The Sunday Mail
Allan Majuru
Trade agreements between Zimbabwe and countries in the region provide opportunities to accelerate economic development through smooth movement of goods and services.
Some of the challenges that hinder the development of Zimbabwe’s export capacity include restrictive customs requirements and “closed borders” of countries that have potential markets.
For example, duty and import-related taxes sometimes constitute a large percentage of the final price for cross-border transactions, thus making products expensive.
To address these challenges, Zimbabwe has signed several trade agreements, which are meant to stimulate and encourage bilateral and multilateral trade, reduce and eventually eliminate barriers to trade.
Currently, Zimbabwe is signatory to the Common Market for Eastern and Southern Africa Free Trade Area (Comesa FTA), established in 2000 to deepen integration through removal of trade barriers such as huge export and import fees.
Comesa is a 21-member state regional bloc established to promote regional integration through trade. It is meant to develop natural and human resources for the benefit of the countries.
The regional trading bloc has put in place policies, systems, regulations and procedures which are conducive, transparent and facilitate an environment for conducting trade across the region.
Under the Comesa FTA, no tariffs are levied on goods made in other member states, whilst each member state applies its own regime of tariffs to goods imported from outside the region.
This means that preferential tariffs are granted to goods that wholly originate within the Comesa region.
To enable the small trader to benefit from the preferential rates enjoyed by commercial traders when importing or exporting goods within the trading bloc, Comesa is implementing a simplified trade regime (STR), currently operational between Zimbabwe and Zambia, and Zimbabwe and Malawi.
The Simplified Trade Regime is a customs clearance procedure used by small-scale cross-border traders importing or exporting goods from one Comesa member state to the other.
STR is used when the small-scale cross-border trader is exporting goods valued at US$1 000 or less per consignment. However, the goods should be listed on the Comesa STR Common List — goods that have been grown or wholly produced in the Comesa region — and should be for re-sale or use in the business.
By becoming a signatory to the Comesa FTA, Zimbabwe has access to a huge regional market with a population of more than 540 million people and a fair share of global trade in goods and services worth US$235 billion.
In addition, when competing with other exporters from outside the Comesa region, Zimbabwean exporters have a substantial advantage of fewer customs requirements and reduced duty.
Given the vast opportunities in the Comesa FTA, Zimbabwe is, however, not harnessing the full potential presented by this trading arrangement.
According to Trade Map, (which provides on-line access to the world’s largest trade data-base), there has been limited trade between Zimbabwe and other Comesa member states, with the country exporting goods valued around US$97 million against an import bill of US$464 million in 2018.
To realise benefits of this Comesa FTA, there is, therefore, a need for Zimbabwean exporters to work closely with national institutions to ensure they have adequate knowledge on how to use the agreement and boost their export value.
Using the trade agreement will lead to lower Government spending – that is, after the trade agreement to remove subsidies, funds can be put to better economic use.
Working closely with national institutions will further ensure that exporters have the capacity to produce high-end products for export competitiveness within the regional market, both in terms of quality and branding.
ZimTrade, the country’s trade development and promotion organisation, has been assisting local companies to enhance productivity and export competitiveness through factory floor interventions.
ZimTrade interventions have resulted in local companies boosting their production and export capacity through investment in newer and more sustainable technologies.
The organisation has also been working with Senior Experten Service (SES), a German volunteer organisation for retired experts and executives, to provide assistance to the manufacturing value chain, which include processes design, factory-floor layout, production technologies, material-handling and product design, amongst others.
In 2018 alone, 42 missions were completed by ZimTrade and SES covering areas such as engineering, organic farming, education, clothing and textiles and processed foods, among others.
The intervention has been evolving and has taken a sector-based approach with the aim of creating strong value chains and increasing competitiveness for local companies to take advantage of the Comesa FTA agreement.
Allan Majuru is ZimTrade’s CEO.
