FINANCE and Economic Development Minister, Professor Mthuli Ncube, says embracing the African Continental Free Trade Area (AfCFTA) is critical in assisting Zimbabwe to structurally transform its economy.
The desire for structural economic transformation is receiving a lot of attention in global policy debates with more urgency in developing countries like Zimbabwe, which have for years relied on production and exportation of primary commodities.
With the country driving towards realising an upper middle-income economy by 2030, structural transformation is vital and this is espoused in the National Development Strategy (NDS1), which was launched by President Mnangagwa last November and spans the period 2021 to 2025.
As the Government forges ahead with investment reforms, Prof Ncube, says the private sector must come on board and play its part by tapping into the opportunities being availed under the AfCFTA.
Zimbabwe has already ratified the AfCFTA Agreement, whose operationalisation commenced in January this year, and is in the process of fine-tuning the tariff offer framework.
“The AfCFTA project will contribute to building Zimbabwe’s structural transformation and will redefine markets and economies right across the region,” said Prof in a recent engagement with business leaders in Bulawayo.
“Let’s strive to enhance regional value chains. The NDS1 is anchored on structural transformation and value chains through resuscitating and strengthening existing and developing new value chains.
“We should tape into quick wins in terms of value chain support because they are looking at agro-based industries, pharmaceuticals, bus and truck assemble, iron and steel, plastic waste and this is all espoused in the NDS1.”
Prof Ncube advised private sector leaders to invest more in enhancing their production capacities and efficiencies to position themselves for higher gains under the regional free trade deal. He said in addition to the support offered by the Government to producers, there were also significant resource streams to be unlocked under the trade deal.
“The first phase of the framework to be implemented between 2020 and 2030 is envisaged to unlock US$1 trillion in the Africa Free Trade area, certified and accredited investments.
“So, there would be resources to be unlocked and this period obviously coincides with Vision 2030,” said Prof Ncube.
“The private sector should, thus, take advantage of the AfCFTA to not only trade but invest in infrastructure, set up the industries, add value to goods and services and increase intra-Africa trade.”
In line with the objectives of the NDS1, which are anchored on a drive to rebalance the economy through increasing the contribution of value-added exports to total exports, Prof Ncube said the country was aiming at growing value-added exports from the current nine percent to 20 percent by year 2025.
The minister, however, lamented the adverse impact of external arrears owed by Zimbabwe to international financiers.
“We have lost a lot of credit lines as a result of this challenge. So, really partly resolving the arrears issue is the ultimate silver bullet in terms of private sector accessing credit lines,” he said.
Despite the setback, Prof Ncube said the Government was prepared to support business using domestic resources and facilities through guarantee schemes with local banks.
Recently, the Government through the RBZ availed a $500 million facility for SMEs, which is available through the banks.
The $18 billion stimulus package to cushion businesses from the impact of Covid-19 is also available, said the minister.