By Clive Siachiyako
Zambia’s strategic advantages have laid the foundations for the establishment of sector export promotion strategies in order to stimulating further production and facilitate diversification in the export base. Trade agreements such as COMESA have opened up regional markets, with Zambia reaping the financial rewards of the region’s free trade area. In addition, Zambia is expected to realise tremendous benefits from the currently launched COMESA Customs Union’s external common tariff, including increased Foreign Direct Investment flows, export diversification and a stronger negotiation position in multilateral negotiations, among others. Further opportunities exist to broaden Zambia’s export markets and products with the Southern Africa Customs Union (SACU) market, in particular South Africa, being seen as having huge potential. To assist the penetration of Zambian products abroad, two trade fairs are organised every year. Held in Lusaka, the internationally recognised Zambia Agriculture and Commercial Show exhibits agricultural equipment, produce and manufactured goods, while Ndola’s Zambia International Trade Fair has an impressive variety of products and draws exhibitors from the region as well as abroad.
From a rich natural resource base covering minerals as well as agricultural resources, Zambia is broadening its export basket to include other important opportunities deriving from export growth. The economic diversification strategy of Zambia includes; diversifying the range of markets into which existing products are exported (geographic diversification); upgrading the quality of existing products; and taking advantage of opportunities to expand exports of services. The emphasis of Zambia’s diversification strategy is tailored to the country’s niche in the global market especially towards emerging large economies, such as Brazil, China and India.
Shifting from the traditional exports of copper and cobalt, the country is utilising available opportunities in several sub-sectors such as the food processing and beverages; clothing and textiles; metal processing; agro-processing – including fertilisers, pesticides and herbicides; wood and wood products, paper products and packaging; and cement and explosives; as well as leather and leather products. Others are processing and polishing of gemstones and jewellery making, engineering products, plastic and glass containers, and many others. Manufacturing industries are cardinal in the diversification of the economy away from raw copper and into NTEs, including the downstream processing of many primary products. A reduction in customs duty rates for some misclassified finished items has been made to boost the manufacturing sector.
Zambia’s Export Opportunities –AGOA
The increase in the number of products eligible into the United States market entails increased market opportunities for the Zambian horticultural products. Zambia’s agricultural-based industries are thus benefiting from the African Growth and Opportunities Act trade initiatives.
The African Growth Opportunities Act focuses on the handicraft industry as well. Although the initial focus was on hand made products, the current AGOA legislation includes crafts products produced from machines. This legislation adds more benefits to the Zambian players in the handicraft industry whose market size has been broadened. This current AGOA legislation includes the textile industry. This entails that Zambian companies in the textile industry can export garments of different nature to the US market quota and duty free. Only quality matters may limit the exporters. However, some Zambian exports into the AGOA market have been induced through exports to countries eligible to export such products to the AGOA market. For instance, in the textile sub-sectors, Zambian exports not eligible into the US market under AGOA have been exported to AGOA eligible countries in such exports for onward garment production for the AGOA market
. Cotton yarn is one such product which Zambian exporters are not eligible under AGOA to export to the US market. To that effect, Zambian cotton yarn exporters sell abroad to eligible countries who later export to the US market. Mauritius, Lesotho, Botswana and South Africa have been principle AGOA induced export markets for Zambia. With the opening up of new garment factories as well as the increase in production capacity of the existing factories, Mauritius is particularly drawing a lot of cotton yarn from Zambia companies.
To boost African Growth Opportunities Act exports and aid for the diversification of export products to the US market, COMESA with funding from the United States Agency for International Development, came up with AGOA linkages in COMESA (ALINC) programme. The ALINC programme promotes African Growth Opportunities Act in member states of COMESA, which are AGOA eligible. Apart from facilitating trade between Africa and the United States, ALINC disseminates information on the African Growth Opportunities Act.
In order to improve Zambia’s chances of taking advantage of AGOA, the Ministry of Commerce, Trade and Industry in conjunction with partners such as Zambia Development Agency; Market Access, Trade and Enabling Policy; COMESA and Mount Makulu have continued with country wide sensetisation programmes, capacity building of producers and exporters as well as institutions rendering services to the private sector on the characteristics and needs of the US market. The initiative is meant to provide Zambian exporters with training on export development, packaging and on how to reduce the cost of transportation of their exports.
The African Growth Opportunity Act initiative is a real opportunity for Zambia. The government must thus build on those opportunities in conjunction with farmers, manufacturers and the business community to ensure that trade under the Act continues to flow between Zambia and USA. This entails more export earnings for Zambia, a phenomenon cardinal to job and wealth creation as well as poverty reduction.
Foreign Markets: - Zambian Exports’ Opportunities.Market expansion is vital for any exporter to increase returns. To broaden its regional and international market share, Zambia is a signatory to a number of bilateral, regional and multilateral trade agreements. Trading partners within the southern Africa include South Africa, Malawi, Zimbabwe, and Congo DR. In addition, vital international trade partners comprise EU coun
tries such as Germany, USA and the United Kingdom.
Within the southern region, Zambia is a member of the Southern African Development Community (SADC), a grouping of 14 countries with a combined population of about 200 million people. And the country’s active participation in the SADC Trade Protocol as well as the Africa wide 20 countries Common Market for Eastern and Southern Africa (COMESA)/ Free Trade Area (FTA) offers preferential tariff access to total market potential of nearly 380 million people.
Similarly, with the advent of Africa Growth and Opportunity Act (AGOA) duty free access to the huge USA market has become a reality.
AGOA-Africa Growth and Opportunity ActThis Act provides trade preferences for quota and duty-free entry into the United States market for certain goods. Notably, AGOA expanded market access for textile and apparel goods into the United States for eligible countries. Some AGOA countries have begun to export new products to the United States, such as cut flowers, horticultural products, automotives and steel. Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015. The Act’s apparel special provision, which permits lesser-developed countries to set foreign fabric for their garment exports, was to expire in September 2007. However, the legislation passed by Congress in December 2006 extended it through 2012.
Contonou Agreement The Continou Agreement provides for reciprocal trade agreements, meaning that not only the European Union (EU) provides duty-free access to its markets for African, Caribbean and Pacific Nations (ACP) exports, but ACP countries also provide duty-free access to their own markets for EU exports. True to the Continou principle of differentiation, however, not all ACP countries have to open their markets to EU products after 2008. The group of least developed countries is able to either continue cooperation of non-reciprocal trade preferences or the “Everything But Arms” regulation.
Zambia is also a signatory to the Continou Agreement, which aims to achieve free trade arrangements between the EU and the ACP regional groupings. EBA- Everything But ArmsEverything But Arms (EBA) is an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty free and quota free, with the exception of armaments. EBA entered into force on 5 March2001. There are transitional arrangements for bananas, sugar and rice until January 2006, July 2009 and September 2009 respectively. COMESA- Common Market for Eastern and Southern AfricaCOMESA was founded in 1994 to replace the former Preferential Trade Area (PTA) and forms a formidable market (both external and internal trading) with over 20 member states with a population of more than 374 million and an annual import bill of around USD 32 billion. COMESA member states are; Angola, Burundi, Congo DR, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Malawi and Madagascar. Other members are Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
SADC- Southern Africa Development CommunityThe Southern Africa Development Community was formed with the objective of building a region of high levels of harmonisation and rationalisation that enable pooling of resources to achieve self reliance and ultimately improve the living standard and quality of people in this region. The SADC member states include Angola, Botswana, Congo DR, Lesotho, Madagascar, Mauritius, Malawi, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia as well as Zimbabwe. To accelerate economic growth, SADC member states are individually intensifying their efforts to implement comprehensive economic and social reforms within the organ’s development framework of pursuing poverty reduction oriented policies, addressing good governance issues, infrastructure and production capacity constraints, all of which are cardinal in the facilitation of economic development and attracting investment. Zambia’s membership to regional organisations such as COMESA and SADC has buoyed the country’s export market. And the country’s participation in international trade has also boosted the country’s competitiveness in global trade. Currently the European Union countries, China, South Africa, Democratic Republic of Congo, Kuwait, United Arab Emirates, India, Japan and the USA remain Zambia’s major trading partners. Although Zambia is a landlocked country, it has easy access to the sea ports of Durban in South Africa, Dar-es-salaam in Tanzania and Walvis Bay in Namibia.
Exports: A Booster to Development.
In today’s interconnected global economy, expansion into international markets becomes a serious question for any economy. Exports generate reasonable foreign exchange into the exporting economy. The net effects of such foreign exchange injections ignite great economic progress, which can translate into job and wealth creation in the economies of exporting countries. Endowed with certain resources, countries depend on each other’s comparative advantage for economic sustenance. Trade therefore becomes crucial in that equation.
Zambia being a resource-rich country in terms of mineral wealth as well as plentiful arable land, abundant water, affordable electricity from coal reserves as well as hydroelectric power, has a lot of potential to export globally. The country has a lot of other existing opportunities for processing of natural resources in sectors such as textiles, agro-industries and gemstone processing, all of which offer opportunities for more external trade. Since the early 1990s, Zambia’s external trade has become progressively liberalised in response to the globalisation phenomenon. Government incentives to develop export industries in favour of import substitution have led to improved foreign exchange earnings.
y’s interconnected global economy, expansion into international markets becomes a serious question for any economy. Exports generate reasonable foreign exchange into the exporting economy. The net effects of such foreign exchange injections ignite great economic progress, which can translate into job and wealth creation in the economies of exporting countries. Endowed with certain resources, countries depend on each other’s comparative advantage for economic sustenance. Trade therefore becomes crucial in that equation.Zambia being a resource-rich country in terms of mineral wealth as well as plentiful arable land, abundant water, affordable electricity from coal reserves as well as hydroelectric power, has a lot of potential to export globally. The country has a lot of other existing opportunities for processing of natural resources in sectors such as textiles, agro-industries and gemstone processing, all of which offer opportunities for more external trade. Since the early 1990s, Zambia’s external trade has become progressively liberalised in response to the globalisation phenomenon. Government incentives to develop export industries in favour of import substitution have led to improved foreign exchange earnings.
The country’s most successful traditional exports remain its metals and minerals, in particular copper and cobalt. However, there has been steady growth of non-traditional exports (NTEs), which continue to be promoted by government. The significance of non-traditional exports to Zambia’s economy cannot be overstated. To reduce the economy’s reliance on traditional mineral exports such as raw copper and cobalt, NTE’s are vital in increasing economic diversification and promoting growth. Zambia’s non traditional exports include sugar, cotton lint, floriculture, soya beans and other primary agricultural produce with textile, engineering products, cement and handcrafts also proving lucrative. Other significant export products are fertilisers, hydrated lime, coal, tea, maize, skin leather, asbestos pipes/sheets, groundnuts, mushrooms, fresh eggs and day old chicks, paper, aluminium wires and cables, sorghum, clothing and blankets. Manufacturing exports have grown significantly, and there is room for further export production considering the great demand of the country’s products on the international market.
The success of the NTE sector has manifested itself in improved export earnings and increased contributions to total exports. In recent years, NTE earnings increased, accounting for some 35 percent of export earnings, with fresh flowers, gemstones, cotton lint, sugar, copper wire and gold bar exports all contributing to this strong performance. The South African market continues to be by far the largest for Zambia’s NTEs. Principal export products to the EU, USA and Far East are cut flowers, fresh vegetables and fruits, cotton yarn, coffee, sugar, paprika, game trophies, tobacco, cotton lint and honey products. Markets within the SADC and COMESA region are mostly supplied with sugar, cotton lint, electricity, cement, soya beans, animal feeds, tobacco, meat/poultry/dairy products, paprika, chemicals and petroleum products.
game trophies, tobacco, cotton lint and honey products. Markets within the SADC and COMESA region are mostly supplied with sugar, cotton lint, electricity, cement, soya beans, animal feeds, tobacco, meat/poultry/dairy products, paprika, chemicals and petroleum products. Zambia’s strategic advantages have laid the foundations for the establishment of sector export promotion strategies in order to stimulating further production and facilitate diversification in the export base. Trade agreements such as COMESA have opened up regional markets, with Zambia reaping the financial rewards of the region’s free trade area. In addition, Zambia is expected to realise tremendous benefits from the currently launched COMESA Customs Union’s external common tariff, including increased Foreign Direct Investment flows, export diversification and a stronger negotiation position in multilateral negotiations, among others. Further opportunities exist to broaden Zambia’s export markets and products with the Southern Africa Customs Union (SACU) market, in particular South Africa, being seen as having huge potential. To assist the penetration of Zambian products abroad, two trade fairs are organised every year. Held in Lusaka, the internationally recognised Zambia Agriculture and Commercial Show exhibits agricultural equipment, produce and manufactured goods, while Ndola’s Zambia International Trade Fair has an impressive variety of products and draws exhibitors from the region as well as abroad.
From a rich natural resource base covering minerals as well as agricultural resources, Zambia is broadening its export basket to include other important opportunities deriving from export growth. The economic diversification strategy of Zambia includes; diversifying the range of markets into which existing products are exported (geographic diversification); upgrading the quality of existing products; and taking advantage of opportunities to expand exports of services. The emphasis of Zambia’s diversification strategy is tailored to the country’s niche in the global market especially towards emerging large economies, such as Brazil, China and India.
Shifting from the traditional exports of copper and cobalt, the country is utilising available opportunities in several sub-sectors such as the food processing and beverages; clothing and textiles; metal processing; agro-processing – including fertilisers, pesticides and herbicides; wood and wood products, paper products and packaging; and cement and explosives; as well as leather and leather products. Others are processing and polishing of gemstones and jewellery making, engineering products, plastic and glass containers, and many others. Manufacturing industries are cardinal in the diversification of the economy away from raw copper and into NTEs, including the downstream processing of many primary products. A reduction in customs duty rates for some misclassified finished items has been made to boost the manufacturing sector.
Zambia’s Export Opportunities –AGOA
Zambia is a signatory to several trade agreements including the umbrella trade organisation, the World Trade Organisation. These trade agreements play a leading role in the promotion of Zambia’s exports and economic development and the reduction of poverty, which are essential tenets in attaining development targets. Each trade agreement focuses on boosting export earnings of key sectors in the economy. Among the trade agreements to which Zambia is a signatory is the African Growth and Opportunities Act (AGOA). The African Growth and Opportunities Act is part of the United State Trade and Development Act, which allows more than 4,600 products from 144 designated countries and territories, mainly in the developing world to enter the United States market tariff-free. Currently, there are 38 Sub-Saharan countries that are eligible for benefits under AGOA. Over the last seven years, AGOA has succeeded in stimulating increases in United States-Africa trade, creating new jobs and spurring investment worth millions of Dollars. In Zambia, AGOA focuses on horticulture and handcrafts. The United States government plays a great role in assisting the Zambian horticulture industry to take advantage of the African Growth Opportunity Act. Initially, only baby corn, baby carrots and snow peas were the only fresh vegetables that were exported to the US market from Zambia. But with the commissioning of the Pest Risk Assessment in 2003, other products are eligible to enter the US market under AGOA. Candidate products eligible for the US market under the Pest Risk Assessment include fine beans, asparagus, courgettes, chilies, baby melons, leeks and okra. This has been possible through the support from the Common Market for Eastern and Southern Africa (COMESA).
Organisation. These trade agreements play a leading role in the promotion of Zambia’s exports and economic development and the reduction of poverty, which are essential tenets in attaining development targets. Each trade agreement focuses on boosting export earnings of key sectors in the economy. Among the trade agreements to which Zambia is a signatory is the African Growth and Opportunities Act (AGOA). The African Growth and Opportunities Act is part of the United State Trade and Development Act, which allows more than 4,600 products from 144 designated countries and territories, mainly in the developing world to enter the United States market tariff-free. Currently, there are 38 Sub-Saharan countries that are eligible for benefits under AGOA. Over the last seven years, AGOA has succeeded in stimulating increases in United States-Africa trade, creating new jobs and spurring investment worth millions of Dollars. In Zambia, AGOA focuses on horticulture and handcrafts. The United States government plays a great role in assisting the Zambian horticulture industry to take advantage of the African Growth Opportunity Act. Initially, only baby corn, baby carrots and snow peas were the only fresh vegetables that were exported to the US market from Zambia. But with the commissioning of the Pest Risk Assessment in 2003, other products are eligible to enter the US market under AGOA. Candidate products eligible for the US market under the Pest Risk Assessment include fine beans, asparagus, courgettes, chilies, baby melons, leeks and okra. This has been possible through the support from the Common Market for Eastern and Southern Africa (COMESA). The increase in the number of products eligible into the United States market entails increased market opportunities for the Zambian horticultural products. Zambia’s agricultural-based industries are thus benefiting from the African Growth and Opportunities Act trade initiatives.
The African Growth Opportunities Act focuses on the handicraft industry as well. Although the initial focus was on hand made products, the current AGOA legislation includes crafts products produced from machines. This legislation adds more benefits to the Zambian players in the handicraft industry whose market size has been broadened. This current AGOA legislation includes the textile industry. This entails that Zambian companies in the textile industry can export garments of different nature to the US market quota and duty free. Only quality matters may limit the exporters. However, some Zambian exports into the AGOA market have been induced through exports to countries eligible to export such products to the AGOA market. For instance, in the textile sub-sectors, Zambian exports not eligible into the US market under AGOA have been exported to AGOA eligible countries in such exports for onward garment production for the AGOA market
. Cotton yarn is one such product which Zambian exporters are not eligible under AGOA to export to the US market. To that effect, Zambian cotton yarn exporters sell abroad to eligible countries who later export to the US market. Mauritius, Lesotho, Botswana and South Africa have been principle AGOA induced export markets for Zambia. With the opening up of new garment factories as well as the increase in production capacity of the existing factories, Mauritius is particularly drawing a lot of cotton yarn from Zambia companies.To boost African Growth Opportunities Act exports and aid for the diversification of export products to the US market, COMESA with funding from the United States Agency for International Development, came up with AGOA linkages in COMESA (ALINC) programme. The ALINC programme promotes African Growth Opportunities Act in member states of COMESA, which are AGOA eligible. Apart from facilitating trade between Africa and the United States, ALINC disseminates information on the African Growth Opportunities Act.
In order to improve Zambia’s chances of taking advantage of AGOA, the Ministry of Commerce, Trade and Industry in conjunction with partners such as Zambia Development Agency; Market Access, Trade and Enabling Policy; COMESA and Mount Makulu have continued with country wide sensetisation programmes, capacity building of producers and exporters as well as institutions rendering services to the private sector on the characteristics and needs of the US market. The initiative is meant to provide Zambian exporters with training on export development, packaging and on how to reduce the cost of transportation of their exports.
The African Growth Opportunity Act initiative is a real opportunity for Zambia. The government must thus build on those opportunities in conjunction with farmers, manufacturers and the business community to ensure that trade under the Act continues to flow between Zambia and USA. This entails more export earnings for Zambia, a phenomenon cardinal to job and wealth creation as well as poverty reduction.
Foreign Markets: - Zambian Exports’ Opportunities.Market expansion is vital for any exporter to increase returns. To broaden its regional and international market share, Zambia is a signatory to a number of bilateral, regional and multilateral trade agreements. Trading partners within the southern Africa include South Africa, Malawi, Zimbabwe, and Congo DR. In addition, vital international trade partners comprise EU coun
tries such as Germany, USA and the United Kingdom.Within the southern region, Zambia is a member of the Southern African Development Community (SADC), a grouping of 14 countries with a combined population of about 200 million people. And the country’s active participation in the SADC Trade Protocol as well as the Africa wide 20 countries Common Market for Eastern and Southern Africa (COMESA)/ Free Trade Area (FTA) offers preferential tariff access to total market potential of nearly 380 million people.
Similarly, with the advent of Africa Growth and Opportunity Act (AGOA) duty free access to the huge USA market has become a reality.
AGOA-Africa Growth and Opportunity ActThis Act provides trade preferences for quota and duty-free entry into the United States market for certain goods. Notably, AGOA expanded market access for textile and apparel goods into the United States for eligible countries. Some AGOA countries have begun to export new products to the United States, such as cut flowers, horticultural products, automotives and steel. Initially, AGOA was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration Act of 2004, which extended the legislation to 2015. The Act’s apparel special provision, which permits lesser-developed countries to set foreign fabric for their garment exports, was to expire in September 2007. However, the legislation passed by Congress in December 2006 extended it through 2012.
Contonou Agreement The Continou Agreement provides for reciprocal trade agreements, meaning that not only the European Union (EU) provides duty-free access to its markets for African, Caribbean and Pacific Nations (ACP) exports, but ACP countries also provide duty-free access to their own markets for EU exports. True to the Continou principle of differentiation, however, not all ACP countries have to open their markets to EU products after 2008. The group of least developed countries is able to either continue cooperation of non-reciprocal trade preferences or the “Everything But Arms” regulation.
Zambia is also a signatory to the Continou Agreement, which aims to achieve free trade arrangements between the EU and the ACP regional groupings. EBA- Everything But ArmsEverything But Arms (EBA) is an initiative of the European Union under which all imports to the EU from the Least Developed Countries are duty free and quota free, with the exception of armaments. EBA entered into force on 5 March2001. There are transitional arrangements for bananas, sugar and rice until January 2006, July 2009 and September 2009 respectively. COMESA- Common Market for Eastern and Southern AfricaCOMESA was founded in 1994 to replace the former Preferential Trade Area (PTA) and forms a formidable market (both external and internal trading) with over 20 member states with a population of more than 374 million and an annual import bill of around USD 32 billion. COMESA member states are; Angola, Burundi, Congo DR, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Malawi and Madagascar. Other members are Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe.
SADC- Southern Africa Development CommunityThe Southern Africa Development Community was formed with the objective of building a region of high levels of harmonisation and rationalisation that enable pooling of resources to achieve self reliance and ultimately improve the living standard and quality of people in this region. The SADC member states include Angola, Botswana, Congo DR, Lesotho, Madagascar, Mauritius, Malawi, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia as well as Zimbabwe. To accelerate economic growth, SADC member states are individually intensifying their efforts to implement comprehensive economic and social reforms within the organ’s development framework of pursuing poverty reduction oriented policies, addressing good gove
rnance issues, infrastructure and production capacity constraints, all of which are cardinal in the facilitation of economic development and attracting investment. Zambia’s membership to regional organisations such as COMESA and SADC has buoyed the country’s export market. And the country’s participation in international trade has also boosted the country’s competitiveness in global trade. Currently the European Union countries, China, South Africa, Democratic Republic of Congo, Kuwait, United Arab Emirates, India, Japan and the USA remain Zambia’s major trading partners. Although Zambia is a landlocked country, it has easy access to the sea ports of Durban in South Africa, Dar-es-salaam in Tanzania and Walvis Bay in Namibia.
No comments:
Post a Comment