A MAJORITY of Zimbabwean industries are not ready to compete with federated economic blocs such as the European Union (EU), a recent study by Friedrich Ebert Foundati
on (FES)’s Sandrine Pierloz says.
Headed the Impact Assessment of the Economic Partnership Agreements on Poverty Alleviation, the report noted that financial help from the EU that should complement trade reforms and help counterbalance the negative effects of liberation had not been made available because of the political situation in the country.
The EU, the world’s largest economic and political grouping, has withheld financial aid to Harare since 2002 when it joined an international outcry over President Robert Mugabe’s re-election.
Pierloz said in the report that financial resources from the EU and other economic groupings should have been used towards strengthening commercial ties between Zimbabwe and Brussels, headquarters to the EU secretariat.
“There are no certainties concerning the future of those resources,” she said.
“The majority of Zimbabwe’s industries are not ready yet for more competition from the EU (goods),” the FES staffer said, adding Harare itself was not “ready yet” for the consequences of huge revenue losses arising from the EU-Zimbabwe trade imbalances.
“Savings and capital have been exhausted,” the report says.
It further says that there are no incentives for foreign investors to take up commercial holdings in the country. Lack of stability surrounding property rights and qualified labour is also evident, says the report.
Pierloz slammed racial speech in Zimbabwe, mainly voiced by key government personnel.
Said the report: “The actual situation is similar to the Economic Structural Adjustment Programme (Esap): relative support, relative understanding and commitment, no strategy with complementary policies, little participation of some stakeholders, no funds without mentioning the deep economical and political crisis.
“In our view economic partnership agreements (EPAs) cannot be considered as a development tool for the time being. We do not believe that the EPAs have the capacity to alleviate poverty in Zimbabwe.”
In 2000, Zimbabwe along with other African, Caribbean, and Pacific (ACP) member countries signed a new convention with the EU, known as the Cotonou agreement, which replaced the Lome Convention.
Under the convention, running until 2020, trade deals and protocols between the ACP and EU are scheduled to end by 2007.
Although the document says that the country will be heavily exposed by the EU trade agreement, the Minister of Indutry and International Trade Samuel Mumbengegwi has been adamant that the newly-found partnership with East Asian countries will not have any negative impact on local industry.
For EPAs to influence development and serve their poverty alleviation purposes, the report said, there ought to be concrete efforts in pilot project-countries to create jobs as well as wage increases, especially in the agricultural, manufacturing and mining sectors.
“Authorities should work at uncovering the informal sector. They should make that data rapidly available to the public and consultancy organisations,” it added.
“They (governments) should analyse the likely impact of EPAs regarding job creation and (job) destruction, and start designing programmes to help displaced workers to be able to reintegrate in the labour market or seek training for other sectors,” said the 100-page discussion paper.
The report said that it appeared many people in Zimbabwe and even concerned authorities, completely ignore what is at stake in terms of trade policies.
Pierloz noted that “many people even those in decision making are not prepared to take appropriate positions” for the EU and other negotiations, in developing propositions that help new tariff schedules.
She said that key sectors of production should always be protected, adding that complementary policies should be put in place.
Harare, she said, should also strengthen its anti-corruption drive in key facets of revenue generation and earnings such as customs, which enable people to bring in goods and enlarge economic cooperation between the EU and Zimbabwe.
She said corruption at borders was affecting investment and creating “unfair competition” on the local market.
“It is a question of making people realise that they harm the whole society, with these kind of individualistic behaviours. It is the duty of the government to make sure that these behaviours are reprehended,” she said in the report.
“The government should in general consider policies that will help exporters, like supporting organisations such as ZimTrade or different ministries.
“It should enable exporters to acquire the needed inputs at the best prices, whether from local production or imported,” Pierloz said.
The study also touched on possible reduction of import duties on inputs and materials for the manufacturing sector, as impetus to lowering “domestic prices and make manufactured exports more competitive”. This should be done with multi-stakeholder consultation involving civil sector and private business.
“Zimbabwe should only open sectors that have already well-developed (infrastructural links) and that are already present in other countries, in other words they have already experienced international competition,” the report said.
Pierloz said most EU industries were much more prepared to do business with this part of the world: “The actual state in which the manufacturing sector is (currently in), is especially bad at present. The productivity is low… and capacity utilisation is under the maximum rate,” Pierloz said.
“All these facts negatively affect competitiveness of the manufacturing sector on the domestic and international markets. In this situation, most Zimbabwean industries will face difficulties to cope with more competition and will find it hard to enter foreign markets in a short time,” she added.
The report said that EPAs are expected to have a major impact on the poor in Zimbabwe.
“If the impact is going to be positive or negative will depend on how the government leads the negotiations.
“Zimbabwe has to strenthen its positions regarding agricultural isues and subidies of agricultural goods in EU member countries as most of the poor get their revenue from this sector.”