Rodgers Rewayi

With the operationalisation of the African Continental Free Trade Area (AfCFTA), questions have been raised on whether Zimbabwe can fully benefit from the agreement to attain Vision 2030 of becoming a middle-income economy. Government, businesses and industries all hope that the AfCFTA will steer the country’s economic growth to better levels.

Over the past two decades, the economy of Zimbabwe has been infused with various woes occasioning the closure of industries impacting on the economic security of citizens. Additionally, internationally, the national reputation of the country has been negatively affected by targeted sanctions. This has in turn affected investment opportunities in the country.

The Government of Zimbabwe has responded to the economic woes of the country by establishing a raft of measures and policies aimed at boosting economic growth.

While the process has been slow and has not yet attained the desired result, the AfCFTA could prove to be vital for Zimbabwe’s economic recovery agenda. Arguably the AfCFTA was pronounced at the appropriate time as Zimbabwe is working to improve production on exports, limiting imports, and when value addition to raw materials is central to the Government of the Second Republic. Although the Covid-19 pandemic has caused a slow start to the implementation of the agreement, Zimbabwe can enormously benefit from the AfCFTA.

The AfCFTA agreement signals a paradigm shift and a commitment to deeper integration of the continent which is being hailed as an economic game changer to Africa’s development agenda by boosting intra-African trade. A lot of successive rounds and negotiations have been embarked on since 2008 leading to AfCFTA being operationalised on January 1, with 54 African countries having signed the agreement and 36 ratifying it.

It is expected to enhance and promote south-south cooperation, creation of a single market for goods and services facilitated by free movement of persons to increase economic integration and growth among African member states.

The AfCFTA promises a virtuous circle of greater market opportunities, triggering more trade and investment, and allowing greater value addition and productivity growth – leading to more and better jobs with social inclusion, and thus further enlarged markets. It also seeks to enhance industrial development through regional integration and later on creation of a continental customs union.

In the short term, the main beneficiaries of the AfCFTA would be small and medium sized enterprises, that today account for 80 percent of the continent’s companies.

The government for the past decade has intensified the “Buy Zimbabwe campaign” as a way to support local industries and support small-medium enterprises to fully reap benefits of AfCFTA as there is high demand for their goods across the continent while improving quality for exports.

The increased intra-African trade results in creation of employment thereby reducing poverty. Zimbabwe can also tap into AfCFTA and benefit as it has enacted the National Development Strategy (NDS1) which strives to promote small to medium enterprises through increasing production for exports and being competitive at broader markets.

However, the government needs to intensify the value addition policy so as to discourage exportation of raw materials. The reengagement policy and the ease of doing business must also play a critical role in attracting investment.

Overall, the biggest gains from the AfCFTA are expected from the reduction of non-tariff barriers (NTBs) and from trade facilitation, which are estimated lead to raise intra-African trade by “between 50 and 132 percent with gross domestic product (GDP) gains of between 1 and 4 percent”.

Zimbabwean industries, cross border traders and small-medium enterprises can benefit from AfCFTA. Trade facilitation which the Government has taken seriously through the concept of One Stop Border Post (OSBP) at Chirundu Border Post, Integrated Border Management (IBM) system, expansion of Harare-Masvingo highway and Beitbridge Border Post among other measures have the potential to increase trade without facing many challenges and trade barriers.

The AfCFTA also provides a framework and an additional commitment mechanism to support implementation of the WTO’s Trade Facilitation Agreement, which at present has been ratified by 40 African countries. The WTO estimates that full implementation of the Trade Facilitation Agreement would reduce global trade costs by 14.3 percent on average and up to 23.1 percent, with the highest average reduction in Africa and LDCs (WTO 2015).

Zimbabwe’s NDS1 must position itself in a favourable position to tap into the benefits of AfCFTA through more exportation. However, the Government needs to capacitate industries to produce more where small-medium enterprises need to boost production and quality to be competitive on the market.

Modern machinery (retooling) must be acquired to produce more at lower production costs. AfCFTA has also the potential of strengthening the skills of the young African labour force through technical and vocational training. The youths especially from tertiary institutions must benefit from the training to kick-start their entrepreneurship programs.

AfCFTA Phase One negotiations have so far focused on trade in goods and services and on dispute settlement. Further negotiations are planned in Phase Two on the facilitation of intra-African investment, intellectual property and competition. Future Phase Three negotiations will focus on e-commerce, although there is discussion at the AU to have this included under Phase Two.

The ongoing second phase of negotiations under AfCFTA are focusing on Investment, Intellectual Property Rights (IPR) and Competitive Policy. Article 7 of the agreement encourages African states to have negotiations and a protocol on IPR while African Regional Intellectual Property Organization (ARIPO) will have an observer status.

States need to discuss how best can they benefit from the IPR Protocol especially on traditional knowledge which has been passed down through generations. African countries previously have failed to patent most of its ideas and the AfCFTA provides an opportunity to have mini patents or utility models on traditional knowledge.

Recently, African states failed to patent their remedies and medicines which fight covid-19 resulting in world superpowers making the vaccines. Some of Africa’s traditional knowledge and technologies have been patented by European countries and important to note is that the Zimbabwe maheu is a US patented product. Patenting is critical since it gives ownership to certain knowledge, ideas and technologies and the AfCFTA Protocol on IPR will give small-medium enterprises an opportunity to patent their ideas and traditional knowledge so that they can earn out of them.

AfCFTA comes at a time Zimbabwe has employed economic policies meant to attract investment and create favourable conditions for business such as ease of doing business, Zimbabwe open for business, Zimbabwe Investment Development Act among others. However, there has been a slow start to the implementation of AfCFTA due to Covid-19 pandemic and Zimbabwe needs also to deal with challenges such as smuggling, policy inconsistency, high cost of doing business, low production to fully benefit from AfCFTA.

· Rodgers Rewayi is a MSc student in International Trade and Diplomacy at University of Zimbabwe.