Industry sounds alarm as Zim edges closer to AfCFTA

Tapiwanashe Mangwiro

Zimbabwe is edging closer to trading under the African Continental Free Trade Area (AfCFTA) as the Government continues to implement systems and structures that meet the agreement’s stringent requirements.

This significant milestone has sparked optimism within some sectors, with the Government emphasising the vast opportunities AfCFTA presents for local businesses to expand into African markets.

However, concerns from the private sector persist, with industrialists warning that more groundwork is necessary to ensure Zimbabwe is truly prepared to capitalise on the agreement.

Speaking at a Zimbabwe Economics Society (ZES) meeting in Harare this week, the former Minister of Foreign Affairs and International Trade, Ambassador Frederick Shava, reassured economic players of the Government’s commitment to providing an environment conducive to increasing trade.

He highlighted the potential benefits Zimbabwe could harness from joining the AfCFTA and emphasised that the country is nearing the point where it can begin trading under the agreement.

“Let me hasten to say that with the increase in intra-African trade, the AfCFTA unlocks opportunities for both local and global businesses to enter and expand into new markets. Opportunities therefore exist for Zimbabwean businesses to exploit in the African market as well as attract Foreign Direct Investments in various sectors of the economy,” Ambassador Shava said.

The AfCFTA, regarded as the world’s largest free trade area, boasts an estimated population of 1.3 billion people across 55 African Union member states. The combined GDP of the participating countries is projected to be at least US$3.4 trillion, offering enormous potential for trade and investment.

According to Ambassador Shava, Zimbabwean firms stand to benefit significantly from this vast continental market once fully integrated into the agreement.

However, the optimism surrounding AfCFTA’s potential has not been universally shared, particularly among some industrialists.

They argue that Zimbabwe’s internal challenges, such as the high cost of doing business and poor infrastructure, could hinder the country’s ability to compete effectively once AfCFTA is in full force.

The Confederation of Zimbabwe Industries (CZI) has repeatedly cautioned that while AfCFTA is a noble idea, Zimbabwe’s readiness remains questionable.

Kurai Matsheza, an industrialist and former president of the CZI, stressed that Zimbabwe has not adequately addressed key structural issues such as high electricity costs, inefficient logistics and bureaucratic hurdles that affect ease of doing business.

In his view, these challenges put the country at a disadvantage compared to other African nations.

This sentiment is shared by other industry leaders, who argue that Zimbabwe’s domestic industries might be overwhelmed by cheaper, more competitive products from neighbouring countries.

Despite the potential for increased exports, local businesses fear they might not be able to compete on a level playing field unless fundamental reforms are accelerated.

Economists and industry experts echo the government’s enthusiasm about the AfCFTA’s potential. Dr. Prosper Chitambara, a renowned economist, noted that the free trade area could serve as a springboard for Zimbabwe to overcome some of its structural challenges, such as low investment levels and an underperforming manufacturing sector.

“The AfCFTA presents a unique opportunity for Zimbabwe to integrate more deeply into regional and global value chains. Through aligning its policies with AfCFTA’s objectives, Zimbabwe can attract more investment and increase its exports, which are essential for closing the financing gap,” Dr. Chitambara said.

Nonetheless, some industrialists see AfCFTA as a long-term opportunity for Zimbabwe to become a regional economic hub. Dr. Nxaba Ndiweni, another industrialist, stressed the importance of leveraging the country’s natural resources and geographical position to integrate into regional value chains.

He pointed out that AfCFTA could play a pivotal role in Zimbabwe achieving its goal of attaining 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,” Dr Ndiweni said.

The path to AfCFTA readiness is clearly marked by both opportunities and challenges. While the Government is confident that Zimbabwe is close to complying with the necessary systems and regulations, industry experts continue to express concern over the pace of reforms. The consensus is that AfCFTA could unlock significant economic growth if these challenges are addressed in time.

For now, the Government remains committed to pushing forward with AfCFTA integration, with Minister Shava reiterating that dialogue between the public and private sectors is crucial to ensure Zimbabwe is prepared for the transition.

In the words of Ambassador Shava: “We are not working in isolation. The Government is fully aware of the concerns raised by industry, and we are committed to resolving them. AfCFTA presents an immense opportunity for Zimbabwe, and we must not let these challenges hold us back from seizing this moment.”