The ManicaPost
Kudzanai Gerede Business Correspondent
While there is general consensus that the success of any modern economy is fringed upon healthy economic ties with its immediate peers, a concept which brought about economic integration by way of breaking the geo-political divide that tend to obstruct unfettered trade access amongst nations, of late there has been increasing voices of discontent, which suggest the concept might be losing its charm.
The development comes at a time when Africa is moving towards this concept of regional integration having noted that trade among members of the regional bloc (Africa Union) and its sub-regional groupings like SADC, ECOWAS and EAC has been very minimal.
For smaller economies like Zimbabwe, the need for local businesses to expand into regional markets is much more attractive as this gives manufacturers wider market bases which help them create healthier economies of scale that lead to competitive pricing.
Envisioning a vibrant trade ecosystem across the entire Sub-Saharan region with unfettered access to all its markets would greatly improve the region’s growth output, knowledge transfer and many other benefits lie abundant.
World over, there are arrangements such as the case with the European Union whose annual Gross Domestic Product in 2016 was around 16 trillion Euros with foreign direct investment of around 5 trillion Euros.
Analysts say for developing countries negotiating trade deals as a bloc with huge markets such as the US and EU has massive benefits as it offers an attractive investment destination than going individually.
But with the highly competitive nature of the modern global economy, nations are now finding it much more flexible and favourable to enter into “personal” trade deals rather than negotiating as a bloc as this directly speaks to an economy’s self-interest.
And this should sit top of the list when African leaders craft Africa’s economic integration strategy.
In the EU for instance, prior to Britain’s exit last year (BREXIT), Germany, Britain, France and Italy constituted about half of the entire EU GDP in 2015 with the remaining 20 plus countries constituting the remainder.
Analysts say imbalance that exists among member states in regional blocks or where emerging economies feel can benefit more if they negotiate personal deals has been the major weaknesses of economic co-operation.
It is widely viewed as the reason Britain left EU.
Opening up access to external players is proving to infringe on certain benefits of host citizens as competition for resources become more intense.
This has taken more prominence following the recent inauguration of the US president, Donald Trump who has quizzed the Trans-Pacific Partnership and North American Free Trade Agreement (NAFTA) signed by his predecessors, even threatening to pull out as Americans view these economic agreements as promoting international co-operation yet threatening US jobs.
In recent years, more US manufacturing companies have shifted base under the TPP relocating to Asian markets and this has benefited company profit figures by operating in a much less costly environments closer to their markets.
“Blue-collar towns and cities have watched their factories close and good-paying jobs move overseas, while Americans face a mounting trade deficit and a devastated manufacturing base,” the White House statement issued a statement soon after Trump inauguration.
For Africa this is even more worrisome noted United Nations Development Program (UNDP) Zimbabwe resident representative, Amarakoon Bandara stressing the varying economic models and uneven levels of development as problematic factors.
“To this day we are yet to see a vibrant sub-regional bloc in Africa where intra trade is really thriving despite the issue dominating discourse when leaders met at high level panels. This in my view can be a reason of firstly; economic policies that are not congruent and disparities in development levels,”
“We can take for instance, indigenisation policy which is a good motive; it does not correspond with other policies beyond Zimbabwean borders like in South Africa or Botswana so that can be challenge if there were to negotiate economic agreement with a third party as a bloc rather than individually,” he said.
Amarakoon’s views hold substance when looking at Zimbabwe-South Africa trade relations.
Such is the imbalance that has seen Zimbabwe assuming trade deficits of around US$ 10 billion since 2009.
South Africa is Zimbabwe’s biggest trade partners yet its industrial base is far much huge, efficient and diversified such that its can easily consume much of the entire Zimbabwean market. This is largely seen as a disincentive to economic integration.
Analysts further say this is more likely to spur protectionist policies such as the recently introduced Statutory Instrument 64 of 2016.
SI64 saw a list of products Zimbabwean industries had capacity to produce being scrapped from the Open General Import License to give local players market space.
Zimbabwe continues to grapple with replacing its old industrial equipment due to low investment in order to improve production efficiency at a time other African economies are highly mechanised.
