By Edward Chisanga
President Hichilema preaches trade and investment to the EU
When President Hichilema tells the European Union (EU) that he wants more trade and investment between his country and the largest and perhaps richest regional grouping in the world, it is not because we like parroting his words that we support his call. Heads of State make statements in public, out of which intellectuals pick pieces and put them together to share a point with citizens, not out of malice for those found with stains in the story but to simply inform the public. The President simply asked the EU to invest and trade more with Zambia. He doesn’t tell me what to write out of that but I see an opportunity.
But Zambia has been divesting trade from the EU
Many Zambians may be forgiven if they assume that Zambia’s main trading partner is the EU. Yes, it used to be many years ago. But no more as Figure 1 below shows. Between 2001 and 2013, Zambia experienced rising trend in exports which was not continued thereafter. Instead, the last ten years are characterized by high rise in imports from the EU which, at one point in 2013, shot up to over US$1.2 billion.
Although government tried to bring imports down quite immensely, it continued to import significantly at the expense of exporting more to the EU, leading to massive trade deficit, which in 2013 reached a staggering minus US$800 million. Although the last ten years saw steadfast improvement in bringing down the deficit, manifested in the rising line shown between 2013 and 2020, this good effort falls short in overcoming the long downtrend shown between 2001 and 2013. Let me remind the reader that a country that continuously records trade deficits fails to leverage external income from trade unless it is spending money on importing capital and intermediate goods for industrialization.
Zambia’ major imports from the EU
Yes, Zambia imported more capital goods from the EU than consumer goods as Figure 2 below shows. But imports of consumer goods is equally high. I’m not sure if it is possible for the country to reduce significantly imports of consumer goods without knowing what they really are. Often, assumptions are made that the country should produce what it imports in order to lower imports and earn trade surpluses. But we have to be frank sometimes and state that many products produced by Zambians have very low quality and do not meet consumer needs. Most honey, made in Zambia for example has funny smell that makes it difficult to continue eating it. Consumers, including Zambians have the right to quality products including imported ones. Striking the balance between these two conflicting sides is not easy.
Zambians cannot simply be subjected to bad products for the sake of nationalism. Zambians must become globally competitive. But using dilapidated machinery, backward processes, unskilled manpower, juxtaposed by under-developed infrastructure, how can they?
Whether we like it or not, export value addition, improved products and the development of the local private sector may not come from Zambians alone in the long-term. It needs to be complimented by foreign direct investment (FDI) that President Hichilema is calling for from developed and more advanced developing countries. Zambia’s significant loss of FDI in the last two decades has largely contributed to its retarded economic growth. While Zambia has literally nothing to export to the EU (because, instead, it is exporting copper to China and Switzerland), our leaders must focus on negotiating FDI, technology, infrastructure and human capital development.
Much as I may be referred to as West-centric, by those who think that development will only come from Zambians, I assent that the President is doing the right thing. Viet Nam, which has overtaken Africa in exports of manufactured goods flourished partly due to FDI from the West and within Asia. But in Africa, we don’ have the likes of Singapore, Korea, China, etc where we can get FDI. South Africa is alone and only investing in retail outlets.