By Calvin Manika
DURING the 14th century in the era of Mutapa and Great Zimbabwe kingdoms, trade contributed to the development of their economies. Barter trade across the regions sustained growth and success of Mutapa and other kingdoms. Merchants sailed thousands of miles for barter trade and business. With the modernisation era, borders separated regions and regularised trade. Zimbabwe, partially benefitted a similar arrangement in 1953 to 1963 during the federation of Rhodesia and Nyasaland, but for not long.
Freeing trade routes and making Africa a borderless continent is a topical subject again 50 years since the dissolution of the federation. But, this time Zimbabwe approached it with hesitation, bringing a lot of factors into consideration. It took Zimbabwe 7 years to ratify the agreement.
The idea of AfCFTA started in 2012, soon after the 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Ethiopia. Africa Union member states envision a Continental free Trade Area to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.
The trade agreement is expected to expand intra African trade through better harmonisation and coordination of trade liberalisation and facilitation regimes and instruments across Regional Economic Communities (RECs) and across Africa. Experts who coined the trade agreement say it enhances competitiveness as the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.
AfCFTA is one of the Agenda 2063 flagship projects which has its success anchored on the commitment and political will of members states. The trade agreement is expected to create the largest trading block in the world. According to the UN Economic Commission for Africa (ECA), with all 55 African countries signing on, this agreement will be the world’s largest by number of countries, covering more than 1.2 billion people and a combined GDP of $2.5 trillion.
Albert Zeufack, Chief Economist, Africa, at World Bank said the African Continental Free Trade Agreement represents a major opportunity for countries to boost growth, reduce poverty, and broaden economic inclusion.
“Implementing AfCFTA would lift 30 million Africans out of extreme poverty and boost the incomes of nearly 68 million others who live on less than $5.50 a day; boost Africa’s income by $450 billion by 2035 (a gain of 7 percent) while adding $76 billion to the income of the rest of the world. This will increase Africa’s exports by $560 billion, mostly in manufacturing,”
Economists believe AfCFTA, will encourage manufacturers and service providers to increase production; an increase in demand will instigate an increase in production, which in turn will lower unit costs.
Zimbabwe ratified the agreement in 2019 during a 33rd African Heads of State and Government Summit in Addis Ababa. In 2020, the Ministry of Foreign Affairs and International Trade said Zimbabwe has waived earlier objections to its immediate implementation of African Continental Free Trade Area (AfCFTA) protocols to ensure Africa achieves trade growth envisaged under the pact.
“Zimbabwe ratified AfCFTA, which became effective mid-2019, but had requested for a 15-year waiver to allow the country to industrialise and be able to fully participate under the terms of the agreement,” President Mnangagwa said.
This was after Zimbabwe’s economists exposed that the economy was under construction and needed time to revive. The situation they have alleged to be as a result of western sanctions.
Experts are of the view that the African Continental Free Trade Area (AfCFTA) which was signed and endorsed by the Government of Zimbabwe is critical to the Zimbabwe`s reform agenda which includes, The Transitional Stabilisation (TSP) Programme, National Trade Policy (NTP) and National Industrial Policy (NIP) among others.
According to a document prepared by the Ministry of Foreign Affairs and International Trade entitled National Africa Continental Free Trade Area (AfCFTA) Implementation Strategy for Zimbabwe,
“The ZNDP, together with its subordinate sub-sectorial strategies, is guiding the direction and development of industry based on investment-led and innovation-led industrialisation, with a deliberate emphasis on export growth,” notes the document.
A Zimbabwean economist Leeroy Shoriwa said, AfCFTA is coming with its its shortfalls, on top of the list is the issue of transportation and logistical challenges on the African continent.
“The issues relating to the easy transportation of especially perishable goods across the African continent will be a major challenge. Countries need to solve or at the very least have a plan for, for the AfCFTA to truly work. If the costs of transporting goods from one country to another far outweigh any potential benefits of a tariff free trade, then it can pose challenges,” Shoriwa said.
According to the World Bank report, The African Continental Free Trade Area: Economic and Distributional Effects, designed to guide policymakers in implementing policies that can maximise the agreement’s potential gains while minimizing risks.
“Creating a single, continent-wide market for goods and services, business and investment would reshape African economies. The implementation of AfCFTA would be a huge step forward for Africa, demonstrating to the world that it is emerging as a leader on the global trade agenda.”
Global Director of Trade, Investment and Competitiveness at World Bank, Caroline Freund said the African Continental Free Trade Area has the potential to increase employment opportunities and incomes, helping to expand opportunities for all Africans.
“The AfCFTA is expected to lift around 68 million people out of moderate poverty and make African countries more competitive. But successful implementation will be key, including careful monitoring of impacts on all workers—women and men, skilled and unskilled across all countries and sectors, ensuring the agreement’s full benefit,” Freund said.
Zimbabwe acknowledges that its trade goals has been affected by competitiveness challenges on the international market due to high costs of production among other issues.
“Limited investments, and limited value addition and beneficiation due to lack of requisite technology; unstable commodity prices on the international market for mineral commodities and agricultural produce such as tobacco and cotton; balance of payment challenges, and sanctions that remain imposed on Zimbabwe affecting securing of trade finance facilities and processing of international payments,” said the Ministry of Foreign Affairs and International Trade.