No Zim economic recovery without re-industrialisation

THE economic message from the Intra-African Trade Fair in Durban, South Africa, is clear: African countries should take advantage of the 1.2 billion market — with a gross domestic product of US$2.5 trillion — to export and promote more trade across the continent.

That is a big opportunity which could make a huge difference to African economies, growth prospects, employment opportunities and livelihoods. This is what countries like Zimbabwe particularly need.

They have to take advantage of the African Continental Free Trade Area (AfCFTA) to create new export and growth opportunities. AfCFTA was founded in 2018, with business commencing as of 1 January 2021. It was created through the African Continental Free Trade Agreement among 54 of the 55 African Union (AU) nations.

AfCFTA is a flagship project of the AU’s Agenda 2063, a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years. It aims to boost intra-Africa trade by providing a comprehensive and mutually beneficial trade agreement among the member states, covering trade in goods and services, investment, intellectual property rights and competition policy.

The second IATF2021 in Durban, from 15-21 November, is held by the AU, African Export-Import Bank (Afreximbank) and South Africa. It provides a platform for sharing trade, investment and market information, and enabling buyers and sellers, investors and countries to meet, discuss and conclude business deals, while offering a platform for businesses to access an integrated African market of over 1.2 billion people with a GDP of over US$2.5 trillion created under the AfCFTA.

In Durban, Afreximbank signed a US$1.04 billion facility with the Nigerian National Petroleum Corporation to finance the exploration of petroleum.

Afreximbank president and chairperson Benedict Oramah said the bank will invest US$40 billion to boost trading activities within the African continent in the next five years. IATF 2021, which was initially supposed to be held in Rwanda, is expected to attract over 10 000 attendees from across Africa with US$40 billion worth of trade and investment deals set to be concluded.

Attendees were able to see 1 100 exhibitors showcasing their goods and services, while business-to-business and business-to-government exchanges provide opportunities for further deals, business matchmaking and networking.

African countries brokered deals worth US$32 billion at the inaugural IATF2018 summit held in Cairo, Egypt, in 2018.

At least 30 Zimbabwean business entities and corporate executives attended the Durban trade fair, including CBZ Bank chairperson Marc Holtzman, Pacific Cigarette Company chair Adam Molai and Nyanza Light Metals chief executive Donovan Chimhandamba, among others.

Heads of state and government also attended. South African President Cyril Ramaphosa, Zimbabwean President Emmerson Mnangagwa, Nigerian President Muhammadu Buhari, former Nigerian president Olusegun Obasanjo, also the chairperson of the Intra-African Trade Fair Advisory Council and several other leaders, business executives, investors and exhibitors were there.

Ramaphosa said at the Inkosi Albert Luthuli International Convention Centre in Durban, venue of the event, the trade fair aspires to create a single market for goods and services across 55 countries, ensuring a market of as much as 1.2 billion people, with a combined GDP of US$2.5 trillion.

Mnangagwa told journalists in Durban that he found the trade fair “excellent”.

Yet trade experts say the utility of the AfCFTA will depend on whether African countries embrace industrialisation and focus on increasing their productive capabilities in a highly competitive global landscape.

Zimbabwe, previously the most industrialised economy in sub-Saharan Africa after South Africa, has undergone dramatic de-industrialisation due a number of endogenous and exogenous factors, including domestic leadership, governance and policy issues, as well as global structural changes and development matrices.

Currently, intra-Africa trade is merely 15% of Africa’s total trade. This shows African intra-regional value chain is very weak in contrast to Asia, where it stands at 80%. The trade volume in Africa is also constrained by the relatively slow economic growth in the continent, which averages 4.6% since 2000 in contrast to Asia’s 7.4%.

Zimbabwe, which now has a highly informalised economy, needs a recommitment and strategic focus on industrialisation. In other words re-industrialisation.

The development of manufacturing is essential if Zimbabwe is to increase the production of value-added products, expand exports of such products, and reduce trade imbalances. This approach improves economic diversification, which accelerates structural transformation.

The same applies to other African countries, although their internal environments and situations maybe different.

To re-industrialise and develop productive capacity, Zimbabwe needs new and massive investment. For that to come it needs a new political and economic environment. One in which there is leadership, governance and policy competence; where there is respect for the rule of law, property rights, human rights and the ease of doing business.

There can be no meaningful and sustainable recovery for Zimbabwe without that.