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Saturday, November 27, 2021

After failing to utilize SADC, the richest market in Africa, Zambia now expands to Continental Market

Columns After failing to utilize SADC, the richest market in Africa, Zambia now...

By Edward Chisanga

In its pursuit of trade as an engine for economic development, Zambia has a history of overly-underutilizing markets it is member to. Examples include the European Union, the United States, Canada, Japan and even lately, China and India. Albeit free market access, our country’s exports continue to drop instead of rising as Table 1 below shows. Another statistic not shown here shows that in 2001, Zambia ranked number sixteen among the forty-eight Sub-Sahara excluding South African countries in exports of all products to the EU. But in 2020, this ranking dropped to number twenty-seven.

Table 1: Zambia’s exports of all products to UK, USA, EU in $ millions

 

2008

2020

Deficit

UK

92

15

-77

USA

42

34

-7

EU28

527

228

-299

Source: Unctadstat

But right in the backyard, Zambia is member of regional trade integration comprising largely COMESA and SADC, the latter perhaps the richest, most qualitative and even quantitative market in Africa because of the presence of South Africa. Just as most progressive countries in the world crave to export to the USA, similar ones in Africa thirst for exporting to South Africa but are thwarted by high import tariffs. But Zambia being member of SADC means it exports to South Africa free of duty for most goods. Do Zambians and their leaders know that to South Africa, Zambia’s exports of all products totaled only $ 181 million in 2020 shown in Table 2 below? While some may jump to concluding that it was due to Covid19, I will ask them to look at data many years prior to Covid 19 in the same Table. In the period shown, Zambia’s highest peak of exports to South Africa was only in 2007 when they reached $494 million. In 2000, Zambia ranked number six in top exporters to South Africa from Sub-Sahara Africa excluding South Africa. However, by 2020 that ranking had slumped to number fifteen, meaning other African countries had overtaken our country and you don’t hear this in Cabinet meetings as if it doesn’t matter.

 

Table 2: Zambia’s exports of all products to South Africa and SADC in $millions

2006

2007

2008

2009

2010

2016

2017

2018

2019

2020

South Africa

407

494

390

252

435

282

324

361

236

181

SADC

726

1,060

900

777

1,120

1,233

1,272

1,952

1,731

1,948

Source: Unctadstat

Of course, Zambia has key trading partners in SADC other than South Africa with Namibia accounting for 37% and DRC 36% respectively as shown in Table 3 below. In SADC, these three markets including Zimbabwe and Malawi account for 94% of Zambia’s total intra-SADC exports, hence its main markets. It means about ten SADC members are not Zambia’s main export markets. But it is only fair to also say that Zambia’s exports have been rising in SADC in terms of absolute values up to about $2 billion in 2020.

 

Table 3: Zambia’s main export markets in SADC in proportions

 

2020

 Proportions in total in percentages

SADC

About $2 billion total exports

 
Namibia

37

DRC

36

South Africa

9

Source: Unctadstat

But, is $2 billion exports really Zambia’s potential in a SADC lucrative market with South Africa where our country exports more primary commodities instead of manufactured goods? To Namibia, our country’s main export market in SADC, Zambia’s exports of primary commodities in total account for 99%. So, in the whole SADC market, exports of primary commodities in total account for about 70% with manufactured goods taking the least share of only 30%. To DRC, Zambia exports more manufactured goods than primary commodities in proportional terms but absolute numbers were only $418 million in 2020. And these goods exports comprise mainly sulphuric acids, copper ores and concentrates, non-alcoholic beverages and cement and common things like foods, maize, cane sugar, salts, vegetables, etc. Clearly, Zambia’s focus on the DRC and Namibia and other markets in Africa and divesting from the South African market is largely a result of failure to compete with other African countries in exports of manufactured goods. In 2020, Zambia ranked number eleven in top Sub-Sahara Africa exporters of manufactured goods. Yet, in 2000, its ranking was number six.

In intra-SADC trade, Zambia imports more than it exports leading to trade deficits every year. As an example, in 2020 the deficits in both all products and manufactured goods shown in Table 4 below reached over $1 billion for manufactured goods and almost $1 billion for all products. With trade deficits, the country fails to leverage external revenue from exports leading to shortage of cash for development and it means regional trade is not playing a significant role to help lift Zambians from poverty. I can hence understand why some Zambians are asking why Zambia should not leave some of these regional groupings where it may be reaping more political than economic benefits.
Table 4: Zambia’s intra-SADC trade in $ millions

Table 4: Zambia’s intra-SADC trade in $ millions

   

2020

Total all products Imports

2,837

  Exports

1,948

  Deficit

-889

Manufactured goods Imports

1,724

  Exports

606

  Deficit

-1,118

Source: Unctadstat

But, despite an awful record in SADC, Zambia has joined the Africa continental free trade area (AfCFTA) to export to the rest of Africa. When I asked a former permanent secretary of the Ministry of Commerce, Trade and Industry in the PF government, why Zambia was entering a larger market before fulfilling the SADC market, her stunning answer was, “If Zambia has liberalized trade with half of Africa (COMESA, SADC and EAC) under the TRIPARTITE arrangement, what’s wrong with doing so with the rest of Africa?” She did not talk about persistent trade deficits. Neither did she mention the products that the country would export to Nigeria, Ghana, Cote D’Ivoire, Morocco, Tunisia, Algeria and other more competitive countries than Zambia with which it currently has no trade partnerships and free trade arrangements.

I conclude by saying that I personally tried to advise government then to focus on building the supply and productive sector; to increase production and industrialization as a matter of priority and forget about looking for more free markets where the country would not export due to lack of products. Industrialization is what Zambia needs. Zambia sometimes should learn to disappoint its fellow African countries by refusing to join groupings that don’t contribute to industrialization. I advised that blind solidarity will not help Zambia to develop. Countries that are developing in Africa are largely those that don’t invest in blind group solidarity, They chose their own national vision and avoid group populism which is often more political than economic.

The African Union is preaching so many things to African member states. So many economic programs are on its website. Yet, it has allowed Viet Nam, a small country in Asia to overtake the whole Africa in exports of manufactured goods. Zambia would do better to build economic partnerships with such countries than responding positively to blind African group solidarity. I advised that when the impact of trade liberalization hits Zambia, the solution for Zambia will not come from the African Union but from Zambia and Zambians. Then solidarity will be ignored. Zambia cannot think that now that it has joined the AfCFTA, then industrialization will be created by these market forces. Viet Nam first built a strong industry which is now producing competitive products, then joined regional trade arrangements. China did not open its trade doors to the world until it developed the supply side.

I hope the new Zambian government will appreciate that group African solidarity cannot be its economic priority. No country in the world developed because of group solidarity. They developed on their own first, then joined groups. Developed countries began by protecting their countries from outside trade, developed then looked for group markets like the World Trade Organization (WTO). Asian countries depend largely on trade with developed countries which is then complemented by intra-Asian trade.

While Africa thinks it can reduce poverty through intra-Africa trade of currently only $70 billion exports, and in future by African countries exporting more to each other, Viet Nam and other Asian continues to increase exports to the rest of the world complimented by almost half inside Asia. Wealth is made by trading with wealth nations. That is what Asan countries do. Because Africa has no industrial products to export, the conclusion by its elite is that the continent has not benefited from trade with rich countries. Asians don’t share that view because they have developed products only wanted by rich countries. Zambia will not develop by trading with DRC, Namibia, Senegal or Benin which are all poor countries without wealth. Zambia should develop its supply side and focus on trading with South Africa and rich countries.

22 COMMENTS

  1. Very well spoken @Edward. This can not be told in any better or simpler ways. Zambia has for decades been an escorting country to others. National interest and real benefits to the Zambian people should be the driving force in any external trade agreements. Zambia needs to engage with SA to balance trade. In this they need to combine the capacity of the relevant ministry with external suppport capacity from patriotic and well informed Zambians like this Chisanga.

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  2. WELL ARTICULATED ARTICLE ZAMBIA CAN DEVELOP BY BECOMING MORE INDUSTRIALISED AND TRADING WITH RICH NATIONS BY MANAUFACTURING HIGH VALUE PRODUCTS NOT EXPORTING CHICKENS, EGGS AND OTHER STUFF TO DRC. LETS MAKE USE OF THE FREE ECONOMIC ZONES TO PROCESS GOODS FOR EXPORT. WE ARE VERY GOOD AT JOINING REGIONAL GROUPING FOR POLITICAL MILAGE NOT ECONOMIC BENEFITS.

  3. Zambians mindset of everyone concentrating on politics, thieving and making churches. Then we bring foreigners from China and Turkey to make bricks, harvest mukula from our forests and rear chickens. All the while we cutting illicit deals, getting cadres drunk, politicking and pretending to be christian nation. God will not be pleased with us for giving us all these natural resources and surrendering it to foreigners whilst we and future generations are condemned to servitude and poverty. Politics, overnight prayers and thieving will not make this country to prosper. Thanks Edward. However, I doubt that our leaders and technocrats will read your educative article.

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  4. And HH was in DRC promoting his personal business acting like he’s representing Zambia…we know his agenda….this man is in the office for his own personal gain and it’s becoming clear day by day….all his campaign promises were fake….corruption is on the rise…theft is on the rise…no electricity….no jobs…US$ expensive…food expensive…high interest rates..fertilizer almost K900 now…Cement K150..fuel shortage and still very expensive

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  5. @ Bashi Chite
    That’s what Zambians don’t want to hear and they will start insulting you…but they want you to proclaim ” Bally will fix it”… whilst Bally is now busy filling up his pockets….we have untapped natural resources which is the envy of the western world but we still depend upon the west to spoon feed us whilst we spend time in overnight prayers and bars drinking every night….and we wonder why we have so much misery and poverty in our communities

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  6. Under PF and lungu everything declined except their personal wealth………..

    Zambia first must satisfy its internal market then we can compete with other countries ………

    The aim must be to cut imports by atleast 80 % ……..

    How can you think of dominating external markets when you can’t satisfy your own internal market ????

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  7. This article has presented you with figures not allegations or conspiracy theories. Mwibulapo ichushi. Those deficits are opportunities for every single Zambian to fill and make a good living from.

  8. #3  Saulosi 
    November 26, 2021 At 8:22 am

    “….all …no electricity….no jobs…US$ expensive…food expensive……”

    Saulosi,

    Why do you keep dodging my question on no electricity ?????

    I keep asking you , did lungu not stand on a podium 4 months ago and proclaim the end of load shedding after spending billions on power generation ????

    Is the end of load shedding not one of the PF claims to unprecedented development ?

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  9. Well spoken Sir but there is more to this than meets the eye. Some of your key words are – China did not open its trade doors to the world until it developed the supply side.

    Check how we sell our own products. We sell them in extremely mediocre way, we don’t know how to add value to products. The vegetables, kepenta and fish are still loaded with sand like it used be in the 80s, surely we should have learned those trades by now but if our products are that way today how do we expect to break into the international markets.

    Our mindsets are still that of producers than that of manufacturers. Maybe government need to legislate some of these things and when quality is emphasized the economic multiplier effect will kick in and start affecting our supply chain etc. More can be said…

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  10. Bashi chite.
    If you are a devil worshiper go a head and worship him, but don’t play with the Lord our God and His church, and those whom He has raised to minister for Him.
    You can persure your wealth in this world and end up in hell.
    Servants of G do not need you to dictate to them , just continue to do evil and make money for your life is short, but the point remains this life is not yours you will be judged by your maker.

  11. Bashi chite.
    Church is not here to make money but to win souls for the kingdom Jesus Christ that is the mission.
    You sound so offended by the works of the church.
    Please concentrate on your mission on this earth, if it is enjoying life enjoy it at your best but know that you will be judged for all you spend your lifetime on.
    You can prosper in materials in this life but very poor with eternity and be finally thrown into the lake of fire, Rev 20:10.
    The devil continues to deceive you his followers.
    You are blind heading to hell, but you can repent and be saved, if you call on Jesus Christ.

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  12. Just been watching the video interview by Radio Icengelo with Mr Hakainde where he talks about after being sworn in etc. I enlarged it and slowed it…. I can now tell even himself was sure of what he was saying.

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  13. @ Mr Spaka sir
    Don’t get me wrong am just being repeatetive on the electricity issue because this is what HH and UPND campaigned on….someone yesterday asked if HH is the one who produces electricity….but remember one of his tweets he…himself HH said he has a solution for electricity just as soon he gets into State House….and you used to blame and call him Lazy Lungu as if he was the one producing electricity but why are you trying to distance HH from Zesco and Electricity??? Double standards i guess

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  14. @ Nshilimubemba. No offense intended to the genuine church. I am a Christian myself. But I refuse to to keep quiet on the abuse the unregulated christian religion is suffering. All sorts of magicians, conmen etc have sought refuge in the church. ” Miracles” of paraffin from water and “miracle money” as miracles to make easy money for themselves. How will the country develop from miracle money and tricks like paraffin from water? Passing exams without studying? IT IS WRONG. Taliban think that they can create a prosperous emirate in Afghanistan like UAE or Saudi Arabia purely on Islamic religion. They forget to factor in the oil that UAE and Saudi Arabia have. Warped thinking.

  15. I answered you that way because you lamped the whole church as doing no good, I said that the work of the church is to win souls and not to make money.
    You condemned prayers without prayer you a prisoner to demons.
    The church is the light of this world and represents God on this earth if you condemn it you are in danger.

  16. Problem with our goods is price and quality. If those two things are right then nothing can stop our exports just like trade kings and zambia sugar has been exporting to neighboring countries all along.

  17. #14 Razor. In every endeavor one must pride in the end product eg if I grow broiler chickens I have to ensure they well attended to so that they are excellent in both quality and quantity. But this lacking among our business community.

  18. The worst enemies of the Lord Yeshua are the so called Christians they are the bullets in the devils guns to destroy the church , they speak more evil against the body of Christ than Satan they are the true enemies of the Lord including those false prophets who deceive innocent people of God by stealing from them their hard earned resources through false miracles and prophesies.

  19. @ Nshilimubemba. You label me as “A prisoner of demons.” I live it up to God (Not a fellow mortal man) to judge me for my stance on the now prevelant “church/cult”based businesses and magicians and conmen swindling poor people of their cash via prosperity gospel, promising them miraculous overnight riches. The pastors and bishops live lavish lifestyles and the poor get even poorer. The poor end up going to beg for jobs and get abused by foreigners ( who don’t even believe in God) in their own land.

  20. This is how to make your point. With data, plenty of data. Kudos to you Mr. Chisanga . Otherwise without a basis to measure or compare, we are all just spewing weasel words.

    The next thing, if we genuinely care about Zambia as a whole, rather than a clever sounding partisan takes on the day’s events to score internet points, we should shift our time horizons for a true economic turnaround from a few months to several fiscal years of the Zambian government.

    The dreams about creating inter-generational wealth or making “billions” from some economic activity by some Zambians not going to happen if we have cartoonish timelines of a few months for real change.

  21. @Razor and Deja vu
    This is my concern…I don’t know why we don’t pay attention to detail when doing or manufacturing things in Zambia…also look how our Capital city Lusaka looks like….street vendors and those Airtel money booths all over….is there any way to modernize those money booths….Engineers graduate every year from UNZA why can’t they come up with proper ideas on how to make Lusaka attractive….plus ifiko…people throwing garbage everywhere…and we shouldn’t blame poverty for living in filthy conditions

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