Africa Free Trade Area may hurt domestic growth, cautions CSPR

CSPR has urged government to come up with clear legislation on industries, import and export policies in its implementation of the African Continental Free Trade Area (ACFTA), cautioning that the agreement had potential to hamper economic growth if not well implemented.

In a statement sent to News Diggers! Civil Society for Poverty Reduction (CSPR) executive director Patrick Nshindano commended President Edgar Lungu for signing the ACFTA agreement, noting that the ACFTA would not only improve regional production networks and the global value chain but also improve the welfare of the local citizens.

Nshindano, however, observed that if not well implemented, the ACFTA could hamper the growth of domestic industries, especially small and medium enterprises (SMEs) due to the introduction of unfair competition by already established foreign industries when it came to resources, market power and experience.

“The Civil Society for Poverty Reduction welcomes Zambia’s signing of the ACFTA agreement. The Continental Free Trade Area is a planned free trade area outlined in the African Continental Free Trade Agreement among 49 of the 55 African Union nations. CSPR believes that the ACFTA will not only improve regional production networks and global value chain, but also improve the welfare of the local citizens as this will lead to increased access to higher quality goods of lower prices, boost economic growth, promote efficiency and innovation, increase revenue to government through more exports, benefits from economies of scale and generally offer a greater market for Zambia’s products,” Nshindano observed.

But Nshindano asked government to come up with legislative measures where industrial, export and import polices were concerned, saying the ACFTA had potential to hamper growth of industries if not well implemented.

“CSPR further understands that the ACFTA has potential to offer a superb opportunity for domestic industries to showcase their products at the continental level thereby increasing the significance of the domestic industry in Zambia’s supply chain networks through intra-firm trade and restrain the hollowing out of the domestic industry. However, CSPR cautions the government to put in place all the relevant measures such as a clear piece of legislation including the industrial policy as well as export and import policies in the implementation of the ACFTA as it has the potential to hamper the growth of domestic industries, especially small and medium enterprises, due to the introduction of unfair competition as the already established foreign industries have an advantage when it comes to resources, market power and experience,” stated Nshindano.

“Therefore, CSPR encourages the government as well as domestic industry to take advantage of the available local resource to create a robust comparative advantage against other participating countries if Zambia is to benefit fully from ACFTA.”

         

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