1. COMESA, SADC FREE TRADE AREAS :– Opportunities for Zimbabweans in The Diaspora By Vonesai Hove

2. SUMMARY PRESENTATION
PART 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. STERP
In 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, and
lay the basis of a more transformative mid term to long term economic programme that will turn Zimbabwe into a progressive developmental State
Major Challenges facing the economy included :
Unprecedented levels of hyper-inflation, massive devaluation of the currency,
There had been an unsustainable period of negative growth
Serious unemployment and loss of jobs,
Massive de-industrialisation
Low productive capacity and food shortages and
Poor service delivery,

4. Overview
STERP 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 DELIVERABLES
The 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 stability
Inflation 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 2010
There is improved overall capacity utilisation thereby addressing supply of goods & services in the formal sector
The financial Sector has been resuscitated
There has been some improvement in Public sector delivery
However, 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 capacity
Government embarked on Fiscal consolidation through introduction of
Cash Budgets
Multiple currencies
Resource based Budgeting
Public Finance management Acts and
Tax reforms
Government strengthening Public Institutions through capacity building and enforcing accountability measures
Government also putting measures to strengthen social protection programmes

9. PART TWO- ECONOMIC PERFOMANCE

10. Real GDP Growth (2008-2011) Real GDP Growth by Sector (%) 2008 2009
2010 Est.
2011 Proj.
Real GDP
-14.8
5.7
8.1
9.3
Agriculture, Hunting & Fishing
-39.3
14.9
33.9
19.3
Mining and Quarrying
-33.4
8.5 47 44
Manufacturing
-17.1
10.2
2.7
Electricity and Water
-13.6
1.9
1.5
2.5
Construction
-8.5
2.1 1
Finance and Insurance
-27.9
4.5
0.5 2
Real Estate
-36.4
0.9
Distribution, Hotels & Restaurants
2.8
6.5 6
Transport & Communications
2.2
0.1
5.5
Source: CSO; MoF

11. INDICATORS Real GDP growth from -14.8 in 2008 to 5.7 in 2009
All sectors recorded positive growth in 2009
Sub sector Capacity utilisation increasing though at modest levels
Zimbabwe’s GDP growth at 4.7% in 2009 compares favourably with regional countries
Zimbabwe’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
% Contribution
Agriculture
15.5%
Transport & Communications
15.2
Manufacturing
14.7
Tourism
11.0
Mining
4.9
Construction
0.6
Real estate
2.0
Finance & Insurance
3.9
Other services
4.3
Domestic Services
1.8

13. Sub sector Capacity Utilisation
2009 Actual
2010 est.
2011Proj.
Foodstuffs
39% 42 45
Drinks, Tobacco & Beverages 50 59 62
Textiles & Ginning 20 21
Clothing & Footwear 58 55 51
Wood & Furniture 82 83 85
Paper, Printing & Publishing 41 43
Chemical & Petroleum Products 31 32
Non Metallic Mineral products 23
Metals & Metal Products 11 10 9
Transport Equipment 16 14
Other manufactured goods 13
Overall Growth
10.2
2.7
5.7

14. Economic Indicators for selected SADC Countries (2009)
Country
GDP (US$b)
GDP Growth
Inflation Rate
Zimbabwe
5.179
4.7
-1.1
Angola
70.53
-0.6
13.1
Botswana
10.94
-5.2
7.3
DRC
11.23
2.7
16.7
Lesotho
1.643
-2.0
8.5
Malawi
4.97
5.9
Mauritius
9.26
2.1
3.4%
Mozambique
9.7
4.3
3.5%
Namibia
9.1
0.7
8.8%
Swaziland
2.96
-0.4
8.5%
Tanzania
22.4
4.9
11.6%
Zambia
12.44
4.5
13.5
South Africa
280.6
-1.8
7.2%
Source: Zimbabwe Budget Statement 2010

15. Zimbabwe's Exports 2005-2009 Year Total Exports
No. Of Exported products
Trade Balance
2005
1 131
2006
1 374
2007
1 367
2008
2009
1 076

16. Table Zimbabwe Exports to Region (Trade Balances- Major Trading partners)
Country
2007
2008
2009
*Botswana
-57821
Lesotho
4596
1175
25032
*Malawi
48361
23258
Mauritius
-6837
-3414
-41717
*Mozambique
-73198
Namibia
11203
3889
239
South Africa
Swaziland
5254
2786
7177
Zambia
14633
8191
-8677
* Zimbabwe recorded surplus trade before 1995

17. Potential Areas for Investment - Zimbabwe
1. Agriculture
Contract Farming to support Agro processing
Irrigation Rehabilitation
Livestock Development and farming ( Small-scale dairy farming; rearing small animal stock, including poultry and piggery)
2. Manufacturing
Targeted sectors for small – medium investment include:
food processing, beverages,
clothing and footwear, leather & Leather products , packaging, paper printing and publishing,
Tourism, construction , services sector and
huge investments in textile and ginning, fertiliser, pharmaceuticals, motor industries, chemical and petroleum products, non metallic mineral products, among others.
3. IT and Technology
4. Micro Financing to provide working capital to micro and small business ventures and manufacturing entities

18. WAY FOWARD
Government 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 resources
Engage agency to draw up strategic engagement policy directing remittances to developmental areas ( Investment in productive sectors) instead of just remittance.

19. PART THREE – REGIONAL INTEGRATION

20. Regional Integration
Zimbabwe has entered into Bilateral Preferential Trading Arrangements with Botswana, Malawi, Namibia, South Africa
Under 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 Groupings
Southern African Development (SADC)- 15 Countries and
Common Market for Eastern & Southern African States (COMESA) has 19 Member states
Zimbabwe 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 them
Tariffs on originating goods are eliminated
Unnecessary non- tariff barriers to trade are removed and eliminated between Member States
Goods are admitted in each other’s territory upon compliance of agreed rules of origin
Each Country maintains its own external tariff
There 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 origin
There are 4 FTAs in the Southern & Eastern African Region (COMESA, EAC, SADC, SACU)

22. Key Objectives of FTA
1.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, Swaziland
East African Community (EAC) – 5 countries : Burundi, Kenya, Rwanda, Uganda and Tanzania
Proposed Tripartite Free Trade Area encompassing COMESA, EAC and SADC regional groupings

24. SADC FREE TRADE AREA
1.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 youth
Under 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’

26. Proposed Tripartite FTA

27. The Tripartite Free Trade Area
The Tripartite FTA refers to three Regional Economic Communities – COMESA, EAC & SADC
Tripartite FTA Membership Structures
COMESA FTA has 14 Member States; 8 also in SADC; 1 in SACU, and 4 also in EAC
SADC FTA has 12 Member States; 8 also in COMESA, 5 in SACU , 1 in EAC
SACU has 5 Member States, which are also Members of SADC; and 1 also in COMESA
EAC 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 witnessed
Sub-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 over
Potential for increasing intra-African trade in agricultural goods remains untapped , therefore, opportunities for investment in agro- industries

30. Comesa and SADC FTA countries
COMESA has 14 FTA participating Countries
1.Burundi 8. Malawi
2Comoros 9.Mauritius
3. Djibouti, 10. Rwanda
4 Egypt, 11.Seychelles
5. Kenya, 12 Sudan
6Libya, 13. Zambia
7.Madagascar 14.Zimbabwe ,
SADC has 12 Participating FTA countries
Botswana 7.Seychelles
Lesotho 8.South Africa
Malawi 9. Swaziland
Mauritius 10. Tanzania
Mozambique 11.Zambia
Namibia 12. Zimbabwe

31. FTA benefits to Business
PRODUCERS/EXPORTERS
EXPORTERS/IMPORTERS
Zero/reduced duties for inputs
Identified NTBs removed
Source cheaper raw materials qualifying under Rules of origin
Source intermediate goods for further processing
Reduced costs of production
Wider market for qualifying goods and Services
Trade Facilitation instruments
Wider source of products for trading
Expanded market for goods & Services
Cross border activities increased from various trade facilitation instruments
Non Tariff Barriers to trade eliminated
Movement of persons facilitated

32. Opportunities From FTA
Non Tariff Barriers to trade being eliminated (Online NTBs Monitoring Mechanism being implemented at Tripartite level
Harmonisation & Simplification of Rules of Origin
Enlarged market and supply of production inputs
Bilateral 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 preference
Common Rules applicable to COMESA and SADC FTAs
Wholly 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 place
Sufficiently worked/processed-Must meet the following:-
Regional value content test (import content or value addition criteria
Change 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 Opportunities
Women 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 campaigns
Specific targets to improve standard of living by women and youths embedded in Trade development programmes

35. MARKET POTENTIAL
TRIPARTITE – 42OMILLION GDP= COMESA SADC SACU EAC

36. Qualifying Criteria for Preferential Treatment Tradable Goods under FTAs
Goods must meet Rules of origin
Wholly 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's
Change of Tariff Heading- Manufactured products

37. ENTRY POINTS FOR DIASPORA
Anchor in Zimbabwean economy
Utilise existing capacity in manufacturing, services and agricultural processing, farming
Bring 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 banking
Joint Ventures ( refer to ZIA for potential sector:
Regional base –
Setup base in FTA countries and produce for local market
manufacture for export into and outside region;
trade in services e.g. consultancy; transport; tourism; construction

38. Enabling Environment Government Commitment to
Support agriculture sector
Rehabilitation and maintenance of run down infrastructure for utilities ( Power, water, roads
Improving access to basic social services by the poor population including women and youths (education, health and social protection)
Favourable investment policies
Private /Public sector partnerships policy
Legal and regulatory framework at national level

39. Invest in What? Agricultural Mechanisation
Finance New farming technologies
Refurbish Agricultural equipment and supply regional markets- (Zambia, Mozambique; South Africa )
Manufacture of agricultural implements for small farmers in the region
Manufacturing 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

40. TRIPARTITE FREE TRADE AREA

41. Websites