The Herald, Zimbabwe
FTA launch boost for regional integration
Business Reporter
20 August 2008
The launch of the Sadc Free Trade Area is a momentous occasion for the region as it makes further strides towards regional integration.
The Sadc FTA further buttresses the Trade Protocol, which entered into force in January 2000 after the adoption of the Maseru Trade Protocol in 1996.
Since 2000 a lot of progress has been made in the area of promoting free trade within the region.
Eight years on the region has every reason to celebrate as 85 percent of all its intra-regional trade is duty-free while the remaining 15 percent is still to be liberalised fully by 2012.
A major step in achieving this goal is expected to take place in 2010 with the establishment of the Customs Union.
While the launch is a milestone for the whole region, a lot still rests on the regional members, who need to shape up to ensure that the process is carried through to fruition.
For Zimbabwe the coming into force of the free trade area brings with it both positives and negatives.
On the positive side, the free trade area is likely to bring relief to the ordinary Zimbabweans as it would ensure the smooth flow of goods into Zimbabwe from neighbouring countries.
This is most important at this time when the country is faced with shortages of basic foodstuffs. A lot of Zimbabweans have been going across the country’s borders to Mozambique, Zambia, South Africa and Botswana to buy various commodities.
With the coming into force of the FTA barriers to trade are removed and where processing of imports at the country’s border posts used to be a hassle for many importers, the FTA brings with it more relief as duties are removed.
This is likely to result in the flooding of goods on the local market and in turn prices are expected to stabilise.
The FTA is also going to assist in ensuring that the goods being brought into the country are quality goods as companies will need to focus more on quality and competitiveness in terms of pricing.
An independent economist Mr Emmanuel Chinyaukira said the Free Trade Area is a welcome move considering the immense potential and optimism for the country’s economic turnaround.
"On the supply side the industry is not producing enough, so we are going to see an improvement of goods in the market," said Mr Chinyaukira.
However, Mr Chinyaukira said we have the industry to protect which is currently struggling and as a country, we should not be a market for other countries goods.
"We should also export thereby earning the country the much needed foreign currency. If our industry were operating at a full scale, then we might have a greater market share," he added.
Mr Innocent Zimuto an economist with the local company said that the FTA is what makes the European economy tick.
"The FTA is the only solution to the revival of our economy as Africans and it is a historic step toward the vision of a fully integrated economic region," said Mr Zimuto.
He noted that the issue of using the single currency by 2018 is a welcome development since it will lure more investors by having a stable currency.
For local companies that are into exports, the widening of tariff reduction should present further opportunities to expand market share as well as increase production, which in turn will promote job creation and foreign currency inflows.
This is more important in terms of value-addition, a practice that has been discussed at length but has not been fully explored by local companies.
On the downside however the coming into force of the FTA has come a little too soon especially for local businesses as the country continues to de-industrialise due to a challenging economic environment.
Lack of credit lines, a hyperinflationary environment, foreign currency shortages and price controls have been some of the challenges that businesses have had to grapple with.