News / National
UN urges Zimbabwe to boost manufacturing sector
01 Jan 2022 at 08:56hrs | Views
REVAMPING of the country's manufacturing and extension of support to Micro-Small to Medium Enterprises (MSMEs) is pivotal for Zimbabwe to derive maximum benefits from the Africa Free Continental Trade Area (AFCFTA), the United Nations has observed.
AfCFTA is the brainchild of the African Union and was initiated in 2012 with the objective of establishing a single trading bloc which enjoys lowered trade barriers across the continent. It is set to bring together the continent's 55 nations, creating a total 1 billion customers for Africa's goods and services through a lucrative $3.4 trillion Gross Domestic Product.
According to the UN Common Country Analysis Zimbabwe 2021 report, the Southern Africa country stands to benefit only if several economic structural and policy bottlenecks are addressed.
"In order to fully exploit regional trade opportunities, Zimbabwe should attract more FDI and increase manufacturing capacity utilisation, which has averaged 43,5% over the past decade – less than half of total capacity – due to high costs of doing business and antiquated equipment," the report says.
"Zimbabwe's MSMEs need support to fully participate in regional and international value chains with products and services that meet market demands and standards. The private sector, in partnership with Trade and Investment Support Institutions (TISIs), such as Zimbabwe Investment and Development Agency (ZIDA), should broaden their capacity to constantly monitor and improve performance," the UN said.
The multilateral organisation believes that full implementation of the AfCFTA will contribute to the building of Africa's structural transformation, in the process reshaping markets and economies across the region.
The UN said the Agreement will not only increase continental trade, but will also help build regional value chains that boost productive capacities, thereby facilitating the production of African made goods with Africa's Micro, Small, and Medium-sized Enterprises (MSMEs) having an opportunity to engage more effectively in cross-border trade under the free-trade area in a market population of about 1,2 billion people and a combined Gross Domestic Product (GDP) of more than US$3,4 trillion.
It recognised that Zimbabwe is also actively seeking to enhance beneficiation and value addition to its commodities before export to maximise benefits to the country saying this can be achieved through creating an environment that supports public/private investment in infrastructure such as transport, logistics, sanitation and technology.
Optimism that the country's membership in the various regional blocs offer expanded market opportunities for both raw materials and exports was expressed.
The analysis bemoaned Zimbabwe's limited fiscal space saying it has undermined economic and social sector allocations including infrastructure investment.
It was recognised that despite spending on education averaging 11% of GDP is among the highest in the region, the country still has substantial infrastructure deficits, including a lack of adequate classrooms and laboratories and limited stock of learning materials and equipment.
The analysis said while budgetary allocation towards social protection coverage remained very low despite high poverty levels, as a share of GDP, non-contributory social protection budget stood at 1, 2% in 2020, an increase from 0,7% in 2019.
It also noted that in the 2021 budget, the social protection sector, a key tool in the quest to leave no one behind, was the recipient of 2,28% of total budget, presenting continued under provision despite the marginal increases.
"In light of the combination of factors of high unemployment, high poverty, and a highly informal economy, it is critical that adequate social safety nets are in place to protect the most vulnerable given the impact of these factors on the achievement of several SDGs.
"With a focus on post-COVID-19 recovery, the health and human capital sectors have been allocated 12% and 15% respectively of the total budget for 2021," added the UN.
AfCFTA is the brainchild of the African Union and was initiated in 2012 with the objective of establishing a single trading bloc which enjoys lowered trade barriers across the continent. It is set to bring together the continent's 55 nations, creating a total 1 billion customers for Africa's goods and services through a lucrative $3.4 trillion Gross Domestic Product.
According to the UN Common Country Analysis Zimbabwe 2021 report, the Southern Africa country stands to benefit only if several economic structural and policy bottlenecks are addressed.
"In order to fully exploit regional trade opportunities, Zimbabwe should attract more FDI and increase manufacturing capacity utilisation, which has averaged 43,5% over the past decade – less than half of total capacity – due to high costs of doing business and antiquated equipment," the report says.
"Zimbabwe's MSMEs need support to fully participate in regional and international value chains with products and services that meet market demands and standards. The private sector, in partnership with Trade and Investment Support Institutions (TISIs), such as Zimbabwe Investment and Development Agency (ZIDA), should broaden their capacity to constantly monitor and improve performance," the UN said.
The multilateral organisation believes that full implementation of the AfCFTA will contribute to the building of Africa's structural transformation, in the process reshaping markets and economies across the region.
The UN said the Agreement will not only increase continental trade, but will also help build regional value chains that boost productive capacities, thereby facilitating the production of African made goods with Africa's Micro, Small, and Medium-sized Enterprises (MSMEs) having an opportunity to engage more effectively in cross-border trade under the free-trade area in a market population of about 1,2 billion people and a combined Gross Domestic Product (GDP) of more than US$3,4 trillion.
Optimism that the country's membership in the various regional blocs offer expanded market opportunities for both raw materials and exports was expressed.
The analysis bemoaned Zimbabwe's limited fiscal space saying it has undermined economic and social sector allocations including infrastructure investment.
It was recognised that despite spending on education averaging 11% of GDP is among the highest in the region, the country still has substantial infrastructure deficits, including a lack of adequate classrooms and laboratories and limited stock of learning materials and equipment.
The analysis said while budgetary allocation towards social protection coverage remained very low despite high poverty levels, as a share of GDP, non-contributory social protection budget stood at 1, 2% in 2020, an increase from 0,7% in 2019.
It also noted that in the 2021 budget, the social protection sector, a key tool in the quest to leave no one behind, was the recipient of 2,28% of total budget, presenting continued under provision despite the marginal increases.
"In light of the combination of factors of high unemployment, high poverty, and a highly informal economy, it is critical that adequate social safety nets are in place to protect the most vulnerable given the impact of these factors on the achievement of several SDGs.
"With a focus on post-COVID-19 recovery, the health and human capital sectors have been allocated 12% and 15% respectively of the total budget for 2021," added the UN.
Source - NewZimbabwe
