Zimbabwe: Contry Should Exploit Comesa Market Potential
ZIMBABWE has immense potential to exploit trade and investment opportunities in the vast Common Market for Eastern and Southern Africa as a strategy to boost economic regeneration.
Comesa, the largest economic bloc in Africa with 20 members, plans to launch its Customs Union next year. The union will facilitate free trade movement of goods among member states.
The implementation of a Customs Union is expected to double investment and increases the market for the region's products.
ZimTrade chief executive Mr Herbert Chakanyuka said Zimbabwe was geared for Comesa due to the country's industrial capacity, which can hold its own among many in the regional bloc.
"There are opportunities for value-added products which gives Zimbabwe an edge over countries such as Malawi, Zambia and the Democratic Republic of Congo," he said in an interview yesterday.
Mr Chakanyuka expressed optimism that local companies would withstand regional competition since exports from Zimbabwe were already doing well in Zambia, Malawi, DRC, Burundi, among other countries.
He was, however, quick to point out that to enhance competitiveness Zimbabwean exporters needed to address capacity issues and the value chain system to reduce production costs.
"Toll manufacturing and strategic alliance are some of the innovations available to effectively deal with capacity. Re-equipping is key, technology transfer alliances could be considered given the scarcity of foreign currency and the prohibitive cost of borrowing," explained Mr Chakanyuka.
The Comesa Customs Union would also encourage sustainable growth, attract investors and reduce the costs of doing business and would also serve as a vehicle to increase trade, investment and economic co-operation, firstly, among member states and, secondly, between the bloc and the rest of the world.
A structure for a common external tariff would be adopted with the following rates: zero to 5 percent for capital goods and raw materials, 10 percent for intermediate products and up to 45 percent for finished goods.
Such an approach would enable Zimbabwe to increase exports and thus generate more foreign currency.
Currently, Zimbabwean exporters were facing various challenges such as hyperinflation, high cost of borrowing, shortage of foreign currency which have hindered them from enjoying greater penetration into untapped areas in the region. To minimise the adverse impact of these threats, Zimbabwean exporters needed to be more innovative by adopting tolling, revisiting their value chain systems, forming strategic alliances and joint venture partnerships to address supply side constraints.
For companies in agro-processing, there was need for upstream diversification through contract farming.
Trade within Comesa had grown significantly over the years. Total intra-Comesa trade rose by 98,6 percent from US$3 billion in 2000 to US$6 billion in 2005, representing an annual growth rate of 20 percent.
Intra-Comesa imports rose by 116 percent from US$1,4 billion in 2000 to US$3 billion in 2005 at an average growth rate of 23 percent. During the same period value added or manufactured exports accounted for 50 percent of intra-Free Trade Area exports.
