Presentation on theme: "COMESA, SADC FREE TRADE AREAS :– Opportunities for Zimbabweans in The Diaspora By Vonesai Hove email@example.com firstname.lastname@example.org www.trademarksa.org."— Presentation transcript:
1 COMESA, SADC FREE TRADE AREAS :– Opportunities for Zimbabweans in The Diaspora By Vonesai Hove
2 SUMMARY PRESENTATIONPART I- ECONOMY Short Term Economic Recovery Programme (STERP) Overview on performance of the Economy Sectoral Perfomamances- GAPS PART II- ZIMBABWE’S TRADE PERFOMANCE Major Regional Trading partners Trade Potential in the region PART III-REGIONAL INTEGRATION COMESA & SADC Free Trade Areas- Facilitating Zimbabwe’s economic recovery &growth through trade, Infrastructure development Opportunities in the FTAs
3 STERPIn February 2009, Government put in place phase 1 of the Short term Economic Recover Programme (STERP) to address the economic woes and challenges facing the economy and work towards revival of the economy. Key goals of the short term stabilisation programme which would run from February – December 2009 were:To stabilise the macro and micro-economy,recover the levels of savings, investment and growth, andlay the basis of a more transformative mid term to long term economic programme that will turn Zimbabwe into a progressive developmental StateMajor Challenges facing the economy included :Unprecedented levels of hyper-inflation, massive devaluation of the currency,There had been an unsustainable period of negative growthSerious unemployment and loss of jobs,Massive de-industrialisationLow productive capacity and food shortages andPoor service delivery,
4 OverviewSTERP unveiled Against the backdrop of the worst economic recession in the world economy. The recession which started as world financial crisis slowed down growth in most major economies, leading to a revision of world growth in 2009 in which it was expected to decline to its lowest levels in 60 years.Therefore, in developing STERP, Government was cautious to put realistic and pragmatic targets as it anticipated low international support as well as the pace of the turnaround in relations to the magnitude of the challenges .
5 STERP Priority Areas- Economic Stabilisation Stabilisation i. Implementation of a growth oriented recovery programme ii. Restoring the value of the local currency and guaranteeing its stability iii. Increasing capacity utilisation in all sectors of the economy and, hence, creation of jobs iv. Ensuring adequate availability of essential commodities such as food, fuel and electricity v. Rehabilitation of collapsed social, health and education sectors vi. Ensuring Adequate Water Supply
6 STERP DELIVERABLESThe Key Priority Areas outlined to stabilise the economy set out in STERP are: i. Implementation of a growth oriented recovery programme ii. Restoring the value of the local currency and guaranteeing its stability iii. Increasing capacity utilisation in all sectors of the economy and, hence, creation of jobs iv. Ensuring adequate availability of essential commodities such as food, fuel and electricity v. Rehabilitation of collapsed social, health and education sectors vi. Ensuring Adequate Water Supply vii. STERP seeks to ensure household food security, targeting of women in their production and reproductive roles in order to eradicate poverty. viii. STERP seeks to ensure the de-marginalisation of women in Zimbabwe through specific and concrete gender mainstreaming policies and programmes in every sector covered by STERP. viii. These measures would be anchored on promoting production and increase capacity in key areas of the economy in particular agriculture, mining, manufacturing and tourism. In short STERP is a Capacity building Recovery programme that seeks to stabilise all the macro and micro-economic fundamentals. ix. A follow up programme is being implemented towards achievement of the set goals
7 Overview of Economic Performance 2008-2010 Objectives of Short Term Economic Recovery Plan (STERP II) are on course:Macro Economic reforms creating economic stabilityInflation dropped from hyper inflation levels to single digit levels consistent with SADC and COMESA macro economic convergence targets .Growth in real GDP increased from % in 2008 to 5.7% in and is estimated to increase to 8.1% in 2010There is improved overall capacity utilisation thereby addressing supply of goods & services in the formal sectorThe financial Sector has been resuscitatedThere has been some improvement in Public sector deliveryHowever, export performance continues to lag behind in response to the low capacity utilisation. The country has recorded negative trade balances with its major regional partners (
8 Measures for Sustaining Macro –Economic Stabilisation Measures being taken to improve production capacityGovernment embarked on Fiscal consolidation through introduction ofCash BudgetsMultiple currenciesResource based BudgetingPublic Finance management Acts andTax reformsGovernment strengthening Public Institutions through capacity building and enforcing accountability measuresGovernment also putting measures to strengthen social protection programmes
10 Real GDP Growth (2008-2011) Real GDP Growth by Sector (%) 2008 2009 2010 Est.2011 Proj.Real GDP-22.214.171.124.3Agriculture, Hunting & Fishing-39.314.933.919.3Mining and Quarrying-33.48.54744Manufacturing-126.96.36.199Electricity and Water-188.8.131.52.5Construction-8.52.11Finance and Insurance-184.108.40.206Real Estate-36.40.9Distribution, Hotels & Restaurants2.86.56Transport & Communications220.127.116.11Source: CSO; MoF
11 INDICATORS Real GDP growth from -14.8 in 2008 to 5.7 in 2009 All sectors recorded positive growth in 2009Sub sector Capacity utilisation increasing though at modest levelsZimbabwe’s GDP growth at 4.7% in 2009 compares favourably with regional countriesZimbabwe’s Trade balance remains in the negative in the last three years ( ) as she loses her leverage in exports to regional markets.Zimbabwe’s trade balances with once her major export destinations ( Malawi, Mozambique, Zambia etc. in the negative
12 Selected Sectors Contribution to GDP (2009) Industry% ContributionAgriculture15.5%Transport & Communications15.2Manufacturing14.7Tourism11.0Mining4.9Construction0.6Real estate2.0Finance & Insurance3.9Other services4.3Domestic Services1.8
14 Economic Indicators for selected SADC Countries (2009) CountryGDP (US$b)GDP GrowthInflation RateZimbabwe5.1794.7-1.1Angola70.53-0.613.1Botswana10.94-5.27.3DRC11.232.716.7Lesotho1.643-2.08.5Malawi4.975.9Mauritius9.262.13.4%Mozambique18.104.22.168%Namibia22.214.171.124%Swaziland2.96-0.48.5%Tanzania22.44.911.6%Zambia12.444.513.5South Africa280.6-1.87.2%Source: Zimbabwe Budget Statement 2010
15 Zimbabwe's Exports 2005-2009 Year Total Exports No. Of Exported productsTrade Balance20051 13120061 37420071 367200820091 076
16 Table Zimbabwe Exports to Region (Trade Balances- Major Trading partners) Country200720082009*Botswana-57821Lesotho4596117525032*Malawi4836123258Mauritius-6837-3414-41717*Mozambique-73198Namibia112033889239South AfricaSwaziland525427867177Zambia146338191-8677* Zimbabwe recorded surplus trade before 1995
17 Potential Areas for Investment - Zimbabwe 1. AgricultureContract Farming to support Agro processingIrrigation RehabilitationLivestock Development and farming ( Small-scale dairy farming; rearing small animal stock, including poultry and piggery)2. ManufacturingTargeted sectors for small – medium investment include:food processing, beverages,clothing and footwear, leather & Leather products , packaging, paper printing and publishing,Tourism, construction , services sector andhuge investments in textile and ginning, fertiliser, pharmaceuticals, motor industries, chemical and petroleum products, non metallic mineral products, among others.3. IT and Technology4. Micro Financing to provide working capital to micro and small business ventures and manufacturing entities
18 WAY FOWARDGovernment to Create concessionary and attractive opportunities for DIASPORA participation in the development of the economy.Targeted engagement with Diaspora to maximise on potential and harness productive human and financial resourcesEngage agency to draw up strategic engagement policy directing remittances to developmental areas ( Investment in productive sectors) instead of just remittance.
20 Regional IntegrationZimbabwe has entered into Bilateral Preferential Trading Arrangements with Botswana, Malawi, Namibia, South AfricaUnder these agreements, Nationals can trade in goods meeting rules of origin free of customs duties.Zimbabwe is a Member of the Southern African Development Community (SADC) and Common Market for Eastern and Southern African States (COMESA) Regional Economic GroupingsSouthern African Development (SADC)- 15 Countries andCommon Market for Eastern & Southern African States (COMESA) has 19 Member statesZimbabwe is also a Member of the Proposed Tripartite Free Trade Area of COMESA, EAC and SADC regional groupings
21 What is a Free Trade Area A free Trade Area is established when countries wish to bring together their economies but do not wish to integrate themTariffs on originating goods are eliminatedUnnecessary non- tariff barriers to trade are removed and eliminated between Member StatesGoods are admitted in each other’s territory upon compliance of agreed rules of originEach Country maintains its own external tariffThere is greater degree of movement of capital among FTA Member to take advantage of economies of scale as the FTA is one market and supplier of goods meting the rules of originThere are 4 FTAs in the Southern & Eastern African Region (COMESA, EAC, SADC, SACU)
22 Key Objectives of FTA1.Further liberalization of intra-regional trade in goods and services on the basis of fair, mutually equitable and beneficial trade arrangements, complemented by Protocols in other areas. 2. To ensure efficient production within the region reflecting the current and dynamic comparative advantages of its Members. 3. Contributing towards the improvement of the climate for domestic, cross-border and foreign investment. 4 Enhancement of economic development, diversification and industrialization of the Region.
23 Regional Groupings - FTAs Four Regional Groupings have attained their FTAs/Customs Unions :Common Market for Eastern & Southern Africa (COMESA) (19 Member states)Southern African Development Community (SADC ) FTA has 12 countries, namely, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.Southern African Customs- (SACU)- 5 countries Botswana, Lesotho Namibia South Africa, SwazilandEast African Community (EAC) – 5 countries : Burundi, Kenya, Rwanda, Uganda and TanzaniaProposed Tripartite Free Trade Area encompassing COMESA, EAC and SADC regional groupings
24 SADC FREE TRADE AREA1.Further liberalization of intra-regional trade in goods and services on the basis of fair, mutually equitable and beneficial trade arrangements, complemented by Protocols in other areas. 2. To ensure efficient production within the region reflecting the current and dynamic comparative advantages of its Members. 3. Contributing towards the improvement of the climate for domestic, cross- border and foreign investment. 4 Enhancement of economic development, diversification and industrialization of the Region.
25 REGIONAL INTEGRATION – Tripartite FTA Twenty six Member States of COMESA, (19) SADC, (15) EAC, (5)and SACU (5) are cooperating under the framework of their FTAs, and Customs Unions with the aim of integrating their economies through development of infrastructure, liberalisation of trade in goods ands services to improve the welfare of their people particularly women and youthUnder the proposed Tripartite arrangement of COMESA, EAC and SADC, Member States undertake to achieve ‘ An Integrated prosperous, and peaceful Africa by its own citizens and representing a dynamic force in the global Arena’
27 The Tripartite Free Trade Area The Tripartite FTA refers to three Regional Economic Communities – COMESA, EAC & SADCTripartite FTA Membership StructuresCOMESA FTA has 14 Member States; 8 also in SADC; 1 in SACU, and 4 also in EACSADC FTA has 12 Member States; 8 also in COMESA, 5 in SACU , 1 in EACSACU has 5 Member States, which are also Members of SADC; and 1 also in COMESAEAC has 5 Member States ; 4 are also members of COMESA
29 Opportunities from Tripartite FTA A recent growth trend in intra-REC trade has been witnessedSub-Saharan Africa has registered a considerably higher rate of growth in its intra-regional exports share over the period 1960 – (4.08%) and 2004 – 2006 (11.41%), representing growth of %Expanded market of overPotential for increasing intra-African trade in agricultural goods remains untapped , therefore, opportunities for investment in agro- industries
31 FTA benefits to Business PRODUCERS/EXPORTERSEXPORTERS/IMPORTERSZero/reduced duties for inputsIdentified NTBs removedSource cheaper raw materials qualifying under Rules of originSource intermediate goods for further processingReduced costs of productionWider market for qualifying goods and ServicesTrade Facilitation instrumentsWider source of products for tradingExpanded market for goods & ServicesCross border activities increased from various trade facilitation instrumentsNon Tariff Barriers to trade eliminatedMovement of persons facilitated
32 Opportunities From FTA Non Tariff Barriers to trade being eliminated (Online NTBs Monitoring Mechanism being implemented at Tripartite levelHarmonisation & Simplification of Rules of OriginEnlarged market and supply of production inputsBilateral Trading Arrangements within the FTA provides more preferences e.g.Access duty free raw materials goods (intermediate, finished) for production
33 What Are Rules of Origin (RoO) These are a set of agreed criteria used to establish degree of processing,and origin of goods produced within SADC Member States and are therefore entitled to tariff preferenceCommon Rules applicable to COMESA and SADC FTAsWholly produced products made from materials obtained from within the region.Cumulating rule – Goods produced using raw materials originating in the region are deemed originating from the Member State where final processing/Manufacturing took placeSufficiently worked/processed-Must meet the following:-Regional value content test (import content or value addition criteriaChange of tariff heading (HS Tariff classification)Produced within the region and classifiable after processing.
34 Regional Integration- Gender Mainstreaming Women and Trade in the FTA?Gender inequality is still a challenge in SADC; (Inequalities transcend trade sector)Inequality manifests in Lack and Loss of economic and Development OpportunitiesWomen generally un aware of initiatives towards Regional Integration and benefits thereof due to unfavourable education levels, widening technological and digital divide etc.Policy and regulatory frameworks established in COMESA, SADC and EAC treaties, protocol provisions on gender mainstreaming and Trade.Trade facilitation instruments developed to benefit women e.g. simplified trade documentations, awareness campaignsSpecific targets to improve standard of living by women and youths embedded in Trade development programmes
36 Qualifying Criteria for Preferential Treatment Tradable Goods under FTAs Goods must meet Rules of originWholly Originating goods ( Agricultural products , minerals, wood, live animals, Fresh water fish, Matemba; cotton based products;Semi processed- Leather & leather products, cotton based, ginned wool, clothing (Safari, children'sChange of Tariff Heading- Manufactured products
37 ENTRY POINTS FOR DIASPORA Anchor in Zimbabwean economyUtilise existing capacity in manufacturing, services and agricultural processing, farmingBring in capital into sectors with regional trading potential ( Processed foods, drink and beverages; manufactured tobacco; leather & leather products, cotton based textiles & clothing; wood & furniture)Trade in services ( Finance, real estate, construction; Commercial transport & logistics; tourism)Micro financing to complement formal bankingJoint Ventures ( refer to ZIA for potential sector:Regional base –Setup base in FTA countries and produce for local marketmanufacture for export into and outside region;trade in services e.g. consultancy; transport; tourism; construction
38 Enabling Environment Government Commitment to Support agriculture sectorRehabilitation and maintenance of run down infrastructure for utilities ( Power, water, roadsImproving access to basic social services by the poor population including women and youths (education, health and social protection)Favourable investment policiesPrivate /Public sector partnerships policyLegal and regulatory framework at national level
39 Invest in What? Agricultural Mechanisation Finance New farming technologiesRefurbish Agricultural equipment and supply regional markets- (Zambia, Mozambique; South Africa )Manufacture of agricultural implements for small farmers in the regionManufacturing and processing- (leather products, steel fabrication, furniture, cotton based textiles & clothing, food processing , engineering; irrigation equipment, motor vehicle spares,Value addition- agricultural produce and commodities, mining ,Agricultural products imported into region traded duty free include: tea, coffee, spices,cereals,fruit, seed, vegetables, tobacco