scheme when it falls away at the end of March 2010.

In terms of the programme textile manufacturers earn tariff credits based on their exports of certain textile and clothing products. These credits can then be used for discount on the importation of certain textile and clothing goods and could initially be freely sold to other manufacturers or retailers, with significant cash-flow benefits for the manufacturers.

But South Africa won't agree on the products that might qualify in this financial year, and as a consequence of abuse has decided to scrap the system in 2010.

The closure of Caratex is a massive blow to Sacu, with members South Africa, Botswana, Lesotho, Swaziland and Namibia. Sacu had planned to establish and develop industries here. For more than ten years Botswana has struggled to successfully implement an industrial strategy involving diamonds and beef and, to date, textiles - virtually its only export products.

The situation threatens further to sour relations between South Africa and Botswana, as well as Lesotho and Swaziland.

Because of South Africa's dominant position in Sacu it is often criticised for not being sufficiently sympathetic towards other members' needs when it comes to trade and industrial policies.

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