V. MARCO TEÓRICO
5.2 Espacialidad y territorio
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IMPROVING TRADE COMPETITIVENESS, PRODUCTIVE CAPACITIES AND INVESTMENT CLIMATE OF LLDCS: ZAMBIA’S EXPERIENCE
By H.E. Mr. Robert K. Sichinga, MP and Minister of Commerce, Trade and Industry
1. Introduction
Structural transformation is an absolute necessity for LLDCs. Most LLDCs have been principally suppliers of raw materials/commodities that were then value added in today’s developed countries especially under the colonial regime.
Th is explains the traditionally low value of exports from some LLDCs particularly the ones in Africa. Th e exports and imports routes to the sea were primarily developed to ensure delivery of raw materials to overseas countries for value addition. Th is explains why developed countries account for higher value.
LLDCs under the colonial regimes were expected to import fi nished goods from the west hence trade routes were not well developed for imports nor intra-regional trade. As a result low value of goods from LLDCs leads to low capital formation thereby perpetuating poverty in LLDCs. Th is trend has to end and hence the necessity for structural transformation of LLDCs.
2. Zambia- Geographical Location
Zambia is a LLDC that suff ers from the foregoing scenario. It exports US$8.5 Billion per year. Zambia is a major producer (4th Globally) of copper and 2nd major producer of cobalt; 882,000 tonnes (2011), and a target of 1 million tonnes (2015).
Zambia’s growth rate was 7.6% in 2011 and 8% 2012. Zambia has a population of 13.6 million with per capita income of only US$1400. 74% of the population is below the age of 35. Zambia is a member of both COMESA and SADC Regional Economic Communities. It is also part of the Tripartite (COMESA-EAC-SADC) arrangement.
Zambia has 8 neighbours that it shares a border with namely Angola, Botswana, Democratic Republic of Congo, Namibia, Malawi, Mozambique, Tanzania and Zimbabwe. Zambia helped to politically liberate 5 of the 16 SADC countries and this accounts for a more conducive environment for agreements with its neighbours.
3. Major routes to seaports and other infrastructure
Zambia’s major routes to seaports include (a) Durban and East London (South Africa through Zimbabwe); (b) Lobito (Angola through DRC- Currently Non-functional); (c) Walvis Bay (Namibia) – Mostly by road. Rail would be benefi cial;
(d) Dar-es-salaam (Tanzania); and (e) Nacala (Mozambique through Malawi) (Proposed)
Beira (Mozambique) – Now seeking Beira Route to service Malawi and Zambia by Zambezi River to Cabora Bassa Hydro dam.
Zambia has an oil pipeline from Dar-es-salaam, Tanzania to Ndola. It used to have rail systems with Zimbabwe into South Africa. Th e TAZARA railway line built in 1966-71 (With assistance from China) has now become a Development Corridor.
Th e greatest challenge of Zambia is to turn its landlockedness into land-linkedness. Two-thirds of the transport cost to the port is inland.
4. Value Addition
Zambia had by 1990 achieved a relatively medium level of value addition on some agriculture products. However the need for industrialization to add value to raw materials is great. Small quantities of copper are used for local benefi ciation.
Cobalt is never benefi ciated. Business and trade liberalisation in the 1990s, made Zambia a warehouse for fi nished goods from outside the country especially South Africa. Currently trade within SADC region favours South Africa (72%), Namibia (8%), and Zimbabwe (4%), balance of 12% shared by the remaining twelve countries in the region.
5. Diversifi cation/ building of productive capacities
Th e thrust is to re-build and build Zambia’s own productive capacities. Th e conference on “Value Addition” would be held in October, 2012, to agree on areas of value addition. Th e thrust will be on commodity value chain in the following:
• Copper/metals fabrication;
• Increased agriculture production and agro-processing;
• Setting-up of Multi-Facility Economic Zones at Provincial level and Industrial Clusters at district Level;
• Need for skills training and technology transfer;
• Power infrastructure- an absolute must for Multi-Facility Economic Zones and Clusters;
• Road network to all districts and inter-connections to main highways;
• Revamping the entire rail system or cancelling concessions, which have failed to run for ten years;
• Enhance management of TAZARA (Railway to Tanzania- Dar-es-salaam); and
• Setting-up Intra-Africa Trade Centres (IATCs)- converting smuggling and “informal/ undocumented” trade to
“formal” at selected border points with all the 8 neighbours.
Zambia is also part of the PIDA- Programme for Infrastructure Development in Africa.
6. Addressing the Supply Side constraints to enhance effi ciency and reduce costs 6.1 Th e role of the private sector
Th e role of the private sector is crucial in addressing the supply side constraints. Zambia established the Private Sector Development in 2006 reform programme which has resulted in Zambia achieving the following:
• Sixth world-wide in getting credit;
• Fourth best reformer world-wide for starting a business;
• Best in COMESA on getting credit;
• Th ird in COMESA on overall ease of doing business, starting a business and paying taxes;
• Second in SADC in starting a business and getting credit;
• Fourth in SADC in paying taxes; and
• Fifth in SADC in overall ease of doing business.
As a result, Zambia was recognized among the top ten global reformers in the world in 2010. Zambia has also improved its ranking on the “Doing Business Index”, moving from 90 in 2009 to 76 in 2010 and plans to be in top 50 for Ease of Doing Business.
Zambia has enhanced the consultative process and engagement with the private sector. Th e government entered into PPP for border management and infrastructure. Th e country has reduced the cost of doing business- ie. company registration can now be done within 24 hours through the Patents and Companies Registration Agency. Th e Multi-Facility Economic Zones are publically and privately owned industrial clusters for value addition at district level. One-Stop-Shops for business registration and export information have been established at all Provincial Centres.
6.2 Border facilitation and management
Border facilitation and management-through establishment of One-Stop Border Posts at Chirundu Border with Zimbabwe. Th is has helped reduce border-crossing delays. Th e country has also increased/intensifi ed use of ICT to
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help with border and transit management systems and has streamlined border management with assistance from WTO, SADC and COMESA.
6.3 Reforms that have been undertaken
Th e Citizen Economic Empowerment law was established to improve local/indigenous participation in business. Th e country undertook further changes in empowerment for human capital formation particularly of youths. Increased skills training with support of UNIDO. Th ere has been increased involvement of parliament and local communities with business at local level. A law was established to incorporate Japanese KAIZEN practices to improve productivity and profi tability with JICA Aid. Th e country is also undertaking policy reforms and measures to attract FDI into priority sectors.
7. Outstanding challenges
While Zambia has made signifi cant strides in improving the trade competitiveness, productive capacities and investment climate, challenges still remain that need to be addressed for Zambia to become even more viable and competitive.
Th ese challenges include:
• Poor infrastructure (Road, Rail and Water)- Zambia ranks 114 out of 125 countries in terms of poor transport and communication infrastructure;
• Low production capacities and productivity;
• Poor border administration-Zambia ranks 66th to 78th out of 125 countries in terms of effi ciency of customs administration and transparency of border administration;
• Bottlenecks to trade such as tariff and Non-Tariff Barriers (NTBs);
• Some Member States such as Angola and DRC have not acceded to the SADC trade protocol which Uganda, Eritrea and Ethiopia and South Sudan have not acceded to the COMESA Trade protocol. Th is has the potential to slow down the process of integration.
• Insuffi cient electricity/power (i.e. Chanida Border cannot operate scanners because there is no electricity in the area); and
• Lack of weighbridges at some borders making it diffi cult to determine how much of products have gone or come into the country.
8. Way Forward
Zambia will not relent in its eff orts and taking positive and practical steps to turn its status as a Landlocked Developing Country to a Land-linked Country. Th e country is convinced that structural transformation, especially infrastructure development, value addition and increased intra-Africa trade with neighbours will signifi cantly contribute to the development of Zambia and the region. While doing this, the Zambian Government is alive to the fact that addressing internal productive capacity alone is not enough to reap the maximum benefi ts hence they aim for commodity benefi ciation. Th is requires regional eff orts and cooperation, which has been built over the years. Th e country therefore seeks the support of donors such as China, European Union, German and Japan and various multilateral organizations such as the World Bank and UN agencies, among others, to help expedite infrastructure development and building national capacities for structural transformation.