Slide 1

July 16, 2011 Presentation Market Conditions and the Regulatory Environment of services sectors in SADC By Noel Watson Slide 2 Members of SADC Slide 3 Structure General Overview Market conditions Restrictions, regulations, impediment Sector overview Structure of sectors Some regulatory issues Some questions Offensive and defensive negotiating strategies Slide 4 Overview Services Sector Slide 5 Overview SADC Services sector is very important in the economies of many SADC countries Rapid growth : up to 5% pa Contributes Above 40% of GDP in most SADC countries (still growing) Employment Exports Slide 6 SADC: Population Estimates for 2011 in Millions Country2011 Estimates Start After Democratic Republic of Congo72.61983 South Africa50.62008 Tanzania42.22006 Mozambique22.02010 Madagascar21.92006 Angola19.62000 Malawi16.2 Zambia13.62010 Zimbabwe12.62000 Namibia2.12008 Lesotho1.92006 Botswana1.92008 Mauritius1.32010 Swaziland1.22008 Seychelles0.12009 Total 280 International Monetary Fund, World Economic Outlook Database, April 2012 Slide 7 SADC: Gross domestic product per capita, current prices Country2010Estimates Start After Seychelles10,7272009 Botswana8,1172008 Mauritius7,5822010 South Africa7,2712008 Namibia5,2442008 Angola4,3292000 Swaziland3,1322008 Zambia1,2212010 Lesotho1,1562006 Zimbabwe5922000 Tanzania5472006 Mozambique4392010 Madagascar4102006 Malawi3432009 Democratic Republic of Congo1861983 International Monetary Fund, World Economic Outlook Database, April 2012 Slide 8 SADC GDP Growth Rates 2007-2011 Country20072008200920102011 Angola 22.613.82.43.4 Botswana 4.82.9-4.87.05.1 Democratic Republic of Congo 6.36.22.87.26.9 Lesotho 4.75.42.95.65.8 Madagascar 6.27.1-4.61.61.0 Malawi 5.88.39.06.54.5 Mauritius 5.95.53.04.1 Mozambique 7.36.86.36.87.1 Namibia 5.43.4-0.46.63.8 Seychelles 9.60.56.75.0 South Africa 5.53.6-1.52.93.1 Swaziland 3.52.41.22.01.3 Tanzania 7.17.46.07.06.3 Zambia 6.25.76.47.65.9 Zimbabwe -3.7-17.76.09.09.3 Source: World Bank Slide 9 SADC Exchange Rates Against US$ Country/Currency2007200820092010 (est)2011 (est) Angola/Kwanza (AOA)76.675.02379.3391.9193.21 Botswana/Pula (BWP)6.20356.79077.15516.79366.695 DRC/Congolese Francs (CDF)5165594729121000 Lesotho/Maloti (LSL)7.257.758.477.327.3 Madagascar/Malagasy Ariary (MGA)18801654.781956.220901950 Malawi/Malawian kwachas (MWK)141.12142.41141.14150.49159 Mauritius/Mauritian rupees (MUR)31.79827.97331.9630.78428.67 Mozambique/meticais (MZM26.26424.12526.2833.9728.5 Namibia/Namibian dollars (NAD)7.187.758.427.327.076 Seychelles/Seychelles rupees (SCR)6.5813.6112.06812.26 South Africa/Rand (ZAR)7.057.95768.427.327.164 Swaziland/Emalangeni7.47.758.427.327.3 Tanzania/Tanzanian shillings (TZS)1,2251,178.101,320.301,409.301,571.10 Zambia/Zambian kwacha (ZMK)3,999.203,512.905,046.104,797.104,869.90 Zimbabwe/Zimbabwean dollars (ZWD).9,686.80430,972.70 Exchange rates relatively stable except for Angola, DRC, Madagascar, Seychelles, Zimbabwe Slide 10 Inflation Rates in 2011 Country Inflation Rate Angola 14.3% Botswana 7.8% Democratic Republic of Congo 17.0% Lesotho 7.2% Madagascar 10.9% Malawi 7.5% Mauritius 6.7% Mozambique 11.7% Namibia 5.3% Seychelles 2.7% South Africa 5.0% Swaziland 8.0% Tanzania 11.1% Zambia 8.4% Zimbabwe 5.6% Source: CIA World Fact Book Slide 11 11 Challenges of the SADC Regional consensus in decision making Transport Infrastructure Language differences Cultural divergences Slide 12 Services Sector in SADC Economies (% of GDP, 2007) Source: WDI, World Bank; Eurostat Slide 13 SADC Services Trade by Member State (2006) Net Exporters of Services Mauritius Tanzania Botswana Namibia Slide 14 SADC Composition of Services Exports Slide 15 SADC Composition of Services Imports Slide 16 Challenges in Services Trade Liberalization Regional services trade liberalization will be more complicated than liberalization of goods Supply of services requires movement of either service producers or service consumers, or movement of capital to invest in service activities Further, barriers to services trade are mostly embedded in national laws and regulations Liberalizing regulations is a more challenging task than simply reducing tariffs. It requires careful design of an appropriate way, timing and forum in which to carry out the liberalization. Successful liberalization will require introducing competition and effective regulation to correct market failure Appropriately designed domestic regulations can help reform at the national level and provide meaningful market access at both regional and international levels. Slide 17 GATS Commitments: Market Access Article XVI:2 of GATS lists six categories of restrictions which may not be adopted or maintained. However, a country is allowed to maintain any of these limitations provided it outlines these limitation in its schedule of commitments. The six prohibited limitations are: 1. limitations on the number of suppliers 2. limitations on the total value of service transactions or assets 3. limitations on the number of service operations or on the total quantity of service output 4. limitations on the total number of natural persons that may be employed 5. measures which restrict or require specific types of legal entity or joint venture 6. limitations on the participation of foreign capital. Market access limitations in schedules therefore fall into one of these categories. Slide 18 Overview of Restrictions in Six Sectors Most countries have put no significant restrictions in the financial services sector. The main restrictions which exist relate to Mode 4, where they are unbound and apply horizontally This includes the fact that for non-residents to work in another member country, they require the necessary visas and there are limitations as to how much money can be carried. In the tourism sector, some countries have opened completely. Zambia and Zimbabwe have opened Tanzania has not opened Telecommunications is also an area where the majority of countries have not made any restrictions except for fixed line services. The energy sector is also unbound and hence restrictions to market access as well as national treatment apply Slide 19 Horizontal Measures Some horizontal measures which apply in all of the countries are with regard to Mode 4 This area requires that employees of foreign entities should have work and residency permits in order to supply certain services. Furthermore, where a supplier of a service belongs to a professional body, proof of membership in such professional body has to be shown. Mutual Recognition Agreements Slide 20 Horizontal Measures Work Permit Are work permits required? Are they easy to get? What is the process? Can foreigners obtain them on the same terms? Discriminatory against any particular member state Transparent Efficient Slide 21 Horizontal Measures Company Registration Do companies need to register to operate locally? Is the company registration process simple? How long does it take? Is it harder for foreigners? Can foreigners obtain them on the same terms? Discriminatory Transparent Efficient Slide 22 Horizontal Measures Exchange Restrictions Are their any restrictions on obtaining foreign exchange? In Mauritius? In other SADC member states? Can foreign exchange be easily obtained? Can business people repatriate funds easily? Can foreigners obtain funds on the same terms? Discriminatory Transparent Efficient Slide 23 Horizontal Measures Professional Licenses Are there any professional licensing requirements that all persons doing business have to acquire? In Mauritius? In other SADC member states? Can foreigners obtain them on the same terms? Discriminatory Transparent Efficient Slide 24 Horizontal Measures Landholding or shareholding restrictions Can services providers from other SADC member states obtain land or shares in companies on the same terms as locals? Can Mauritian services providers obtain land or shares in companies in other SADC countries on same terms as their nationals? Discriminatory Transparent Inefficient Slide 25 Final Report Example of how SADC countries might examine Horizontal Measures UNCPC #Services Affected Discrimi- natory Non- transparent Inefficient Professional licence AllNo Alien Land Holding AllYes Company registration AllNot sureNo Exchange Controls AllN/A Work PermitAllYesNoYes Slide 26 INCREASING TEMPORARY MOVEMENT OF NATURAL PERSONS IN THE SADC REGION: WHAT SHOULD BE DONE? STUDY BY MAKOCHEKANWA ALBERT AND MARINGWA JAMES (2009) The study investigates the extent to which the current regional member countries laws and regulations, measures and practices encourage or inhibit free movement of citizens across their respective territories. The research found out that, national laws, regulations and practices inhibit free movement of regional citizens across member states. Some of the regulations, laws and practices which inhibit free movement of people include : stringent visa requirements, different requirements for registration of foreign business non recognition of relevant educational qualifications obtained in other member states strict entry requirements in certain sectors such as medical and legal fields application bureaucracies the cost of applying for permits. Slide 27 Mauritius Ranking in World Bank Ease of Doing Business Survey Topic Rankings DB 2012 Rank DB 2011 Rank Change in Rank Starting a Business 1512-3 Dealing with Construction Permits 53541 Getting Electricity 44451 Registering Property 6765-2 Getting Credit 7875-3 Protecting Investors 1312 Paying Taxes 11 No change Trading Across Borders 21 No change Enforcing Contracts 6160 Resolving Insolvency 7976-3 Overall Rank 23 out of 183 Slide 28 Registering a Firm in Mauritius Indicator Mauritius Procedures (number) The total number of procedures required to register a firm. A procedure is defined as any interaction of the company founders with external parties (for example, government agencies, lawyers, auditors or notaries). 5 Time (days) The total number of days required to register a firm. The measure captures the median duration that incorporation lawyers indicate is necessary to complete a procedure with minimum follow-up with government agencies and no extra payments. 6 Cost (% of income per capita) Cost is recorded as a percentage of the economys income per capita. It includes all official fees and fees for legal or professional services if such services are required by law. 3.6 Paid-in Min. Capital (% of income per capita) The amount that the entrepreneur needs to deposit in a bank or with a notary before registration and up to 3 months following incorporation and is recorded as a percentage of the economys income per capita. 0.0 Slide 29 Procedures for Setting up Firm in Mauritius No.ProcedureTime to CompleteAssociated Costs 1 Incorporate and register the business and search for company name on line 2 daysMUR 2,000 2 Receive inspection by local authorities about 4 daysno charge * 3Pay license fees 1 day, (simultaneous with procedure 2) MUR 6,000 * 4 Register with the Social Security Office 1 day, (simultaneous with procedure 2) no charge * 5Make a company seal 1 day, (simultaneous with procedure 2) USD 12 Slide 30 EconomyEase of Doing Business RankStarting a Business Mauritius12 South Africa25 Botswana49 Namibia621 Zambia76 Seychelles815 Swaziland1336 Tanzania1420 Madagascar173 Mozambique187 Lesotho2028 Malawi2126 Zimbabwe3628 Angola3738 Congo, Dem. Rep.4130 Ease of Doing Business and Starting Business Amongst African Countries Slide 31 Financial Services Slide 32 Background on Financial Services Financial services are divided into Banking and other financial services (e.g. financial leasing, guarantees and commitments), and Insurance and insurance-related services (e.g. broking and agency services South Africa is by far the major player in the region, and has a significant outward investment in financial services in other SADC countries. Other SADC countries are mainly importers of financial services, from South Africa and elsewhere. Most SADC countries are not in a position to engage in international export of financial services. However, financial services are crucial inputs into many economic activities; therefore, importing them should be regarded as enabling economic development. Is the signing of SADC Finance and Investment Protocol by (most) countries a reflection of the importance of Financial Services in SADC? Slide 33 SADC: Contribution of financial services to GDP (2006) Note: Figures for Mozambique, Swaziland and Zambia are for 2005. Data for Angola and the Democratic Republic of the Congo are not available Slide 34 What are the implications of South African Dominance of SADC Financial Services? Does it restrict competition in other member countries? Does it result in higher lending rates and higher spreads? Does it lead to a dependence on South African Executive and Managerial staff? What are implications for Mauritius developing as a global financial centre? Botswana developing as a regional financial centre? Can lessons be learned from South Africa that can be used by Mauritius? How can the SADC services negotiations be best used to Mauritiuss advantage? Slide 35 Banking Sector Regulators in SADC CountryRegulator AngolaBanco Nacional de Angola BotswanaBank of Botswana DRCBanque Centrale du Congo LesothoCentral Bank of Lesotho Madagascar Banque Centrale du Madagascar Malawi Reserve Bank of Malawi Mauritius Bank of Mauritius Mozambique Banco de Moambique Namibia Bank of Namibia South Africa South Africa Reserve Bank Seychelles Central Bank of Seychelles Swaziland Central Bank of Swaziland Tanzania Bank of Tanzania Zambia Bank of Zambia ZimbabweReserve Bank of Zimbabwe Slide 36 Regulations in the Banking Industry in SADC Licenses are required to establish banks in all SADC countries To be discussed in sectoral meetings Equity requirements In most countries foreigners can have 100% equity increases competition Capital requirements Cross border trade Legal structure Board composition Botswana, Namibia and the United Republic of Tanzania, there are no limits as to how many foreigners can sit on the board of directors Zambia, only 25 per cent of the members of the Board of Directors can be foreign citizens, while a bank cannot employ more than five expatriates. Slide 37 Regulators of non-banking financial services Not always the same as regulators of banking services Mauritius - Financial Services Commission regulates all non-banking Botswana -Ministry of Finance and Development Planning (MFDP) serves as regulator of the insurance companies and pension funds Zambia - Registrar of Pensions and Insurance regulates the pensions and insurance subsectors Namibia - non-banking institutions, including the insurance and securities sectors, are regulated by the Namibian Financial Institutions Supervisory Authority Slide 38 Regulations in the non-banking financial services differ Within the insurance industry, all countries require that insurance service providers have the requisite qualifications as well as licences In Botswana, insurance agents should possess professional qualifications and all insurers and brokers should renew their licences annually. Also, the same person is not allowed to manag e more than one insurance company In some countries, domestic residents and firms can purchase cross-border insurance. However, the types that can be purchased are limited. In Namibia, residents cannot purchase life insurance, medical insurance, or brokering cross-border from a foreign insurance company In Mauritius, residents cannot purchase motor insurance across borders Slide 39 GATS Commitments Financial sector is quite open within the SADC region Angola, Lesotho, Malawi, Mauritius, Mozambique, South Africa and Zimbabwe have made GATS commitments in financial services Most countries have made commitments in the banking sector, but only three Lesotho, Mauritius and South Africa have made commitments in insurance as well Most countries applied their horizontal GATS commitments to Mode 4 (movement of natural persons). Access is limited to skilled labour linked to commercial presence The market access restrictions are mainly on commercial presence and cross- border supply Exchange controls are a common reason for limiting cross-border supply Restrictions on commercial presence revolve mostly around complying with domestic regulations and being incorporated locally. Is there evidence that SADC countries have liberalised more than reflected in their GATS commitments? Botswana abolished all forms of exchange control but made no commitment in GATS Are there any such cases in Mauritius? Slide 40 Is the Sector ready for greater liberalisation? Are regulatory requirements in place and sufficiently robust? Is there compliance with Basel II? Is macroeconomic environment sufficiently stable? Is there sufficient harmonization of licensing standards? supervision of information and communication technology (ICT) systems? accounting and auditing standards? How will harmonisation be impacted by the fact that some SADC members are members of COMESA - are SADC and COMESA harmonised? What will be the benefits and costs? Are some sub-sectors more ready than others? Has the necessary SWOT analyses being carried out Regional level Local level If SWOT and cost-benefit analyses are positive why wait? Slide 41 SWOT Analysis S trengths Strong regulator O pportunities Global Financial Centre T hreats Lack of Regional harmonisation W eaknesses Do we have enough skilled persons Helpful To achieving the Objective Harmful To achieving the Objective External Attributes of the Environment Internal Attributes of the country Slide 42 Telecommunications Services Slide 43 Importance of Communications and Its Development in SADC Like financial services the communications sector is critical to all other sectors of the economy and to the lives of people of all ages, nationalities, gender, etc. In terms of the number of mobile phones per 100 people, Botswana, Mauritius, Namibia and South Africa are ahead of the other SADC countries. These countries also have higher incomes per capita than the region as a whole The variability in this sector across SADC was a driving force behind the launching of SADC Regional Information Infrastructure (SRII) project several years ago as part of efforts to develop this sector at the regional level The objective was to provide the necessary telecommunications infrastructure connectivity within the region and bridge the digital divide. How successful has this been? Slide 44 Communication Network in SADC (2008 Main LinesMobileInternet CountryLines Millions (2009) Density per 100 (2010) Subscribers (Millions) (2009) Density per 100 (2010) Users (Millions) (2009) Density per 100 (2010) - Fixed wired broad band Angola0.30221.68.90946.60.60670.1 Botswana0.13746.82.363117.80.120.6 Dem. Rep. of Congo0.0420.111.35517.70.290.01 Lesotho0.03881.80.698845.50.07680.02 Madagascar0.17220.78.24237.20.31990.05 Malawi0.161.13.08820.40.71640.03 Mauritius0.387729.81.19191.70.296.1 Mozambique0.08810.47.22430.90.6130.06 Namibia0.1526.71.53567.20.1270.42 Seychelles0.02225.50.1176135.90.0327.26 South Africa4.2258.450.372100.54.421.48 Swaziland0.0443.70.732761.80.09010.14 Tanzania0.17450.4 46.80.6780.01 Zambia0.09010.74.94741.60.81620.08 Zimbabwe0.37937.561.21.4230.26 Sources: CIA World FactBook and The International Telecommunication Union Slide 45 To what extent have SADC Members liberalised their fixed line infrastructure? Fixed-line infrastructure often provides the underlying backbone for nearly every other telecom service e.g. leased line, international gateway services and including mobile services Lack of competition is likely to result in artificially high prices in several areas of the sector Slide 46 Regulators in SADC In all of the countries, the communications sector is regulated by statutory bodies In some countries, there is one regulatory body which regulates both the telecommunications subsector and the postal/couriers Tanzania and Zimbabwe Mauritius the two subsectors are regulated by two different regulators Some of these regulatory entities are independent from Government Mauritius the regulator reports to the National Assembly rather than a particular ministry or the executive Namibia - regulator is not independent as it reports to the Minister of Information and Broadcasting, and 80 per cent of its funding comes from the national budget. Tanzania - regulator is also independent from the minister responsible for postal/couriers is funded100 per cent from licences and other fees. Slide 47 Member State Regulator Angola Institut Angolias des Communications (INACOM) Botswana Botswana Telecommunications Authority Democratic Republic of Congo Autorite de Regulation de la Poste et des Telecommunications du Congo (ARPTC) Lesotho Lesotho Communications Authority Madagascar Office Malagasy d\'etudes et de Regulation des Telecommunications (OMERT) Malawi Communications Regulatory Authority (MACRA) Mauritius Information and Communication Technologies Authority Mozambique Instituto Nacional das Communicacoes de Mozambique Namibia Communications Regulatory Authority of Namibia (CRAN) Seychelles Ministry of Information Technology and Communication (MITC) South Africa Independent Communications Authority of South Africa (ICASA) Swaziland Swaziland Postal and Telecommunications Coorporation (SPTC) Tanzania Tanzania Communications Regulatory Authority (TCRA) Zambia Zambia Information and Communications Technology Authority (ZICTA) Zimbabwe Postal & Telecommunications Regulatory Authority (POTRAZ) Regulators in Communication Sector Slide 48 To what extent is private and foreign ownership restricted in SADC countries? Private ownership is restricted in some countries Limits sector growth because it requires huge capital investment which can only be provided by large, generally foreign-owned companies Limitations on foreign equity held by foreign shareholders reduces the likelihood FDI into the sector if they cannot exercise effective control over their investments To what extent are regulators independent of Government and can take action when rates/tariffs are high given that the Government may have controlling interests Slide 49 Audio Visual Services Are radio and television services still mainly State-owned in SADC countries? The South African Broadcasting Corporation (SABC) is the largest radio and television transmission company in the region, comprising close to 20 radio stations targeting a combined audience of over 20 million South Africa has also by far the largest television audience in SADC, comprising over 4 million licensed television households. South Africas M-Net, a privately-owned subscription television, has over 1.2 million subscribers in 49 countries across Africa, including SADC. Is piracy of music and videos still a real problem? Is this due to non-existence or lack of enforcement of regulatory measures and or laws in the industry? Slide 50 Regulatory Issues in the Communications Sector in SADC What is the typical industry structure in SADC? Oligopoly or monopoly Certainly not perfect competition!!! What has come of the SADC Protocol on Transport, Communications and Meteorology of 1998? Provides the legal and broad policy framework for cooperation, and defines the strategic goals for the transport, communications and meteorology sectors In 1998, the Southern Africa Transport and Communications Commissions (SATCCs) Committee of Ministers approved Telecommunication Policy Document as a common policy guideline for adoption and implementation at the national level, and The Model Telecommunication Bill as a guideline for national legislation for implementing the agreed telecommunications policies. To what extent have these been implemented? Issues addressed included: Design of policies, establishment of regulatory authorities, licensing of telecommunication services and duties of public telecommunication service providers. Slide 51 Regulatory Issues across SADC Fixed-line For telecommunications sector there is generally a similar trend in all the countries One fixed-line operator that provides fixed-line services Except for Mauritius, which opened up its fixed-line segment and allowed the entry of another fixed-line operator, which introduced rates that are lower than the incumbent. How successful has this been? Zimbabwe also opened up its fixed-line sector Botswana is in the process of developing a services-neutral licensing framework for both mobile and fixed-line operators, which will allow operators to provide a wide range of services including both fixed-line and mobile services. In some countries notably Tanzania, Namibia and Zambia the law prohibits the entry of new operators into the fixed-line segment The reasons given are that the Government wants the sector to develop before it is exposed to international competition What new events have happened recently? Slide 52 Regulatory Issues across SADC (cont) Fixed-line Mauritius and Tanzania have partially privatized the national operator Did Zambia privatize (they did have plans to do so)? Botswana is still conducting feasibility studies Most SADC countries have begun exclusivity periods that will see the licensing of a second national operator It has become increasingly difficult for late liberalizers to attract new fixed- line operators to their markets Because of the rising popularity of mobile services in recent years Is it still true that most SADC countries, except Tanzania and Zambia, require Mobile and value added networks (VANS) operators to lease networks from the incumbent for international and domestic long-distance traffic routing? What are the implications? Has this resulted in continued monopoly and a continuation of the associated infrastructure inadequacies and high costs of network services? Slide 53 Regulatory Issues across SADC (cont) Mobile Telecommunications Mobile subscribers have grown from being non-existent just over a decade ago to outnumbering fixed-line subscribers Has the number of fixed lines been declining in recent years due to increasing numbers of subscribers disconnecting? All the SADC countries have licensed mobile operators and have some level of competition in the sector Except for Swaziland or have things changed there too? Tanzania has a fully liberalized market with no foreign ownership restrictions Zambia has a 60 per cent domestic partner requirement What is the situation in the rest of the Region? Slide 54 Regulatory Issues across SADC (cont) Mobile Telecommunication Equity restrictions (examples) Some countries have restrictions on the equity which foreign suppliers can hold in a telecommunications company Namibia = 49% maximum Tanzania = 65% maximum Zambia - foreigners can only own a maximum of 75 per cent of an existing facilities-based operators equity and can only own 25 per cent of a new entrant facilities-based operator Zambia -no limitations on equity held by foreigners in retail-based operators so they can be 100 per cent owned by foreigners whether it is in an existing entity or a new entrant Tanzania - foreign retail-based service suppliers can only establish as a joint venture or partnership How does Mauritius compare? Slide 55 Regulatory Issues In SADC (cont) Postal Services In most SADC countries, postal and courier services are provided by State-owned enterprises such as Lesotho Postal Services, Mauritius Post Limited, Namibia Posts Limited and South African Post Office In recent years, privately owned courier companies in South Africa and Mauritius, for example, have been spearheading the courier of parcels and other goods DHL, FedEx and Cargo Express Some years ago the SADC ministers responsible for postal, telecommunications and ICT directed that a technical committee be formed comprising operators, regulators and member States to come up with a policy and legislative framework that will guide the implementation of the project. What was the outcome? Slide 56 Regulatory Issues In SADC (cont) Postal Services Mauritius - postal services are provided by Mauritius Post Limited, which is wholly owned by Government Namibia - Government does not restrict the entry of new suppliers into the postal and courier services sector In terms of the posts and telecommunications legislation, new firms may freely engage in postal and courier services for the supply and delivery of letters and parcels to different destinations. Counter services and mailbox rental services - limitations have been placed on the entry of new suppliers for both local and foreign-owned firms. Tanzania, Zambia and Zimbabwe - the supply of letters weighing up to 500g, counter services and mailbox rental services is restricted to one supplier, which is State-owned Slide 57 Regulatory Issues In SADC (cont) Postal Services For the other segments of post and telecommunications, private ownership as well as foreign ownership is allowed In Mauritius and Zambia - a foreign supplier can own up to 100 per cent of a courier supplier Tanzania - to 65% Zimbabwe and Namibia - up to 49% Overall, regulations vary widely across SADC Harmonization process established by ministers under the SADC umbrella needs to be expedited for trade to increase. Slide 58 Audio Visual Services Audiovisual services comprise motion picture projection services, motion picture and videotape production and distribution services, radio and television services and transmission services Are radio and television services still mainly State-owned in SADC countries? The South African Broadcasting Corporation (SABC) is the largest radio and television transmission company in the region, comprising close to 20 radio stations targeting a combined audience of over 20 million South Africa has also by far the largest television audience in SADC, comprising over 4 million licensed television households South Africas M-Net, a privately-owned subscription television, has over 1.2 million subscribers in 49 countries across Africa, including SADC Is piracy of music and videos still a real problem? Is this due to non-existence or lack of enforcement of regulatory measures and or laws in the industry? Slide 59 Audio visual Commitments are made mainly in motion picture projection services and motion picture and videotape production and distribution services Very few commitments are made in the areas of radio and television services or transmission services Seen as a sensitive sub-sector Can also be very lucrative Foreign ownership of suppliers of radio and television services or transmission services is also allowed across SADC Tanzania foreign ownership of suppliers is limited to % Not sure about Zimbabwe Slide 60 Regulatory Issues in SADC Audio Visual Licences are required in order to provide audiovisual services in SADC countries Conditions for acquiring licences vary from country to country Zimbabwe- the applicant for a licence has to (a) ensure that majority domestic ownership; (b) pay licence fees; (c) present a business plan; and (d) meet minimum domestic content (75%) requirements Tanzania- the same requirements have to be met, with additional requirements that the supplier must have minimum capital to invest Zambia- the new entrant does not have to prove that majority ownership is domestic, nor does it have to meet any minimum capital requirements. Slide 61 GATS Commitments in Communications In SADC, only Mauritius, South Africa, Zimbabwe and Lesotho made GATS commitments in the telecommunications sector Only Lesotho has made commitments on audiovisual services Botswana, Lesotho and South Africa have made commitments in the couriers subsector South Africa is the only SADC member to have subscribed to the Telecom reference paper Most of the commitments were made to liberalize value added services and did not open the fixed-network market What did Mauritius do? Slide 62 Key issues It is clear that a substantial agenda for services liberalization, spanning access, competition, and ownership exists within the region What form(s) should this take? How should interconnectivity and cross-border supply be addressed? How should ownership and competition issues be addressed? Slide 63 Transportation Services Slide 64 SADC: Transportation Sector The SADC Region transportation system comprises road, railway, air and port systems principally serving regional transit traffic Most of the infrastructure and operating organizations are owned wholly or partly by States Is the sector facing financial problems? Or have the problems been resolved through restructuring and increased involvement of the private sector in the provision of transport services? Slide 65 SADC transport network (2007) Slide 66 Pricing of transportation in SADC(2006) Slide 67 Cost comparisons Mauritius - the lowest-cost country both in terms of number of days and dollar cost Zambia - the most expensive country to conduct international trade in SADC as indicated by the number of days and the cost of trade Several factors contribute to differences in cost levels and structure efficiency of distribution systems quality of transportation infrastructure the regulatory and institutional frameworks Slide 68 Importance of South Africa Many SADC members depend heavily on South Africas railways, highways, airports and other transit transport facilities Botswana, Lesotho, Malawi, Swaziland, Zambia and Zimbabwe all landlocked countries highly dependent on South African ports, with 90 per cent of their trade passing through South Africa South Africa is a major player in the export of services as it is among the top 15 developing country services exporters, which account for 80 per cent of all developing country services exports Slide 69 Air Transport Services Air transport services comprises aircraft repair and maintenance services, computer reservation services, selling and marketing of air transport services Chapter 9 of the SADC Protocol on Transport, Communications and Meteorology creates a framework for cooperation in civil aviation The main objectives include Ensuring the provision of safe, reliable and efficient services in support of socio-economic development in the region Addressing the constraints of small national markets, market restrictions and the small size of some SADC airlines in order to further ensure the competitiveness of regional air services in a global context Encouraging the involvement of the private sector and the need for the restructuring of State-owned enterprises and integration of regional systems through compatible policies and legislation Slide 70 Yamoussoukro Declaration of 1988 COMESA, the East African Community (EAC) and SADC decided to base their activities on the Yamoussoukro Declaration of 1988 What is all this about? How has it progressed? Within the Air transport sub-sector, there is one regulator in each SADC country which generally issues licences and ensures that international standards are met Regulators are generally statutory bodies falling under the supervision of the ministry responsible for transportation, or are themselves government departments Funding is usually from the Government, supplemented by licence fees. Slide 71 Road Transport Road transport services cover passenger and freight transport, rental of commercial vehicles, maintenance and repair of road transport equipment, and supporting services for road transport services Chapters 4 (road infrastructure), 5 (road transport) and 6 (road traffic) of the SADC Protocol on Transport, Communications and Meteorology provide a framework for achieving harmonization of regional road traffic and transport systems Some of the regional associations in place and already taking part in the implementation of the protocol include The Federation of East and Southern African Road Transport Associations, The Association of Southern African National Road Agencies (ASANRA) which aims to enhance regional policy coordination and enhance the management of the regions road infrastructure Slide 72 Regulation related issues Road Transport Each country has legislation whose main objective is to license vehicles, provide for different classes of licences for different vehicles, and establish regulatory bodies which issue licences Competition within the road transport sector exists in some countries between foreign entities and local entities. However, there are certain restrictions on market access in some segments Zimbabwe - restrictions on the entry of new firms whether local or international in passenger transportation, freight transportation, rental of commercial vehicles with operator, and maintenance and support services for road transport services. Tanzania does not restrict new entries in these subsectors Some countries require that foreign firms establish themselves as subsidiaries only, while in others they can also establish as branches or representative offices Slide 73 GATS Commitments Road Transport In SADC, only Lesotho and South Africa made GATS commitments in the road services sector On passenger, freight and the maintenance and repair of road transport equipment Limitations to market access and national treatment with respect to the presence of natural persons through horizontal limitations Provides limited access for skilled personnel and the provision of training for local personnel Slide 74 Rail Transport Rail transport services cover passenger and freight transport, maintenance and repair of rail transport equipment, and supporting services for rail transport services The SADC railway industry comprises 13 operating railways, all of which are State-owned. 10 of these form the Interconnected Regional Rail Network (IRRN), with a total of nearly 33,600 route-kilometres of standard gauge (1.067 metre) track Of the 10, South Africas Spoornet accounts for 61.8 per cent of the network Dominance of South Africa again No SADC Country made commitments in Rail Transport Slide 75 Discussing Negotiating Strategies Offensive and defensive negotiation strategies Why might offensive strategies be selected? Export potential Requirement for foreign Investment (Mode 3) Non-sensitive industry Why might defensive strategies be selected? Sensitive industry Reserved for nationals oEssential services oImportant for achieving National Development goals Infant industry requiring protection