Local companies to benefit from AfCFTA

trade focus

allen majuru

Zimbabwe has good political relations with the rest of Africa.

The continent essentially provides a platform for the country to promote its interests.

Recently in his weekly column in The Sunday Mail, President Mnangagwa said that Africa offers the strongest defense of Zimbabwe’s interests.

He also clarified that Zimbabwe is following transactional diplomacy, where the new approach is to unlock economic benefits from the country’s foreign relations.

The focus on Africa is no coincidence; It is strategically calculated, based on the country’s ability to exploit the economic opportunities available across the continent.

Beyond these opportunities, Zimbabwe has a shared history with the 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 is pursuing the best options to fast track continental economic integration, especially in trade.

That’s where the African Continental Free Trade Area (AfCFTA) comes in.

A few years ago, member states of the African Union (AU) agreed that the structure of trade on the continent was unsustainable, as countries were trading more among themselves than with other continents.

This trade imbalance has seen African countries failing to complement each other in terms of adding their raw materials or taking advantage of areas that individual countries enjoyed a competitive advantage over.

Therefore, 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?

Colonization left Africa isolated and with little cooperation or integration.

It is common for AU member states to have tariff and non-tariff barriers, making it difficult for countries to trade 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 1996 Southern African Development Community (SADC) Protocol on Trade applies to countries in the southern part of the continent and the island nations of Madagascar, Mauritius and Seychelles.

To address the challenge, African states came up with a continent-wide trade agreement aimed at promoting intra-African trade.

Understanding AfCFTA

AfCFTA plans to transform Africa’s economy by removing trade barriers as well as deepening integration through improved infrastructure development, investment flows and increased competition.

The agreement will progressively eliminate tariffs on intra-African trade, making it easier for African businesses to trade within the continent and benefit from the growing African market.

Cooperation between customs authorities on product standards and regulations as well as trade transit and facilitation will also ease the flow of goods between Africa’s borders.

The AfCFTA brings together all 55 AU member states, comprising a market of over 1.2 billion people, including a growing middle class and a combined GDP of over US$3.4 trillion.

As trade becomes easier, the AfCFTA will create a single market for goods and services.

With the agreement largely relying on simplified immigration systems, this will improve the movement of businesses and, by extension, investment.

Intra-African trade will also be strengthened through better coordination and coordination of trade liberalization and facilitation in regional economic communities.

Zimbabwean companies benefit

Local companies would benefit from participating in regional value chains, which would enable them to specialize in productive processes and activities where they have a competitive advantage.

Easier trade among African countries, as envisaged by the AfCFTA, would facilitate the establishment of regional value chains.

It will also open up access to technology and brand names, while accelerating export diversification and growth.

In most economies within the region, the focus is on carrying out all production processes within value chains internally.

The practical implementation of the AfCFTA has the potential to boost industrialisation, job creation and investment, thus enhancing Africa’s competitiveness in the medium to long term.

It is estimated that the AfCFTA has the potential to increase intra-Africa trade by 52.3 percent through the elimination of import tariffs.

It is believed that current intra-African trade could be doubled if non-tariff barriers were also reduced. With an average tariff of 6.1 percent, businesses currently face higher tariffs when exporting within Africa than outside the continent. The 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.

In addition, the agreement will connect local companies to new markets that we have not traditionally exported to.

Already, Zimtrade – the national trade development and promotion organization – is implementing a number of programs to ensure local companies benefit from continent-wide trade agreements.

These activities include programs to connect local businesses with potential buyers and distributors in non-traditional markets.

For example, ZimTrade organized the Zimbabwe-Ghana Business Forum, held in the last week of March, where local companies showcased their products to over 200 businesses in the West African market, all of which sought to source products from Zimbabwe. expressed interest.

During the same period, Zimtrade also conducted a market survey in Nigeria to identify opportunities for local products and services.

These activities, along with the support of Zimbabwean embassies across Africa, are expected to provide a soft landing for local products in non-traditional markets.

Zimtrade is also conducting an Inward Buyers Mission in April, targeting three African countries – Equatorial Guinea, Kenya and Malawi. Buyers from these countries will meet Zimbabwean manufacturers on their premises to gain a better understanding of local production processes.

In turn, this will boost Africa’s confidence in Zimbabwe’s production and supply capacity.

Alan Majuru is the CEO of Zimtrade