Sundaymail Editor
Business Reporter
THE African Continental Free Trade Area (AfCFTA) presents a perfect opportunity for Zimbabwe to fast-track the structural transformation of its economy and advance towards its Vision 2030 goals, according to the African Development Bank (AfDB).
The country’s central location in Southern Africa, combined with the AfCFTA’s efforts to integrate African economies, positions the nation well to benefit significantly from expanded regional trade, unlocking new paths for economic growth and development.
Zimbabwe’s outward-oriented policies, aimed at leveraging the AfCFTA, have sparked optimism about the nation’s ability to achieve rapid structural transformation.
This is contained in the AfDB’s 2024 country report titled “The AfCFTA offers Zimbabwe a unique opportunity to propel the country towards the achievement of Vision 2030”.
The bank’s perspectives focus on how Zimbabwe can use the regional trade framework to enhance its economic progress, particularly through structural reforms and international trade expansion.
The AfCFTA, the AfDB notes, could fast-track the country’s structural transformation by enhancing Zimbabwe’s connectivity to regional and global markets.
Ranked 12th in Africa in terms of free movement of people on the 2023 Africa Regional Integration Index, Zimbabwe has already demonstrated its commitment to greater regional integration.
This regional openness, says the report, positions the country well to reap the benefits of the AfCFTA, expanding market access and strengthening its competitiveness on the continent.
The AfCFTA can provide Zimbabwe with a platform to boost exports, expand industries and pursue its economic targets set in its Vision 2030 plan, the regional lender says.
AfDB’s report emphasises the importance of services exports, noting that “Rapid growth in income and jobs embodied in services export is an area where Zimbabwe could see immediate benefits”.
The report continues: “The AfCFTA offers an opportunity for Zimbabwe to benefit from regional and global markets, with outward-oriented policies helping the country enhance its trade potential.”
However, Dr George Elombi, the executive vice president, corporate governance and legal services, at the African Export-Import Bank (Afreximbank), noted that African countries continued to trade with the rest of the world more than among themselves.
Speaking at the bank’s Compliance Forum in Senegal, Dr Elombi said: “Despite trade under the agreement establishing the African Continental Free Trade Area having officially started on January 1, 2021, the envisaged changes in intra-African trade are yet to be fully appreciated. Intra-African trade, as a share of global trade, declined from 14,5 percent in 2021 to 13,7 percent in 2022.”
The AfCFTA is the largest free trade area since the formation of the World Trade Organisation, given Africa’s current population of 1,2 billion people, which is expected to grow to 2,5 billion by 2050.
Estimates indicate the AfCFTA could boost the continental economy from about US$3 trillion (2020) to about US$8 trillion by 2030.
Its expected benefits include increasing trade among African countries, which currently ranges between 15 percent and 18 percent. The AfCFTA could also stimulate production through the development of regional value chains.
In this case, manufacturing, agro-processing and other activities across the continent are stimulated to supply the market.
Dr Elombi continued: “The African share of global trade remained at less than 3 percent, driven largely by merchandise trade, an indicator that African countries continue to trade with the rest of the world more than among themselves.”
During the 2021/2022 period, intra-African exports declined as a percentage of total exports from 18,22 percent to 17,89 percent, and intra-African imports declined from 12,81 per cent to 12,09 percent.
Dr Elombi added: “With the implementation of the African Continental Free Trade Area, intra-African trade grew at a healthy pace of over 2 percent in the first quarter of 2024. However, this dynamic has not been sufficient to offset the region’s low global trade figures.”
Another industrialist, Dr Nxaba Ndiweni, commented on the importance of the AfCFTA for the country’s future development and achievement of upper middle-income status by 2030.
“Zimbabwe is uniquely positioned to become a regional hub under the AfCFTA. Our vast natural resources, combined with our central location, present a great opportunity for integration into regional value chains.
“The AfCFTA can truly be a catalyst for our economic transformation, particularly in sectors like manufacturing, mining and services,” he said.
The country’s abundant natural resources, including significant reserves of chrome, copper, lithium, nickel and gold, provide a foundation for future growth.
AfDB’s report further highlights that “Zimbabwe could leverage its huge natural resources and the AfCFTA to address its
debt burden and strengthen its mining sector”.
The country’s estimated 10 billion tonnes of chrome reserves and its strategic location within Southern Africa position Zimbabwe to benefit from the integration of regional value chains.
In the short term, the AfDB recommends that “Zimbabwe adopts bold private-sector-driven policies to stimulate economic growth”.
“A thriving private sector-led, open and competitive economy is critical for achieving economic transformation. These policies must be anchored in sound macroeconomic policies, fiscal discipline, and monetary and financial sector stability.”
For the country to fully unlock the benefits of the AfCFTA, the AfDB report stresses the need for strong institutions.
“Strong, effective, responsive and inclusive institutions are essential for faster structural transformation,” the bank notes, emphasising that institutions are the backbone of good governance and accountability.
Through fostering transparency and efficient decision-making processes, the country can create a conducive environment for sustained growth and development.
Economist Dr Prosper Chitambara echoed the AfDB’s call for institutional reform, stating: “Without strong institutions, Zimbabwe’s potential under the AfCFTA could remain untapped.
“We need governance structures that promote transparency and accountability, as well as the political will to implement these reforms.
“Only then can we realise the full benefits of the AfCFTA and drive the structural transformation needed for Vision 2030.”
The AfDB noted the importance of policy and regulatory reforms in the medium term, suggesting that “Zimbabwe must build strong political will, coupled with sufficient financial and technical resources to support institutional growth”.
These reforms, the report says, are crucial for fostering a business environment that promotes investment, allowing the private sector to take a leading role in driving the economy forward.
Online Reporter