AfCFTA risks government is ignoring

THE Africa Continental Free Trade Area (AfCFTA) came into operation on 1 January.
There are four areas our government seems to not to be addressing.

In fact,  these areas should have been addressed in the National Development Strategy One (NDS 1)(2021-2025) that began on the same day as the AfCFTA. Zimbabwe ratified the AfCFTA — we even successfully lobbied for a phased reduction of tariffs.

The AfCFTA did not catch us by surprise — we co-created it–its implications for our national development should have been obvious. It is actually unbelievable that the NDS 1 has no mention whatsoever of the AfCFTA.

Here are the four swords hanging over us as a result of the AfCFTA.

First, we have a strategy risk. The government does not seem to be not fully aware of the changing economic environment.  Both the 2021 National Budget and the NDS 1 are completely silent on the trade liberalisation commitments we made as per the AfCFTA.

We expected a clear statement on how as a country we were planning to meet our yearly commitments to reduce tariffs.

This strategic “miss” does not seem to be a deliberate geopolitical or geo-economic game plan to bide time to see if the continental heavyweights such as South Africa, Nigeria, Egypt, Morocco and Angola blink first.

Whichever way one looks at it, it is completely inexcusable for Treasury to at least make a statement on its assessment of the likely impact of AfCFTA on the NDS 1 in terms of both opportunities and down risks.

We cannot act as if we are in denial, more so given that we had a hand in creating the AfCFTA monster we seem to be ignoring when it looms large over our national development strategy. We cannot paint a picture that we do not know that we do not know.

Second, AfCFTA , in the immediate, presents a serious threat to the NDS 1 and in the long-term the attainment of Vision 2030. South Africa, with the continent’s most advanced and competitive manufacturing sector, is poised to benefit in a skewed manner.

With tariffs present, South Africa accounts for 30% of Africa’s intra-continental exports. South Africa is Zimbabwe’s single largest trading partner, accounting for about 60% of Zimbabwe’s trade.

Our phased linear tariff reduction commitment will stifle our own re-industrialisation agenda as more competitive goods and services will flood Zimbabwe before our own manufacturing industry recovers.

With Zimbabwe still facing a drought of foreign investment and other capital flows due to the huge debt overhang owed the World Bank, the  African Development Bank , the European Investment Bank and the Paris Club, the country will not get enough money to modernise our secondary industry and replace inefficient machinery.

Our secondary industry will be outcompeted, not only by South Africa but also by other countries.
A major threat outside South Africa is Nigeria, specifically in terms of fertiliser and cement. Dangote’s new fertiliser factory is going into operation in March 2020.

It is as if Dangote designed the launch of his monster project to coincide with the birth of the AfCFTA. Dangote Fertiliser will be Africa’s largest fertiliser manufacturer.  Zimbabwe’s fertiliser value-chain strategy outlined in NDS 1 does not factor in the Dangote reality. Dangote enterprises ruthlessly deploy economies of scale to achieve competitiveness. Dangote is ready–we are still planning to start — if we drop tariffs, we open up the country to ruthless competitors such as Dangote.

The story of Dangote Cement in Zambia is instructive. the entry of Dangote Cement in Zambia caused cement prices to fall. Dangote Cement from its Zambian manufacturing plant will likely find its way into Zimbabwe aided by existing good transport infrastructure links between Zimbabwe and Zambia.

Third, if Zimbabwe decides to delay implementing the tariff reduction commitments as per AfCFTA, the country will lose out on its strategic investment to facilitate movement of goods from the South African seaports and its manufacturing hubs to countries to the north of Zimbabwe.

The new Kazungula Bridge linking Botswana, Namibia and Zambia over the Zambezi  River will pivot transit traffic away from Zimbabwe to Botswana.

Fourth, since Africa’s current trade is overwhelmingly dominated by agricultural produce, Zimbabwe stands very little chance of competing in that space as several countries farm more efficiently.

This is the reason this writer has been advocating for our agriculture strategy to go beyond food self-sufficiency goals but to aim towards achieving leaps in productivity to ensure we produce surpluses that can compete in the export market.

If we do not address the agriculture productivity imperative, AfCFTA will open the way for cheaper agriculture imports to flood Zimbabwe. The barriers to agricultural productivity such as insecure land tenure, if not removed expeditiously, will birth an existential crisis for Zimbabwe as AfCFTA unleashes the forces of liberalisation.

Still in connection with agriculture, AfCFTA is advocating for sustainable agricultural development. AfCFTA has explicitly alerted African nations that the issue of sanitary and phyto-sanitary standards will be a key issue.

Recently, this writer highlighted the global shift towards circular agriculture or closed loop agriculture; the AfCFTA’s sustainable agriculture imperative is addressed by circular agriculture.

This writer has argued in this column that Pfumvudza should be viewed as a mindset rather than a technique.

We need to quickly transition from looking at Pfumvudza descriptively to a conceptual frame. That mindset shift will position Zimbabwe to benefit from AfCFTA; agro-food exports that adhere to sustainable agricultural practices will receive certification from a relevant  AfCFTA body.

The plea by this writer to use the seed of Pfumvudza (pun not intended) to develop it further in the context of circular agriculture is even more urgent than before.

Many, with limited insight, have derided Pfumvudza and see it as the staple of poor farmers — we know that the former white commercial farmers who pioneered Pfumvudza did up to 3 500 hectares using the techniques.

If as a nation we do not get our strategy ducks in a row, the AfCFTA we co-created with other African nations will turn into a Frankenstein monster that will devour us.

Brett is a management consultant and a classic grounded theory researcher who has published research in an academic peer reviewed international journal. He can be contacted through email: [email protected]