By Edward Chisanga
Zambia is exporting almost nothing to South Africa
When the late President Kaunda sacrificed Zambia and Zambians to help black South Africa gain its political freedom and rule largest economy in Africa, the expectation of Zambians was that payment would come at least in form of vibrant trade and foreign direct investment (FDI). South Africa is the only country in the continent with potential FDI and capital and intermediate goods needed for Zambia’s industrialization. But about twenty-five years since black South Africans took over the governance of the country, Zambia has failed to maximize and take advantage of the warm relationship. It is unclear how much capital and intermediate goods the Zambian private sector imports from South Africa and how much FDI they have captured. What is clear though is the presence of many retail shopping malls erected by South Africans in Zambia from which we buy retail and already processed South African goods.
Trade is perhaps the only thing under Zambia’s control which our private sector can take advantage of from South Africans. Since black rule began, many Zambian business men and women as well as government officials have been travelling to South Africa telling us they go there to seek trade. The Zambian Embassy in South Africa was opened with the main objective to promote the country’s trade. Hence, one would expect that in the past years, Zambians would be seeing expanded trade, at least exports to that country.
When then President Lungu and President Zuma, of South Africa met, our President told his counterpart, “Although trade between Zambia and South Africa remains buoyant, it is heavily and unfortunately skewed in favor of South Africa.” When I checked the definition of the word, ‘buoyant,’ the answer was, “(Of an economy, business or market) involving or engaged in much successful trade or activity.” It was in 2016 when then President Lungu made this statement. So, I compiled statistics to show Zambia’s exports to South Africa from 2001-2020 shown in Figure 1 below. What I found was that President Lungu’s statement was misleading. In 2016, Zambia’s trade with South Africa was not buoyant. In fact, it was torpid or gloomy. You can see the continuous downturn that it experienced from its highest peak of about $ 900 million in 2013 to less than $200 million in 2020. The peak was achieved by President Banda and Mwanawasa’s rule while the slump is attributed to President Lungu’s period.
Meanwhile, I also constructed statistics to show more details of Zambia’s trade with South Africa depicting exports and imports. My finding is that Zambia exports less to South Africa than it imports from that country leading to a growing trade deficit which both Presidents Mwanawasa and Banda, on the one hand, as well as Lungu on the other, failed to reverse as Figure 2 below shows. President Lungu tried but did not succeed. Continuous trade deficits mean Zambia is not leveraging external revenue from trade with South Africa and this constitutes one of Mr. Lungu’s complaints to Mr. Zuma.
I checked data to see whether Zambia was importing capital and intermediate goods from South Africa enough for industrialization. In 2020 for example, Zambia’s imports of capital and intermediate goods put together reached less than $1 billion for each. That is not enough money to import such important tools for industrialization and economic development. Zambia’s own reported data shows that the country imported consumer goods from South Africa which amounted to $807.8 million the same year. That is quite a lot relative to Zambia’s exports of less than $200 million goods to that country.
Zambia has lost its ranking in top Sub-Sahara African countries exporting to South Africa
I was equally interested to find out how competitive Zambia is in the midst of other Sub-Sahara African countries excluding South in exports of all products to South Africa. What I found stunned me and am sure will other Zambians. In 2001, Zambia’s ranking was number five but this went down to number fifteen in 2020 as Table 1 below shows. It implies that Zambia lost competitiveness to other African countries exporting to South Africa. It traumatizes me and, I’m sure other Zambians that our private sector is failing to utilize free market access through our membership to SADC to export to South Africa. How can our private sector and government be exporting less than $200 million?
Table 1: Sub-Sahara African countries’ exports of all products to South Africa in $millions:
|Zambia ranks number 15||
It is not because of Covid19 that trade between Zambia and South Africa has slumped so much. The slump began many years before its ugly arrival. The many public statements coming from both the private and public sectors that we must promote trade as an engine of growth, job creation and poverty reduction is not matching with what is happening on the ground. What really is the role of Zambia’s private sector when it has not expanded trade since independence. Of course, numbers have been rising in some cases in absolute values, but we don’t really see expanded trade in the manner we see it in Asian countries like Viet Nam. What is really wrong?
One certain wrong thing is that the private sector continues to export primary commodity products instead of manufactured goods. One time I asked a former South African Director of Trade friend of mine, “How can the Zambian private sector increase and improve its trade partnership, in particular to export processed goods to that country?” His answer was that Zambia’s private sector must negotiate export value chain agreements. They must sit down with their counterparts in South Africa and adopt ways in which they can learn production processes.
Finally, Embassy staff must begin to become result-oriented and accountable to Zambians. They must begin learning how trade is done. One way to do this is to understand what trade itself is. We can help them to understand some basics about trade. They need to know what concepts like exports, imports, trade balance, competition and other relevant terms mean. Often those asked to go and promote trade in Embassies don’t even know the size of Zambia’s exports to the host countries they are in. They need to know as a basis for promoting trade. Organizations like the United Nations that I worked for can help in building capacity for Embassy staff. That is what we used to do.
When President Hichilema tells Zambians that his team, including those promoting trade will be driven by merit and professionalism, that is exactly what I’m talking about. Let those promoting trade first know what trade is. And there are many Zambians who know this but find it difficult to penetrate into the system that makes appointments. Some Zambians from poor families with the right qualifications and knowledge in trade are simply languishing without jobs because they have no one to connect their CVs into the system. Let things change. We can promote trade in South Africa if we have the right people. But we must have the right products too because how can they promote trade which is not there?