The Policy Monitoring and Research Centre (PMRC) has urged government, through the Ministry of Commerce, Trade and Industry, to invest in capacity-building for Zambian firms to enable them compete on the continental market.
PMRC Head of Research and Analysis Salim Kaunda observed in the Centre’s December, 2018, briefing document that Zambia must prepare adequately in order to secure itself a position to get the best deals on the Continental Free Trade Area (CFTA).
The PMRC December, 2018, briefing document, which was prepared with help from Centre executive director Bernadette Deka, also suggested that government must implement strategic policies to encourage investment in the manufacturing sector.
“Manufacturing industries will need to be strategically considered by promoting value-addition, as this is the sure way Zambia can benefit. In view of this, government must implement strategic policies to encourage investment in the manufacturing sector. Special focus should be given to industrial policy, trade policy and other policies related to cost and ease of doing business. Government must prioritize sectors where Zambia has comparative advantage and build domestic production capacity e.g. agro-processing and mining,” Kaunda observed.
“There is need to increase sensitization on the CFTA and promote building consensus and understanding the impact of Zambia joining. This would also adequately equip businesses and manufacturers to strategically position themselves and benefit from CFTA. There is need to identify products that will be floated on the CFTA market.”
He added that Zambia needed to adequately prepare for the various potential challenges that may be faced in view of potentially increased migration.
“Policies must be set up in such a way that Zambian citizens are protected from loss of employment; and that immigration of skilled labour is encouraged to ensure that the benefits of these skills are harnessed. Skilled labour allows the country to be efficient in its production and also its ability to develop advanced technological systems and equipment within the country. Zambia also needs to focus on strengthening the facilitation of movement of capital. As the region becomes a large single market, competition is likely to increase for Zambian producers in particular. It is essential for Zambian producers and businesses to be able to survive in this very competitive market. Research on the potential demands of products that Zambia may have comparative advantage in should be carried out to ensure necessary targeting is done. This will give Zambia an advantage as it services varying customers in different countries. Cost benefit analysis of the best means of business must be undertaken to ensure efficiency and to benefit from economies of scale,” stated Kaunda.
“Zambia must also invest in technology and equipment, which improve productivity. Zambia can also mobilize domestic resources in such a way that it can survive the potential short-term losses that come with developing the CFTA. In this way, the country may not incur a lot of costs despite the reduction in tariff revenue. The removal of trade barriers is likely to bring about Foreign Direct Investment (FDI) and more multinational companies that need to be regulated. The issue of cross-border tax avoidance may arise as a result of this. Zambia may avoid this by endorsing a global common reporting standards for Automatic Exchange of Information (AEOI), which allows easier access to financial information to the residence country. Support must be provided for small-scale producers to avoid crowding out by a market run by the private sector. Small-scale producers may adapt to the post-CFTA market through enhanced technical, managerial and financial skills and meet industry standards. The government may assist in investment of these attributes. Zambia’s priorities in its trading arrangements is currently focused on interventions that promote value-addition, diversification and job and wealth creation.”
In order to achieve value-addition, Zambia has recently developed an export strategy focused on ensuring that the domestic industry benefits by manufacturing products that will be able to meet the demands of the CFTA countries.