Yesterday, our organization, the SME
Association of Zimbabwe was invited by the Zimbabwe National Chamber of
Commerce to a Consultative workshop about Tripartite Free Trade Area (TFTA) between COMESA-EAC-SADC. This workshop is being funded by the British
Council and we were only alerted of its nature less than 48 hours. So, I took it upon myself to read up on TFTA
what it is and why they need our input as an organization. So I download two 20-page documents off the internet.
The first document I read was a
well-researched paper by Petros Shayanowako, ‘Towards a COMESA, EAC, and SADC
Tripartite Free Trade Area,’ (January 2011).
They were critical aspects to the paper he covered which would be useful
to any SMEs or Private Sector whom would want to understand the historical
background and impact of the TFTA on business, trade and industry. I will not bore you with the details of the
paper but more emphasis on Import-substitutions and Value Additions on our local
industry would have been useful.
Hence, I then, referred to the Draft TFTA as suggested by Shayanowako’s
paper to understand the specific legal guidelines that is informing the
author’s deductive reasoning.
As I read ‘The Draft Agreement Establishing the
COMESA, EAC and SADC Tripartite Free Trade Area,’ Revised (December 2010). It became abundantly clear what the
benefits and the challenges of the TFTA were.
Now, I am not a Trade lawyer and neither, do I have a PhD in Trade and
Development but it doesn’t take a social scientist nor a legal practitioner to
explain Article 3: General Objectives,
clause 1: to promote the rapid social and economic development of the region
through job and wealth creation and the elimination of poverty, hunger, and
disease through building skills, innovativeness and hard and soft
infrastructure; and through improving the location of factors for sustainable
generation of national, regional and foreign investment and trade
opportunities. In essence TFTA is promoting the competitiveness of a
country by developing the country’s competitiveness of its local industries. So, here is when things became uncomfortable
for me when the following assertion amongst others, were made by various senior
persons with the mandate to speak on behalf of ZNCC and Ministry of Industry
and Commerce, paraphrased as follows:
Zimbabwe is a dollarized
economy. When countries export it is
because they want to buy up foreign currency; and since Zimbabwe has the U.S.
dollar; the Botswana Pula; the South African Rand; and the European Euro then Zimbabwean
SMEs can benefit from having countries in the COMESA-EAC-SADC trade with
Zimbabwe for that foreign currency.
Now here is the question I later posed to the
panel after painfully listening to their unsolicited and uninformed advice
about how SMEs can leverage from the TFTA. How does a company in the manufacturing sector
benefit from TFTA when (1) their production inputs in making a product is in
a strong currency such as the US$; and (2) distribution (transportation costs)
are in US$. The retailer then puts a
mark-up on the product to sell to consumers in the domestic market. In the end, the products only fetches
particular consumer with a specific disposable income and if one takes this
product across the board to South Africa to sell in a weaker currency in South
African rands; how does that product perfectly compete on price with South
Africa? Is this a sustainable model for
the SMEs? Can the SME still maintain Zimbabwean jobs? Can the SME still circulate income in the
Zimbabwean economy? Can the already
under capacity-utilization manufacturing plant avoid the economic-certainty of
poverty, hunger and disease knocking on its doors? How do all these factors promote
import-substitution and value addition? My question was not welcomed by one of the panel
members, in fact they responded as if they needed to exorcise the demon that
had descended on me to even dare ask that question.
My question was greeted at first with ‘I don’t understand your question about
exporting and production costs in US$?’ Then I repeated it slowly in simple
non-economic terms to the Economists asking?
Then the respondent defiantly acknowledge the question and responded
with soft indignation ‘I don’t understand
why your production costs would be in US$ and why it would be more expensive?
Anyway, it shouldn’t be more expensive because you have to look at what you are
doing wrong in your processes to minimize that cost so that your product would
be affordable. So, fix that in your
business processes and your products would be cheap. At this particular point, my brain-stopped
processing information, the way a laptop stops functioning the minute someone
mistakenly pours water over it. There
were few more questions I needed clarity on, for instance how do you balance the
contradictions inherent in Article 9: Prohibition of Export Duties with Article
19 of Safeguard measures…etc. The
respondent at this point was like, ‘Are
you suggesting we bring back the Zimbabwean dollar, back?’ My colleague,
sitting next me unsolicitly says ‘Yes,’ and the respondent greeted back with
the violent ‘NO. You can’t do that! It is getting political. It’s a
non-starter. Like I said, look at your
business processes.’ I responded passively saying that this was supposed to
be an open dialogue and on that note our Q&A was shut-down by ZNCC official
chairing the consultative workshop.
******
During lunch I engaged with various colleagues
as a few found my line of questioning an important one but did not have the
courage or the insights to ask more questions and response to my queries. As for the panelist, neither of them had the
curiosity to want to understand nor seeks to impart their in-depth knowledge of
the TFTA to ensure we were all the same page. I watched the stakeholders who had called the
consultative workshop huddle into their respective groups without interacting
with the rest of the delegates and accepted (finally) that the Zimbabwe I now
found myself in, had a type of dysfunction, that to bring Zimbabwe to absolute resolve can not result in political change alone!
Copyright @ April 17, 2013. Published on BlogSpot by
Tambu Ndoro, Adhoc Strategy & Innovation Specialist for UN Commission Trade and Development (UNCTAD) and Hanga Consulting (PVT) Ltd, ©2011. www.hangaconsulting.com. Tambu is also a member of Research and
Development Committee of SME Association of Zimbabwe ©2011
