Zam­bia’s fail­ure to cut deals with SA widens ac­count deficit to USD$3.8bil­lion

Zambian Business Times - - FRONT PAGE -

THE ZAMBIAN gov­ern­ment is strug­gling to cut clear quan­tifi­able deals with its largest trad­ing part­ner South Africa that would start to ad­dress the widen­ing trade deficit, with trad­ing vol­umes be­tween the two coun­tries sur­pass­ing US$3.8 bil­lion.

De­spite Zam­bia and South Africa hav­ing en­joyed a cor­dial re­la­tion since time im­memo­rial, there seems to be im­ped­i­ments with clos­ing deals that are in fa­vor of Zam­bia. Per­haps the ma­jor achieve­ments of the ef­forts to en­gage in ne­go­ti­a­tions has only been the sign­ing of trade com­mis­sions, with the lat­est be­ing the Bi-Na­tional Com­mis­sion (BNC) which some crit­ics have de­scribed as mere talk shows.

His­tor­i­cally, the two coun­tries have shared com­mon as­pi­ra­tions and en­joyed warm re­la­tions dat­ing back to the 1960s dur­ing the free­dom strug­gle and is demon­strated by the num­ber of high level vis­its that have been con­ducted by both po­lit­i­cal and busi­ness lead­ers.

In an exclusive in­ter­view with Zambian Busi­ness Times, Min­istry of Trade pub­lic re­la­tions man­ager God­fridah Chanda said South Africa re­mains Zam­bia’s big­gest trad­ing part­ner in the re­gion and Zam­bia is de­ter­mined to en­sure that this re­la­tion­ship con­tin­ues to grow.

Chanda said that the bi­lat­eral re­la­tions be­tween the two coun­tries have strength­ened as ev­i­denced from the trade be­tween the two coun­tries which has now sur­passed $3.8 bil­lion.

“Zam­bia has wit­nessed a num­ber of South African firms get­ting es­tab­lished in terms of in­vest­ments. Some no­table com­pa­nies such as Zam­bia Su­gar Ltd, Medi­care all mak­ing sub­stan­tially huge in­vest­ments re­sult­ing in em­ploy­ment cre­ation for our Zambian na­tion­als”, Chanda said.

She noted that a num­ber of South African chain stores have also been es­tab­lished in Zam­bia and in terms of statis­tics over 250 South African com­pa­nies are op­er­at­ing in Zam­bia with a com­bined prod­uct range of about 3,000 prod­ucts and services across var­i­ous sec­tors.

She said trade be­tween South Africa and Zam­bia re­mains buoy­ant although it is heav­ily skewed in fa­vor of South Africa and so far trade be­tween the two coun­tries has shown ex­pan­sion of busi­ness op­por­tu­ni­ties for lo­cal com­pa­nies by open­ing new mar­kets as long as South Africa re­moves un­nec­es­sary bar­ri­ers and make it eas­ier to ex­port.

While Zam­bia has opened up its econ­omy for trade and in­vest­ments from South Africa, Zam­bia is still re­solv­ing some tech­ni­cal bar­ri­ers to trade es­pe­cially for prod­ucts from the agri­cul­ture sec­tor such as quails, pep­per and honey among oth­ers.

South Africa pre­dom­i­nantly ex­ports high value goods such as ma­chin­ery, chem­i­cals, min­eral prod­ucts, mo­tor ve­hi­cles and pro­cessed foods, while Zam­bia on the other hand mainly ex­ports base me­tals and min­eral prod­ucts, with lit­tle value ad­di­tion.

Chanda said that in or­der to ad­dress the im­bal­ance in trade, the Min­istry of Trade is tak­ing steps such as se­cur­ing shelf space on South African chain stores es­tab­lished in Zam­bia.

The gov­ern­ment through the min­istry has man­aged to se­cure shelf space for the avail­able lo­cally pro­duced goods, es­pe­cially fruits and veg­eta­bles in an ef­fort to re­duce im­ports from South Africa.

Un­der the aus­pices of Joint Trade and In­vest­ment Com­mis­sion ( JTIC) es­tab­lished in Septem­ber 2017, the two coun­tries de­vel­oped the Im­ple­men­ta­tion Ac­tion Ma­trix for the Mem­o­ran­dum of Un­der­stand­ing on Trade and In­dus­trial De­vel­op­ment Co­op­er­a­tion.

She fur­ther dis­closed that in terms of in­dus­trial co­op­er­a­tion, Zam­bia is ex­pected to pack­age pri­vate sec­tor-led project pro­pos­als in the en­ergy, min­ing, ICT, in­fras­truc­ture, and tourism sec­tors and pro­cess­ing of nat­u­ral re­sources for the two coun­tries to co­op­er­ate and part­ner in.

The two coun­tries fur­ther in­tend to part­ner in the de­vel­op­ment of vi­able agro-pro­cess­ing in­dus­tries in Zam­bia and also in­ten­sify ef­forts to search for po­ten­tial in­vestors in the sec­tor.

Both coun­tries are ex­pected to iden­tify strate­gic in­fras­truc­ture de­vel­op­ment projects in both phys­i­cal and eco­nomic sec­tors to part­ner in, in or­der to en­hance com­pet­i­tive­ness of the Zambian econ­omy.

Mean­while, Zam­bia and South Africa es­tab­lished a Busi­ness Coun­cil which was launched in 2015 in South Africa to sup­port busi­ness part­ner­ships be­tween the two coun­tries.

The Busi­ness Coun­cil is ex­pected to en­hance bi­lat­eral trade, fa­cil­i­tate new in­vest­ments and pro­vide prac­ti­cal so­lu­tions to the chal­lenges hin­der­ing trade and in­vest­ments in both coun­tries.

Chanda said this has fur­ther pro­moted col­lab­o­ra­tion be­tween in­vestors in the two coun­tries, for in­stance, in the en­ergy sec­tor.

The Zambian gov­ern­ment has fur­ther helped to re­solve some of the mea­sures im­posed by South African au­thor­i­ties that im­pede Zam­bia’s ex­ports.

In ad­di­tion, Chanda said that gov­ern­ment’s vi­sion is clear with re­gard to a pri­vate sec­tor led growth, in­dus­tri­al­iza­tion, job cre­ation and mi­cro, small and medium en­ter­prise de­vel­op­ment and it is for this rea­son that it has con­tin­ued to of­fer a con­ducive in­vest­ment cli­mate, sound eco­nomic poli­cies and a sta­ble po­lit­i­cal en­vi­ron­ment for the pri­vate sec­tor to thrive and sup­port Zam­bia’s com­pet­i­tive­ness in the do­mes­tic, re­gional and global mar­kets.

The gov­ern­ment has le­gal and leg­isla­tive back­ing for in­vest­ment pro­mo­tion and pro­tec­tion, prop­erty rights, guar­an­tees and en­vi­ron­men­tal con­cerns.

Zam­bia has con­tin­ued to im­ple­ment pos­i­tive and for­ward-look­ing in­vest­ment cli­mate and eco­nomic poli­cies aimed at fos­ter­ing eco­nomic de­vel­op­ment and im­prov­ing the so­cial welfare of the Zambian peo­ple. This has been cou­pled with the for­mu­la­tion of poli­cies aimed at en­cour­ag­ing pri­vate sec­tor par­tic­i­pa­tion in the econ­omy.

The Min­istry of Trade is vi­car­i­ously re­spon­si­ble for com­ing up with trade poli­cies that are in the in­ter­est of the econ­omy as well as en­sur­ing that trade deals are made with Zam­bia’s ma­jor trad­ing part­ners. This is key to its con­tri­bu­tion to a sta­ble macro-eco­nomic en­vi­ron­ment, es­pe­cially sta­bi­liza­tion of the lo­cal unit, the Kwacha trad­ing lev­els with say the USD which de­pends on the mar­ket forces of de­mand and sup­ply.

An­other case in point is that Zam­bia im­ports its pe­tro­leum from mostly Saudi Ara­bia and Kuwait, hence this im­port bill re­quires that the coun­try also en­gages these coun­tries to ne­go­ti­ate trade deals that would en­sure that the coun­try also ex­ports some of its prod­ucts to these same coun­tries as trade part­ners.

The an­nounce­ment that lo­cal farm­ers would be ex­port­ing goat meat to Saudi Ara­bia was a wel­come start­ing point but it's clear that what­ever lev­els or vol­umes of goat ex­ports at­tained, that would be a drop in the ocean when com­pared with the heavy pe­tro­leum im­port bill Zam­bia foots.

Fail­ure to strike fa­vor­able deals with these coun­tries that Zam­bia spends most of its im­port dol­lars on and has some level of ne­go­ti­at­ing power should make the min­istry look for al­ter­na­tive trad­ing part­ners that are will­ing to en­gage in fair trade deals and vol­umes be­tween the two coun­tries.

It’s clear that coun­tries such as South Africa, Saudi Ara­bia and oth­ers which ac­cord­ing to the Cen­tral Sta­tis­ti­cal Of­fice trade data, the coun­try has huge and widen­ing trade deficits with, have no pro­duc­tion mo­nop­oly of these re­sources or prod­ucts. It there­fore makes the flirt­ing with al­ter­na­tive trade part­ner coun­tries who are will­ing to sign fair trade deals re­main­ing a vi­able op­tion for Zam­bia.

Com­merce and Trade Min­is­ter Christo­pher Yaluma

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