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Sunday, May 22, 2022

President Hichilema’s promotion of trade in the UAE reveals sad statistics about role of our private sector

Columns President Hichilema’s promotion of trade in the UAE reveals sad statistics about...

By Edward Chisanga

Zambia’s exports to the UAE are too low

President Hichilema arrived in the United Arab Emirates (UAE) this week with a strong pledge to increase trade between Zambia and that country. I agree with him. Prior to their departure to that country, our Foreign Affairs Minister, Mr. Stanly Kakubo stated, “Zambia is among the 192 countries participating at the Dubai Expo, which runs from 1st October, 2021 to 31st March 2022, and presents a great opportunity to create synergies between advanced and emerging economies to promote equitable growth and development. One of them is trade in line with exactly what the Head of State is pursuing in his pursuit to realign the economy and reduce poverty among Zambians.
Currently, Zambia’s trade with that country is something not worth writing a letter to Zambians about because it is extremely low. In 2020, Zambia’s exports of all products to the UAE amounted to only $24 million while imports from that country were twenty-threefold higher as Table 1 below shows. In other words, as a continued habit, Zambia is importing much more from the UAE ($558million). On the other hand, UAE’s exports to Zambia amounted to $$682 million and imports $145 million. Therefore, the President will be telling the Zambian private sector participating at the Dubai Expo to pull their socks. If he had these statistics prior to his departure, I salute him for telling them that at the moment, they’re exporting literally nothing to that strong country with so much potential for exports for countries like ours.

Table 1: Zambia’s trade in all products with UAE in $millions

     

2020

Zambia Imports UAE

558

  Exports  

24

       
UAE Imports Zambia

145

  Exports  

682

Source: Unctadstat

Zambia ranks number 32 in African countries’ exporting to the UAE

Again, as Minister Kakubo says, “Zambia is among the 192 countries participating at the Dubai Expo. I don’t know these countries. But what I know is that of the fifty-five African countries exporting to the UAE, Zambia’s ranking in terms of dollars earned is number thirty-two, meaning all the thirty-one African countries are exporting ahead of our country as Table 2 (a) below shows. On the other hand, Table 2 (b) shows that in terms of imports, Zambia ranked number 8 which is not very good because the African country is not leveraging external revenue from the Arab country. Again, I would advise our President to send a strong message to our private sector that they’re not available at all in that country. They may be available in terms of shopping but they’re not taking the Zambian product there.

Table 2: Zambia’s ranking in African countries’ exports of all products to UAE in $millions

  Table 2 (a) Exports to UAE

2020

  Table 2 (b) Imports from EAE

2020

Egypt

2,665

Libya

1,595

Uganda

1,943

Egypt

1,249

South Africa

1,534

South Africa

1,202

Guinea

1,473

Nigeria

958

Mali

1,461

Kenya

804

Zimbabwe

1,156

Tanzania

679

Botswana

928

Djibouti

575

Ghana

920

Uganda

574

DRC

885

Zambia ranks number 8

558

Libya

804

Tanzania

685

Rwanda

555

Angola

515

Congo

409

Benin

368

Kenya

308

Nigeria

145

Namibia

134

Cameroon

133

Mozambique

132

Niger

103

Senegal

88

Seychelles

88

Eritrea

85

Morocco

77

Madagascar

77

Burundi

75

Ethiopia

60

Tunisia

51

Côte d’Ivoire

38

Togo

37

Zambia ranks number 32

24

Source: Unctadstat

Zambia is exporting raw emeralds, manganese

As suspected, Zambia’s exports to the UAE are largely emeralds and manganese, all unprocessed as Table 2 below shows. To answer the President’s call, the private sector needs to export more dynamic products to that country. Otherwise, it is very difficult to improve the economy on the basis of continued exports of unprocessed goods.

Table 3: Products exported to EAE by Zambia in $’000

Product Code

US$

Product Description
HS No

22,494

Total Trade

710391

11,668

— Rubies, sapphires and emeralds

720211

5,095

— Manganese

260200

1,268

–Manganese ores and concentrates, in

Source: COMTRADE

Concluding

In one of my past write ups, someone asked me, “What solution are you proposing?” I cannot propose a solution when I’m not an exporter. I’m an adviser and limited by policy options that I can suggest. One is that history shows that developed and emerging countries that have succeeded in entering global manufacturing began with exports of textiles and clothing. The UK, Germany, China, Viet Nam, Bangladesh, etc were and are focused on this sector.

I cannot understand why, China, the most successful country in exports of textiles and clothing products, present in Zambia is supporting Ethiopia, Rwanda and other African countries but not Zambia. I cannot comprehend what’s going on in Kabwe at the Mulungushi textiles. Yes, because of the World Trade Organization (WTO) trade in this sector is tougher today than it was prior to the liberalization of the WTO agreement on textiles and clothing which has since introduced global competition. But how come Bangladesh, a least developed country in Asia has overtaken Africa in global exports of textiles and clothing? Bangladesh is utilizing free market access in the EU while Zambia is failing to do so there and in the USA.

Let Zambia open an Embassy in Viet Nam with a focus on learning manufacturing only, no politics or other non-manufacturing issues. Viet Nam has overtaken Africa in global exports of manufactured goods. People in that country have more similarities with us in terms of learning economic development. Culturally, they are less detached from us than more developed countries. Let me make one point clear: I’m an advocate that Africa should trade with and acquire foreign direct investment from developed countries and create wealth for its people because that is where wealth is. Bring this wealth into Africa, develop Africa and in turn begin to create wealth from within Africa. On the other hand, I’m also an advocate that learning manufacturing will not come from developed countries. It is easier from emerging economies in Asia if we play our cards well.

Equally, in the UAE, Zambia can start finding out how our private sector can learn some ideas that are making that country diversify its economy and add value to exports. Using agriculture as a strategic product for future exports of value addition is easier said than done. Zambia’s agriculture value added is simply too low in the economy to propel structural change and value addition. In dollar values, according to Unctadstat data, it was less than $1 billion in 2019 while the proportion in GDP was only 3.4%. Among the fifty-five African countries, Zambia ranks number thirty-seven in agriculture value-added in GDP in dollar values. It means there are more serious countries investing in agriculture while Zambia’s investment is largely vocal.

Using agriculture as a strategic policy for global and regional exports means continuing to do what other countries are abandoning. We have no agriculture. Let’s try the harder way that Asian countries tried. The UAE will not import raw tomatoes, beans, vegetables and other stuff that we boast of as potential export products because of stiff international standards which our private sector cannot meet. They will not import Trade Kings’ detergent products because there’re stronger competitors exporting there. They will import manufactured goods if we produce them. Let us help our President to succeed in his promotion by producing these products.

It is unfair to expect him to promote trade that has no dynamic and competitive products. If I were his advisor, I would urge the President to be tougher with the private sector as a way of helping it to succeed than being too friendly. This private sector needs to make friends with its counterparts in Asia or South Africa where export value addition is going on. It cannot always be, “It’s governments’ fault.” President Hichilema was not there. Our private sector has always been there. That is why it must own up.

22 COMMENTS

  1. “….cannot understand why, China, the most successful country in exports of textiles and clothing products, present in Zambia is supporting Ethiopia, Rwanda and other African countries but not Zambia…..”

    You need a ready and trained workforce of tailors and machinists, which Zambia does not have……………

    You can’t depend on the market tailors to step in…………

    GRZ needs to intensify training ……….

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  2. We cannot win any battle if we do not know our strength and comparative advantages. Goat farming should be taken serious, Uganda is their main export to the country in question. Zambians, we like spending too much time on things of no value like by-elections.

  3. I do not know of any country that is rich because of exporting agricultural products. Agriculture is good for self sustenance. Grow enough to feed yourselves and only export the excess. Export Agriculture is too much work for so little benefit in a country that has no sea ports. What Zambia should be looking to now is NEW areas of investment and productivity. We cannot keep imitating this one and that one. We have copper. Let us use it in modern technologies- eg. electric cars. We have the best English speakers in Africa. Let us use them for Call centres.

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  4. Changing the mono-cultural nature of the Zambian economy is key to exporting more finished products. We should move away from being mere exporters of primary products to setting up manufacturing industries than can add value to our primary products. Any FDI coming to Zambia should be of a partnership nature. Government should ensure Zambians involved in production of primary products partner with investors that bring in capital and machinery which should be used to produce finished goods. For instance, let us own our copper and other minerals and only attract investors who bring in capital and technology to help us manufacture finished electric car parts using our copper which we can export to countries with companies producing electric cars. Once we provide incentives for lowering the…

  5. Great article.

    I have observed the following things that prevent development in Zambia. I am not gonna talk about other African countries.

    1) We lack structure. We do things without standards and structure. Where structures and standards don’t exist, there can never be improvements.

    2) We lack legislation. Government should legislate a lot of things in Zambia because at the moment lack of legislation in a lot areas has created chaos.

    When we do these right then we will be able to sell to the outsiders. People buy things because they think what they are buying is good but the current state of products and services by Zambians leaves much to be desired.

    We are so used to seeing substandard products/services in Zambia that we think the mediocre quality we produce is normal…

  6. There has to be a government deliberately policy-drive, in that direction as well. Past, especially the Lungu regime, was just not fit for purpose on this front or anything, really. I found the thinking that; develop infrastructure first then look to driving the economy later, a very dumb and buying time gimmick. Why not just get on with both at the same time? The condition are right in every way including the weather, natural resources etc. Where there’s a will there’s a way. Glad that Lungu and his PF are now behind us.

  7. Zed and the Saint I agree with you 100%.

    We need to leverage our comparative advantage.

    We need to change things so no more by-elections. Maybe at parliamentary level parties should be voted in rather than candidates so that if by some unfortunate chance the MP passes away, the party just replaces their member using their own system because by-elections are not necessary in our economy.

    Lets begin investing in renewable energy and keep improving our infrastructure too because it is good for the economy. When we have infrastructure and good and cheap internet we can start attracting call centre business and because we strategically globally located with the english language advantage we will get some of the market share India and China have.

    We should start investing in…

  8. @5 Develop Zambia
    You’re a genius my friend….and when you live in the Diaspora and try to educate folks back home about quality and proper standards then they think you’re a show off and they hate you….look at what’s being sold in hardware stores…garbage no quality control whatsoever…can you imagine guys from Zambia bureau of standards sells their quality assurance stickers to the Chinese…roofing sheets…aluminum etc

  9. I have nothing to comment cause most of the sensible ideas have been addressed by the writer of this article and further more, the comments above surprisingly are all top notch. So, I will jst sit back and listen further. Ndelolesha fye

  10. The president’s time in Dubai is totally WASTED. Upon his return, ask him how many other heads of state he has met. The answer will be ZERO. He hasn’t even met Sheikh Mohamed Makthoum from Dubai or Sheikh Khalifa from Abu Dhabi. That’s how “important” (sarcastic undertone) the World Expo has been…….

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  11. But I will bet a depreciated million kwachas that HH will tell us upon his return – when he will be greeted on KKIA by all those totally useless YES MEN and YES WOMEN – that the trip was a HUGE SUCCESS – but that he didn’t bring back any signed contracts…….

  12. By the way, why is HH always wearing those stupid white gloves? Is he trying to look like a musungu????

    • @No Corruption, if you look at all HH’s cabinet dressing style it tells you a lot about what they are. a shallow bunch of Euro focused imitators with a deep inferiority complex that tells them to wear ties and jackets to look like white men.. They spend more time trying to look white than delivering food to the peasants. A man who is not proud of himself will never achieve because he aims for the cosmetic.

  13. Good analysis Chisanga. Establish trade units at Ministries with export potential (Agric, Livestock, Mines, Forestry and tourism). These should not be civil servants but contracted qualified Consultants (advisers) to government and should have international business exposure. Their contract renewals would be based on results delivery. Development partners can be requested to support these units in the initial stages before industry starts paying for the services.

  14. It’s a good article and some comparative statistics on the trrade with UAE There are stratergies and points to effect positive trade balance or terms of trade,on the Financial Account and capital with the UAE It’s about the strategy and view including the understanding of Those Markets Good well reasoned article with basis including the Investments promotions The represent action was fair in comparison to other African countries that exhibited like kenya and Zimbabwe There are export stratergies and Investments that Zambia can employ to rebalance

  15. Okay UAE has a policy both foreign and local to promote Trade and Investments with the global with a focus towards it’s own region and country That is why they are investIng heavily in the Dubai expo Perhaps to move focus from the European and Asian to themselves So the stratergy is to move those trading needs and economic zones to Zambia centers of economic locations apart from just looking at those numbers the export stratergies are a bigger picture

  16. It’s a nice wealth country especially visiting the headquarters of ADQ INVESTOR then you begin to see the potential for Zambia in 2013 to now those visited

  17. Just visiting ADQ INVESTOR. Headquarters you are presented with opportunities for Zambia apart from Minning livestock and tourism but like I have indicated they have a Policy like other trade partners to themselves and regional economies You make them Invest here to link into theirs Trading with them gives those numbers to write and learn why about to improve trade balances and financials

  18. In 1998 the mmd government had persued a policy to encourage the manufacture of export products. The called it ‘the revamped duty drawback and manufacture under bond”. This was a mechanism of reimbursement of duties both direct and implied incurred in the production of exports. This was meant to avoid double taxation and as such making them more competitive as a result. This the pf government discarded, and only planned to reintroduce it in their last development plan just before the election that the lost.

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