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African free trade area: Business urges caution


ZIMBABWE’S industries said this week authorities must address a cluster of hurdles that have discouraged foreign direct investment inflows from the world’s biggest corporations, as the African Continental Free Trade Area (AfCFTA) comes alive in January 2021.

In an interview with businessdigest, Confederation of Zimbabwe Industries (CZI) president, Henry Ruzvidzo said while relaxation to trade barriers present opportunities for domestic industries to export into the larger market, authorities will have to work around the clock to lead companies into Africa.

“We need to move with speed to address all concerns over doing business in Zimbabwe to attract investors and the Zimbabwe Investment Development Agency (ZIDA) has its work cut out,” Ruzvidzo said.

ZIDA is the State agency with the mandate to review hurdles to investment in Zimbabwe and take corrective action.

“One of the biggest concerns will be where foreign investors assemble production capacity to take advantage of the relaxation of regional trade. If they set up in Botswana, South Africa or Zambia and they produce goods that (we) produce we have a big task. One of our major concerns will be logistics. Logistics must be in place to take us to the market quickly,” the CZI president said.

In Southern Africa, governments appear to be responding to this concern with the establishment of projects like the multimillion Kazungula Bridge, which links Botswana, Zimbabwe and Zambia and significantly reduces distances travelled by transport networks.

Ruzvidzo said logistical gridlocks were not only confined to Zimbabwe but across the continent.

“But infrastructure will be developed as governments see the benefits of intra-Africa trade. It will now make sense to add value in Africa and trade with a bigger market. We have been looking at this as CZI. There is a national strategy being worked out and we have been providing input,” he said.

AfCFTA will cut across Africa’s 55 economies with a combined 1,3 billion consumers and a combined US$3,2 trillion gross domestic product.

The AfCFTA agreement contains provisions compelling member states to remove tariffs from 90% of goods entering their markets from the region.

This is expected to allow free access to commodities, goods and services across the African continent.

Zimbabwe’s industries have been looking outwards to push exports and survive a difficult domestic economic meltdown.

This week, Ruzvidzo said this crisis had been compounded by the Covid-19 pandemic, which has been making a fresh comeback in the final months of 2020, following a period of hope that Africa had tamed its spread.

In a recent paper submitted to the government the CZI said intra-Africa trade was among several solutions to Zimbabwe’s crisis.

“The country should participate meaningfully in the regional and international economy and take advantage of AfCFTA and TFTA (Tripartite Free Trade Area)”, said the CZI.

“Opportunities for synergies with all neighbouring countries to establish One Stop Border Posts and enhance efficiencies and collaboration need to be executed to improve flow of trade. One of the key measures to ensure export competitiveness is to allow all raw materials to be imported duty free.

“To enable locally manufactured goods to compete with imports as well as to compete in the export markets where our products compete with products from countries that we source some raw materials from.

“Establishment of the supporting institutional frameworks that ensure cheap raw materials for various manufacturing subsectors locally. Import Substitution – further restriction on imports especially for finished goods and services that can be produced locally. Acceleration of the implementation of agro-industrial linkages.” .

The Zimbabwe National Chamber of Commerce (ZNCC) said the country must review efficiencies at ports of entry to enhance international trade.

“There is a need for allocation of funds towards improving efficiency for border systems — modernise the infrastructure at ports of entry in line with changing global trends and business needs. There is a need to digitise all Zimra operations at the borders; Zimra should move to paperless operations.

“There is also snail pace progress in implementing One Stop Border Posts across the entry points with the Beitbridge Border Post supposed to be the second to implement after Chirundu. There is a need to increase border patrol along the Limpopo river so as to curb smuggling. Approximately US$80 million is lost annually through smuggling,” said the ZNCC.

In a recent interview, CEO Africa Roundtable chief executive officer, Kipson Gundani was bullish about prospects for a giant market for Zimbabwean exports.

“We are boosting trade by removing barriers. The AfCFTA is a game changer in terms of boosting trade in Africa. Zimbabwean firms are prepared. We may feel that we are in the murky waters but we can partner fellow players from the continent, so this will bring us into one big force. I think by doing the right things, we can compete competitively,” Gundani said.

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