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Eric Bloch Column

Sadc, Comesa or Ecsacom?


By Eric Bloch


ALTHOUGH far from being the only one, a prerequisite of recovery for the Zimbabwean economy and for ongoing economic wellbeing is that Zimbabwe very substantially increases its

export performance.


The needs for a virile, substantive export facet of the economy are diverse.


They include the generation of critically needed foreign exchange in relatively considerable, consistently forthcoming, quantities.


Although Zimbabwe has a great potential wealth of many primary products, including a significant range of precious minerals, agricultural commodities such as tobacco, beef, citrus, tea, coffee, sugar and many others, nevertheless Zimbabwe is a very import-dependent country.


Zimbabwe must import petroleum products, agricultural inputs, many manufacturing inputs, plant, machinery and equipment, and many, many other essentials.


To fund those imports requires foreign currency, and Zimbabwe is chronically short of that critical need.


Although some of that critical need can be forthcoming through Foreign Direct Investment (FDI) and, for a period of time, though international aid, balance-of-payments support, lines of credit, and the like.


On an ongoing basis Zimbabwe must generate the bulk of its foreign exchange requirements through exports.


The potential for doing so is very great, for most of Zimbabwe’s primary commodities are in major demand, regionally and internationally, Zimbabwe has a tremendous, almost unique, array of tourism resources and, notwithstanding the horrendous afflictions that have impacted upon the manufacturing sector, Zimbabwe still has the second most developed industrial infrastructure in Southern Africa.


That potential is very greatly reinforced by the markedly increasing demands within the region for, with the sole exception of Zimbabwe, the entire region is undergoing very extensive economic growth.


South Africa is benefiting from the immense surge in the world gold price, from 13 years of significant political stability, which has facilitated creation of an investment conducive environment, from dynamic technological developments and pronounced industrial expansion, and from sound, constructive fiscal and monetary policies.


To varying degrees, all other countries within the region are all attaining positive economic growth, Zimbabwe being the very notable only country in the region which, year after year, has a horrendously contracting economy.


And, it is of major import that Zimbabwe is geographically placed to be a key supplier to most, if not all, of the region.


Moreover, its export potential can be very greatly increased, and realised, if much of its economic focus would be upon value addition to its treasure trove of primary products.


Heretofore, to such extent as Zimbabwe has engaged in export operations, albeit inadequately, a very high proportion of the exports have been in primary form, without any meaningful value addition thereto.


But, if Zimbabwe is to achieve real and extensive penetration into export markets, it needs to undergo a variety of fiscal and monetary policy transformations.


It needs to have a market-force driven economy, instead of a command economy grievously mismanaged by government, it needs to contain inflation vigorously, constructively, and lastingly, and until inflation has been successfully contained, it needs to devalue its currency on an ongoing basis, in alignment to inflation.


The development of viable, considerable export operations, worldwide, but with especial focus and emphasis upon the region, will also need intensive, innovative and dynamic marketing, product diversification, stringent quality controls to assure consistent, high product quality, and proven timeous delivery.


However, Zimbabwe will also have to resolve its relationships with its present, and future, trading partners.


Zimbabwe is a member of the Southern African Development Community (Sadc), alongside Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland, Tanzania and Zambia. But Zimbabwe is also a member of the Common Market for Eastern and Southern African (Comesa), together with Angola, Burundi, the Comoros, Democratic Republic of Congo, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda and Zambia.


Thus, in addition to Zimbabwe being a member of both Sadc and Comesa, so too are Angola, Malawi, Tanzania and Zambia.


Comesa intends to establish a customs union by 2008, and Sadc by 2010, and both entities have told Zimbabwe and the other four common members that they will have to determine in which they intend to remain, but that they cannot be members of both.


Such determination can have very great impacts upon Zimbabwe’s future export performance for, although one or both of those future customs unions may not necessarily become free trade areas, with zero customs duties on goods flowing from one member country to another, there would be a commonality of rates of duties, and such rates would be markedly less than those pertaining to goods being imported from countries external of the customs unions.


Some argue that as South Africa is very pronouncedly the most virile and advanced economy in the entire region, it is potentially the greatest purchaser, by far, of Zimbabwean goods, as compared to any other countries in the region and that, therefore, Zimbabwe must remain a member of Sadc, and therefore must withdraw from Comesa.


Others contend that doing so would be disastrous for, if South Africa benefits from favoured customs duty levels on its exports to Zimbabwe, it will be able to use the size of its manufacturing enterprises, which are beneficiaries of considerable “economies of scale”, to supply goods for sale in Zimbabwe at lower prices than Zimbabwean manufacturers of like products can sell such goods.


This, they suggest, would result in the destruction of Zimbabwean industry, and hence they argue in favour of Comesa membership, instead of remaining in Sadc.


The latter contention is suspect, for if Zimbabwe effectively created substantial export market penetration, then many of its industries could rapidly grow to a degree according them like economies of scale and, therefore, market competitiveness.


That competitiveness would be even greater for those whose inputs are primarily of Zimbabwean origin, with value addition thereto.


Others suggest that, in the medium to long-term, Comesa membership would be the more advantageous to Zimbabwe, having regard to the greater population that constitutes Comesa.


But one must ponder whether it is necessary to have two separate regional associations, with membership restricted to one or the other.


The proximity of the countries that constitute the region of Southern, Central and East Africa, and their very considerable commonality of interests, suggest that the better solution could well be a merger of the groupings, to establish the East, Central and Southern Africa Common Market (Ecsacom).

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