The Sunday Mail
Trade Focus
Allan Majuru
ZIMBABWE enjoys good political relations with the rest of Africa.
The continent essentially provides a platform for the country to enhance its interests.
Writing in his weekly column in The Sunday Mail recently, President Mnangagwa said Africa provides the strongest defence of Zimbabwe’s interests.
He also made it clear that Zimbabwe is pursuing transactional diplomacy, where the new approach is to unlock economic benefits from the country’s foreign relations.
The focus on Africa is not coincidental; it is strategically calculated, based on potential for the country to harness economic opportunities that are available across the continent.
Apart from these opportunities, Zimbabwe shares a common history with the entire continent, as well as a common interest in the economic development of its people.
Thus, in the same spirit with the rest of Africa, Zimbabwe has been pursuing best options to fast-track continental economic integration, particularly in trade.
This is where the African Continental Free Trade Area (AfCFTA) comes in.
A few years ago, African Union (AU) member states agreed that the structure of trade on the continent is unsustainable, as countries were trading more with other continents than amongst themselves.
This trade imbalance has seen African countries failing to complement each other in terms of value-adding their raw materials or leveraging on areas individual countries enjoyed competitive advantage.
So, for decades, Africa has been exporting raw materials and importing finished products.
African countries were, and still are, importing products from other continents, but these same products are available in AU member states. How did we get here?
Colonisation left Africa disconnected and with very little cooperation or integration.
It became common for AU member states to have tariff and non-tariff barriers that made it difficult for countries to do business together.
Movement within the continent was also limited due to visa requirements.
Coming up with a comprehensive trade agreement for the continent proved increasingly difficult.
Although multilateral trade agreements existed, they were limited to regions.
For example, the Southern African Development Community (SADC) Protocol on Trade of 1996 applied to countries in the southern part of the continent and island nations of Madagascar, Mauritius and Seychelles.
To address the challenge, African states came up with a continent-wide trade agreement, whose goal was to boost intra-African trade.
Understanding AfCFTA
AfCFTA plans to transform Africa’s economy by dismantling trade barriers, as well as deepening integration through improved infrastructure development, investment flows and enhanced competition.
The agreement will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent and cater for and benefit from the growing African market.
Cooperation between customs’ authorities over product standards and regulations, as well as trade transit and facilitation, will also make it easier for goods to flow between Africa’s borders.
AfCFTA brings together all 55 AU member states, covering a market of more than 1,2 billion people, including a growing middle class and a combined gross domestic product of more than US$3,4 trillion.
As trade is made easier, AfCFTA will create a single market for goods and services.
With the agreement largely depending on simplified immigration systems, this would likely improve movement of businesspeople and, by extension, investments.
Intra-African trade will also be strengthened through better harmonisation and coordination of trade liberalisation and facilitation across regional economic communities.
Benefits for Zimbabwean companies
Local companies are set to benefit by participating in regional value chains, which will enable them to specialise in those productive processes and activities where they have competitive advantage.
Easing trade between African countries, which AfCFTA envisages, will facilitate the establishment of regional value chains.
This will also open access to technology and brand names while also accelerating export diversification and growth.
In most economies within the region, the focus is on completing all production processes within value chains internally.
Practical implementation of AfCFTA has potential to foster industrialisation, job creation and investment, thus enhancing competitiveness of Africa in the medium to long term.
It is estimated that AfCFTA has potential to boost intra-Africa trade by 52,3 percent through the elimination of import duties.
It is believed current intra-African trade can be doubled if non-tariff barriers are also reduced. With average tariffs of 6,1 percent, businesses currently face higher tariffs when they export within Africa than outside the continent. AfCFTA will progressively eliminate tariffs on intra-Africa trade, making it easier for African businesses to trade within the continent and benefit from the growing African market.
Further, the agreement will connect local companies with new markets, which we have not been traditionally exporting to.
Already, ZimTrade — the national trade development and promotion organisation — is implementing several programmes to ensure local companies benefit from the continent-wide trade agreement.
These activities include programmes to connect local businesses with potential buyers and distributors in non-traditional markets.
For example, ZimTrade organised the Zimbabwe-Ghana Business Forum held in the last week of March, where local companies exhibited their products to over 200 businesses in the West African market, which all expressed interest to source products from Zimbabwe.
During the same period, ZimTrade also conducted a market survey in Nigeria to identify opportunities for local products and services.
These activities, coupled with support from Zimbabwe’s embassies across Africa, are expected to provide a soft landing for local products in non-traditional markets.
ZimTrade is also organising an Inward Buyers’ Mission in April, targeting three African countries — Equatorial Guinea, Kenya and Malawi. Buyers from these countries will visit Zimbabwean manufacturers at their premises to have a better understanding of local production processes.
This will, in turn, boost Africa’s confidence in the production and supply potential of Zimbabwe.
Allan Majuru is ZimTrade’s chief executive officer
