Zambia to improve the economy through ACFTA Project

 Zambia to improve the economy through ACFTA Project

By Daily News Reporter

The operationalization of the much espoused African Continental Free Trade Area is projected with over 24 countries have ratified the treaty has raised questions why Zambia is seemingly lurking in the shadows.

The much-touted or grand finale-ACFTA, characterized by pomp and splendor took center stage in the Niger capital, Niamey, last July during the Heads of States and Government summit when Nigeria and Benin signed the AfCFTA agreement; all African countries except Eritrea have now signed.

Gabon and Equatorial Guinea also deposited their instruments of ratification, bringing the number of countries that have ratified the agreement to 28.

Countries that have deposited their instruments of AfCFTA ratification with the African Union Commission Chairperson are Ghana, Kenya, Rwanda, Niger, Chad, Congo Republic, Djibouti, Guinea, Eswatini, Mali, Mauritania, Namibia, South Africa, Uganda, Ivory Coast (Côte d'Ivoire), Senegal, Togo, Egypt, Ethiopia, the Gambia, Sierra Leone.

Ostensibly, the Agreement Establishing the African Continental Free Trade Agreement (AfCFTA) entered into force on 30 May 2019 for the 24 countries that had deposited their instruments of ratification.

The date marked 30 days after 22 countries had deposited their ratification instruments with the African Union Commission (AUC) Chairperson – the designated depositary for this purpose, as stipulated in Article 23 of the Agreement.

The 22-country threshold in conformity with legal provisions was reached on 29 April 2019 when Sierra Leone and the Saharawi Republic deposited their instruments of ratification with the depositary. To date, 28 countries have both signed and ratified the AfCFTA Agreement. Of the 55 AU member states, only Eritrea has yet to sign.

The operational phase of the AfCFTA launched at the 12th Extraordinary Session of the Assembly of the African Union on 7 July 2019 meant the AfCFTA being governed by five operational instruments. These include the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory, data shows.

However, with all these in place, Zambia is still in its planning stage to join other countries that have given thumbs up to the ACFTA. According to commerce trade and industry chief economist, Paul Mumba, “Zambia is ready to finalise its ACFTA strategy and implementation plan”

Being a state party to the agreement indicating the highest political will especially that the framework agreement was signed by President Edgar Lungu, Mumba stated recently during a planning meeting with various players who sat to finalise Zambia’s ACFTA strategy and implementation plan in Livingstone.

According to Mumba, the series of meetings planned ahead of the final signature were important as would help prepare various key players-government and Small and Medium Entrepreneurs-all needed to respond to the opportunities and challenges lying ahead, come the ACFTA.

“We need to plan to put a strategy in place so that we can ably respond systematically to the ACFTA challenges and opportunities” he said. Focus, he noted should be on strategies to provide opportunities that come with the ACFTA than the negative fears of Zambia industries failing to compete favorably in the wider market as perceived.

Mumba’s views tally with the concerns raised by industries players in the telecommunication, manufacturing, pensions, among others that felt Zambia was ill-prepared to stand the competition expected under the ACFTA and needed at least 15 months to get ready before joining the fray.

However, United Nations Economic Commission for Africa-UNECA believes to the contrary. It argues, smaller African economies need not fear the AfCFTA. Instead, they embrace the accord for the benefits it will bring to the continent through expanded intra-African trade, argues UNECA’S chief economist and executive secretary, Vera Songwe.

“Beyond central technical considerations in relation to the design of AfCFTA modalities, ECA’s assessment reveals that smaller economies should certainly not fear the AfCFTA reforms but rather embrace it; particularly, as African LDCs would be those getting the largest increase in intra-African exports of industrial products.

“And of course, it must be underscored that such benefits will only materialize if the AfCFTA reforms are properly designed and effectively implemented.

She argues: “Our analysis shows that the AfCFTA is win-win for all countries, big and small, agricultural and industrial, landlocked and coastal, in regard to both increases in exports and overall welfare or GDP.”

ECA is currently assisting member States with the development and implementation of much needed national AfCFTA strategies, to ensure they can best benefit from the reforms.

And trade think tank, Centre for Trade and Policy Development-CTPD wants Zambia to assess its position and move in tandem with other countries that have appended their signatures and deposited their instruments awaiting the flag off of the ACFTA.

A consultative meeting called in collaboration with Zambia’s ministry of Commerce in Lusaka Thursday, Nov. 14 to establish the readiness of Local Manufacturing Industries and Entrepreneurs ahead of the fast approaching implementation of the AfCFTA.

The capacity building meeting will seek to resolve among other pertinent issues understand business and trading strategies that Local Industries and Entrepreneurs have put in place to support the growth of the Local Manufacturing Industries amid the envisaged competiveness under the AFCFTA.

“Through this forum CTPD hopes to establish the perception and views of local manufacturing industries, the private sector, civil society organizations on the participation of Zambia in the AfCFTA.” Isaac Mwaipopo noted ahead of the meeting.

At country level CTPD argues there are still some outstanding issues such as the list of sensitive and excluded products and Rules of Origin that need to be addressed for the country to fully harness the benefits of the continental agreement.

There is need intensify capacity building and sensitization programmes around the operations of the AfCFTA and the African Union agenda 2063 to adequately prepare local traders and industries as nations look forward to the initial operational phase of the African Continental Free Trade Area.

All local players, small scale farmers, traders, manufactures, marketers, retailers as well as multinational chain store, need to show interest and understand as well as and keeping the AfCFTA momentum in tandem with the fast pace at which the project is moving.

All AU states should promote peace-building and security on the continent for the AfCFTA to be sustainable and effective. ‘‘We believe that peace-building and security is one of the key factors for continental integration.

So what is the way forward: Government needs to consider sourcing funds from Regional Economic Communities (RECs) to which it is a member (COMESA and SADC) in order to implement the Country’s strategy for the implementation of the AfCFTA. This highlights the need to leverage the RECs comparative advantages, convening powers and institutions for the benefit of the AfCFTAs implementation.

Awareness should also focus on how the Agreement can benefit Zambian producers and businesses as well as what risks come with it. Producers need to be prepared for the increase in competition that will arise once tariffs are removed and trade under the AfCFTA begins. This kind of support would ensure that Zambian producers and businesses are not crowded out by firms from countries with larger economies such as South Africa and Nigeria. This support can take the form of enhanced technical, managerial and financial skills to meet industry standards. The Government may assist in investment of these attributes.

And there is a need also for capital markets to provide specific credit (for a longer period of time than is generally available in the market) to support MSMEs for investment, growth, export and diversification. Related to this, there is a need for greater awareness of such funding and its availability to Micro, Small and Medium Enterprises (MSMEs).

Further Zambia should work at identifying the product and commodity categories in which we have comparative advantage (the ability to carry out an economic activity more efficiently than another activity). For example, amongst others, Zambia has comparative advantage in copper production as well as sugars and sugar confectionary. These are the goods that the country must now focus on producing as trade in the AfCFTA begins to take place.

Furthermore, by identifying these categories, it can be determined which countries we share comparative advantages with e.g. Copper with Democratic Republic of Congo, Sugars with Eswatini, Malawi and Mauritius. These product categories present opportunities for joint-production among member states as well as sectors for product development. Discussions regarding strategy and co-operation in these areas should now begin as soon as possible.