Rise of the Brics: Wall against LDCs

Economic growth of the emerging markets may create an access barrier to Least Developed Countries (LDCs) notes a recent working paper by the World Bank.

The World Bank has said rising incomes prompt higher standards and thus apparently the economic growth of Brazil, Russia, India, China, and South Africa (Brics) may be a spell on poor countries.

In its working paper: Measuring the impact of standards on agricultural exports of low income countries, the World Bank investigates the effect of national and international standards on agricultural exports of developing countries, with a focus on low income countries in Africa among others.

“Our research paper focuses on trends in import standards for agricultural goods in the Brics, and the impact of standards on exports from developing countries. We show that, in general, as a country’s income rises, so do its product standards. Thus, the question arises: as incomes in the Brics rise, will this create new opportunities for exports from Least Developed Countries (LDC) – as many hope, or as standards in Brics become more restrictive, will LDCs be vulnerable to exclusion from these growing markets?” reads the paper in part.

However, the World Bank adds that the research is still work in progress.

Generally, Malawi has certification problems and therefore a problem to access developed economies such as the European Union and North America.

Responding to a question on Sunday, a trade expert Victor Mponda-Banda said the country needs to work on certification if value addition is to be meaningful.

“Malawi should invest in the Standardisation, Quality Assurance and Accreditation and Metrology (SQAM) infrastructure and expertise. It is expensive but it is worth it if we really wish to improve the competitiveness of our exports. Certification of sanitary and phyto-sanitary regimes in line with the international standards is key. Our products will not be competitive in the Brics or anywhere out of pity. Our groundnuts and the legendary chambo fish would fetch high prices on the international market, if they were certified as free from traces of aflatoxin and salmonella respectively. Value addition would be incomplete if products are not properly certified with internationally recognised standards,” said Mponda-Banda.

He argued that the relatively high transportation costs that Malawi products face, may be offset by exporting a basket of high value-added products certified with internationally recognised standards.

He further noted that a robust and internationally recognised SQAM regime has a positive bearing on investment in a country. He argued that prospective investors would be attracted to establish commercial presence in the country if their products would be certified with international standards locally.

Recently, National Working Group on Trade Policy (NWGTP) chairperson Geoff Mkandawire, urged for the accreditation of the Malawi Bureau of Standards (MBS).

He noted that food products face problems of certification adding that this is a problem in the country especially for small businesses.

But Ministry of Industry and Trade spokesperson Wiskes Nkombezi said the government is working on the problems.

He pointed out that currently government is upgrading MBS in terms of infrastructure, equipment and technical skills under a project funded by the European Union and the Malawi government. He hoped that after completion of the project, the bureau will be recognised and certification will not be a problem.

A recent survey conducted by the International trade centre (ITC) ,revealed that product certification and export licensing are top non-tariff measures (NTM’s) that exporters and importers experience in Malawi.

The survey noted that technical measures applied by partner countries affect products representing almost 90 percent of Malawi’s export value. It noted that the recurring underlying impediment is the fact that MBS, as the national standards body and certification focal point, is not an internationally accredited facility.

It added that therefore, importing countries in North America, the EU and Asia do not recognise technical certificates of MBS and thus exporters need to revert to private sector certification facilities, which imply additional costs for them.

The survey noted that the European Union (EU) is Malawi’s largest export destination but 28.6 percent of interviewed companies reported one or more burdensome NTMs in this market, and thus it is a relatively difficult region to access. The report added that Northern America shows similarly high shares of affected companies 33 percent.

However, the ITC report notes that Asia, especially China, is a growing market for Malawi’s exports and that for China and the Russian Federation, two of the largest markets, no burdensome NTMs were registered.