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Mnangagwa blundered by jumping into AfCFTA deep end

12 Feb 2020 at 08:30hrs | Views
THE urge to be a member of a group is strong for some people, even if they are not suitable or ready for the membership. Zimbabwe, despite its struggling economy, has committed itself to join the African Continental Free Trade Area (AfCFTA), President Emmerson Mnangagwa announced at the weekend.

The AfCFTA, an intra-Africa trade agreement, was born on May 30, 2019, when 22 member States ratified the treaty. It has a potential market of 1,2 billion people and the potential to generate trade worth a whooping US$2,5 trillion annually.

This is a development likely to spur economic growth on the continent that for a long time has been seen as a market for the developed world.

Its potential has never been in doubt, with all big powers — United States, Russia, China, Japan and the European Union – over the years holding their own business summits.
It is interesting that these powers have and still treat Africa (54 States) as if it were a single country.

The continent's diversity and plurality has not been an impediment, probably because most of the countries rely on commodities for trade.

Very few African countries (South Africa as an exception) trade in finished products like cars, ammunition and textiles.

In joining AfCFTA, Mnangagwa said: "We are also aware that challenges relating to implementation modalities will need to be addressed if we are to achieve the desired outcomes.

"Subsequently, however, in the spirit of moving forward and our commitment to the principles that inspired the establishment of the AfCTA, we are prepared to move on the basis of the agreed collective position. Therefore, Zimbabwe is now on board."

This development comes before Zimbabwe stakeholders (industrialists, labour unions, farmers, financial services) have had indepth discussions on what joining AfCFTA means in reality.

Looking at Zimbabwe's exports and imports in the past decade, one cannot miss the fact that the country imports more than it exports.

It would be fair enough to suggest that joining the free trade area is a gamble whose time had not arrived.

The country at the moment has one advantage – a weak currency — but that is not sufficient to spur the country's economic growth because it does not have basic economic drivers such as electricity, water, roads and human resources.

The cost of production is still too high to be competitive in Sadc region, let alone the continent.

Mnangagwa was right last year when he said Zimbabwe needed 15 years to industrialise and potentially compete on the continental stage.

South Africa and Rwanda have been making themselves competitive in the past decade and are ready to derive benefits of a free trade agreement.

The duo has been ready from day one to export unique products into the free trade area and increase their footprint across the continent.

Looking into the crystal ball, one can see that Zimbabwe will become one large supermarket for goods and services from countries that are ready.

For instance, the South African motor and manufacturing industries will flood their goods on the continent, including Zimbabwe.

They can do this easily with a relatively weaker rand, modern industries and a sophisticated financial services sector.

At the moment, Zimbabwe basically imports all the basic commodities from her neighbours, which has made it difficult for the local industries to bounce back, especially without any protection when the free trade rules kick-in.

Disappointingly, Mnangagwa at the AU summit only saw the sanctions as the impediment to the country's economic growth and was contend with the continent's political solidarity to have the sanctions removed.

"What is required is: When are they (sanctions) going to be removed? How long will they (Western countries) continue to have sanctions on us? Fortunately, the continent as well as our region are with us in the fight to have sanctions removed," he said.

It never occurred to him that Zimbabwe has been surviving on huge budget deficits, a monostrous foreign debt, inefficient industries, poor financial services, a demotivated labourforce, collapsed energy sector and road infrastructure and a comatose public service.

Can Parliament save Zimbabwe from the potential economic mess Mnangagwa has plunged the country into? This could be asking too much from Zanu PF MPs who for 40 years have known and internalised one lesson — the leader is always correct.

It would not be shocking that by the end of the year the free trade agreement would be ratified, condemning the country to a supermarket economy from where it will never rise from.

For now, the ED choir will sing hoarse celebrating the membership into the esteemed free trade organisation despite that Zimbabwe will be nowhere near an associate member position to this body.

The crocodile can for sometime submerge in the water, but how long will it take before it wants to have some air?

Paidamoyo Muzulu is a journalist and writes here in his personal capacity.

Source - newsday
All articles and letters published on Bulawayo24 have been independently written by members of Bulawayo24's community. The views of users published on Bulawayo24 are therefore their own and do not necessarily represent the views of Bulawayo24. Bulawayo24 editors also reserve the right to edit or delete any and all comments received.

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