Trade imbalance was a concern for Zambian business who attended a two-day virtual roundtable that reflected on COVID-19 impact on commercial interaction between SA and Zambia.
By Radithebe Rammutle
From 9 to 10 July 2015, South Africa and Zambia hosted a two-day virtual roundtable of business and public leaders, to reflect on the impact of COVID-19 on economic activity between the two countries. The South African (SA) government through the Department of Trade and Industry (DTI) relied on the Outward Trade and Investment Mission to access market in Zambia leading up to the pandemic. The pandemic had an impact on this programme.
Various keynote speakers on the first day of the conference observed that businesses experienced supply and demand led challenges due to lockdowns that affected value chains. Consequently, businesses ability to procure input material for their production and to get their products and services to the market was impacted.
Florence Muleya, CEO of Zambia Association of Manufacturers (ZAM), said that due to supply shocks, the manufacturing sector in Zambia lost 40% in revenues. In their manufactures survey ZAM found that while some of manufactures ceased their production others opted to adjust. According to the survey 21% of manufactures ceased their production. Those that continued production, 68% increased their hygiene protocols, and 48% sought for alternatives suppliers. Some manufactures also introduced flexible working methods and stockpiled goods.
Yet, trade imbalance between the two countries, an issue that preceded lockdowns, was the sore point generating negative response mainly from Zambian participants. Ernest Mande, Group Engineer at Trade Kings Group expressed dissatisfaction with SA export regime towards Zambia likening it to ?intelligent dumping?. This characterisation of SA trade behaviour towards Zambia illustrated the negative perception towards SA. SA is perceived to be using its economic strength to unfairly gain market share in Zambia in the processes thwarting its local industry.
The 2018 economic diplomacy row over honey trade would have further fuelled negative perception towards SA. Just under two years after granting Zambian honey producers market access in SA, the Department of Agriculture, Forestry and Fisheries revoked its 25th November 2015 decision in August 2018, re-imposing a ban on Zambian honey. Zambian producers exported non-irradiated honey to SA given the growing demand of organic foods. However, a food-borne pathogen, which caused the American Foul Brood (AFB) disease, was found in Zambian honey imports.
In response to the expressed dissatisfaction from Zambia, Alan Mukoki, CEO of South African Chamber of Commerce, said that ?South Africa, from a principled point of view does not see Zambia as a place to dump its products?. While Covid-19 is a devastating phenomenon both countries should not be trapped in a siege mentality said Mukoki. Therefor business should accept the virus as part of their operational environment and find ways to get back to work in a safe way.
The outbreak of the corona virus was also viewed as a reset button that presented an opportunity to break away from the past and imagine new trade arrangement of inclusivity and mutual benefit. ?Covid-19 has opened opportunities to achieve [equitable] balance in trade? said Ballard Zulu, Outreach Director at Indaba Agricultural Policy Institute. Whilst there were many other inputs on how to break away from the past, John Rocha, a representative of SA?s Department of Trade, Industry and Competition surmised that the common theme in shaping future bilateral relations rested on three pillars: Enhancement of SA bilateral and Intra-Africa trade, Industrialisation, and improving supply chain efficiency.
The share of intra-Africa exports as a percentage of total African exports is less than 20%. This is low compared to levels in Europe (69%), Asia (59%) and North America (31%). For intra-Africa exports to grow there is an equal need for import substitution. Rocha presented a 2014 Afrexim Bank report in which it demonstrated that Africa imported $621 billion worth of goods and services. Those sourced from Africa were worth $84 billion representing 13% of intra-Africa imports as a percentage of Africa imports. The report estimated that $239 billion of those goods and services could be sourced from Africa.
Given the demand conditions in African countries, there is a need to diversify their economies through industrialisation and improving supply chain efficiency said Rocha. Policies that enhance supply chain should target public health and safety, immigration border security, efficient custom clearance, infrastructure development and harmonisation of certification and standards, on order to unlock bottlenecks in the movement of goods.