COMESA, SADC FREE TRADE AREAS :– Opportunities for Zimbabweans in The Diaspora
By Vonesai Hove
hvonesai@yahoo.com
vhove@trademarksa.org
www.trademarksa.org
www.tradebarriers.org
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
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,
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 .
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
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
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 -14.8% in 2008 to 5.7% in 2009 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 (
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
PART TWO- ECONOMIC PERFOMANCE
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
5.7
Electricity and Water
-13.6
1.9
1.5
2.5
Construction
-8.5
2.1
1.5
1
Finance and Insurance
-27.9
4.5
0.5
2
Real Estate
-36.4
2
0.9
1
Distribution, Hotels & Restaurants
2.8
6.5
0.5
6
2.2
0.1
5.5
Transport & Communications
Source: CSO; MoF
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 (2007-2009) 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
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
Sub sector Capacity Utilisation
Sector
2009 Actual
2010 est.
2011Proj.
Foodstuffs
39%
42
45
Drinks, Tobacco & Beverages
50
59
62
Textiles & Ginning
20
21
21
Clothing & Footwear
58
55
51
Wood & Furniture
82
83
85
Paper, Printing & Publishing
41
43
43
Chemical & Petroleum Products
31
31
32
Non Metallic Mineral products
21
21
23
Metals & Metal Products
11
10
9
Transport Equipment
16
14
14
Other manufactured goods
13
14
16
Overall Growth
10.2
2.7
5.7
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
8.5
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
Zimbabwe's Exports 2005-2009
Year
Total Exports No. Of
Exported
products
Trade
Balance
2005
1 393 464
1 131
-678 134
2006
6 427 251
1 374
3 851 522
2007
3 308 285
1 367
- 132 652
1693801
-1 137 323
1 076
-1 257 217
2008
2009
2 268 873
Table Zimbabwe Exports to Region (Trade BalancesMajor Trading partners)
Country
2007
2008
2009
*Botswana
-207961
-57821
-161689
Lesotho
4596
1175
25032
*Malawi
-113845
48361
23258
Mauritius
-6837
-3414
-41717
*Mozambique
-105046
-73198
-124055
Namibia
11203
3889
239
South Africa
-295135
-1047669
-940012
Swaziland
5254
2786
7177
Zambia
14633
8191
-8677
* Zimbabwe recorded surplus trade before 1995
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




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 .
PART THREE – REGIONAL INTEGRATION
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
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)
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.
Regional Groupings - FTAs
Four Regional Groupings have attained their FTAs/Customs Unions :
1. Common Market for Eastern & Southern Africa (COMESA) (19 Member
states)
2. Southern African Development Community (SADC ) FTA has 12 countries,
namely, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia,
Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
3. Southern African Customs- (SACU)- 5 countries Botswana, Lesotho
Namibia South Africa, Swaziland
4. East African Community (EAC) – 5 countries : Burundi, Kenya, Rwanda,
Uganda and Tanzania
5. Proposed Tripartite Free Trade Area encompassing COMESA, EAC and
SADC regional groupings
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, crossborder and foreign investment.
4 Enhancement of economic development, diversification and
industrialization of the Region.
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’
Proposed Tripartite FTA
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
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 – 1962
(4.08%) and 2004 – 2006 (11.41%), representing growth of 179.94%
 Expanded market of over
 Potential for increasing intra-African trade in agricultural goods
remains untapped , therefore, opportunities for investment in agroindustries
Comesa and SADC FTA countries
COMESA has 14 FTA participating
Countries
SADC has 12 Participating FTA
countries
1.Burundi
8. Malawi
2Comoros
9.Mauritius
1. Botswana
7.Seychelles
3. Djibouti,
10. Rwanda
2. Lesotho
8.South Africa
4 Egypt,
11.Seychelles
5. Kenya,
12 Sudan
3. Malawi
9. Swaziland
6Libya,
13. Zambia
4. Mauritius
10. Tanzania
7.Madagascar
14.Zimbabwe
,
5. Mozambique 11.Zambia
6. Namibia
12. Zimbabwe
FTA benefits to Business
PRODUCERS/EXPORTERS
EXPORTERS/IMPORTERS
•
Zero/reduced duties for inputs
•
Wider source of products for trading
•
Identified NTBs removed
•
Expanded market for goods & Services
•
Source cheaper raw materials qualifying under
Rules of origin
•
Cross border activities increased from various
trade facilitation instruments
•
Source intermediate goods for further processing
•
Non Tariff Barriers to trade eliminated
•
Reduced costs of production
•
Movement of persons facilitated
•
Wider market for qualifying goods and Services
•
Trade Facilitation instruments
Opportunities From FTA
 Non Tariff Barriers to trade being eliminated (Online NTBs Monitoring
Mechanism being implemented at Tripartite level www.tradebarriers.org
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
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.
1. Cumulating rule – Goods produced using raw materials originating in the region are
deemed originating from the Member State where final processing/Manufacturing took
place
2. 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.
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
MARKET POTENTIAL
TRIPARTITE – 42OMILLION GDP=
COMESA
SADC
SACU
EAC
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
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: www.zia.co.zw
 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
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
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
TRIPARTITE FREE TRADE AREA
Websites
www.comesa.int
www.eac.org
www.sadc.int
www.sacu
www.trademarksa.org
www.tradebarriers.org