Almot Maqolo, Staff Writer 
ZIMBABWE stands to reap significant rewards from the African Continental Free Trade Area (AfCFTA) but must address carbon emissions and product quality to remain competitive, the World Bank has warned.
The AfCFTA, launched in January 2021, boasts a combined GDP of US$3 trillion, projected to double by 2050.
World Bank senior country economist for Zimbabwe, Victor Steenbergen, emphasised the importance of identifying comparative advantages to thrive within the free trade bloc.
“Tariff reductions will be comprehensive,” Steenbergen told a recent business conference.
“Understanding where Zimbabwe can outcompete and be outcompeted by regional players is crucial and our analysis positions the country as a major potential beneficiary due to its relatively high tariffs and tariff barriers, but demands a deeper dive into specific areas of opportunity.”
He cautioned against global threats, particularly the European Union’s impending carbon border adjustment mechanism (CBAM).
This mechanism essentially imposes tariffs based on the carbon emissions associated with production, potentially jeopardizing Zimbabwe’s iron and steel exports to the EU, given the sector’s high emission levels.
“Maintaining export competitiveness hinges on improving production’s carbon efficiency,” Steenbergen stressed.
“What concrete steps are being taken to address this challenge?”
Economist Ashok Chakravat echoed Steenbergen’s concerns, highlighting Zimbabwe’s faltering industrialisation efforts.
“Analysis by local institutions reveals a concerning decline in products with comparative advantage, from 488 in 2002 to just 160 today,” Chakravat said.
“This trend is detrimental to our economic prospects.”
This also comes as experts have said the bulk of Zimbabwean businesses are not yet prepared to participate in the trade bloc.
Zimbabwe Economic Society president Nigel Chanakira recently told The Financial Gazette that Zimbabwean businesses need to stop overpricing to become more competitive.
“My plight is: are we capable of competing in the African Free Continental Trade Area and punching within our weight? Sadly, I will tell you no.
“The bulk of our businesses as they stand, unless they wake up and stand, stop over pricing, and become more competitive, look for technologies and capital we can,” Chanakira said.
“We must have a stable microeconomic environment. We are already flooded, potentially with more competitive companies.
“For example, when we look at procurement, are we procuring at competitive prices so that we can go out and export?”
According to the latest International Monetary Fund statistics, the AfCFTA is expected to increase intra-African trade by about 30 percent and global trade by about 15 percent.
Commenting on the preparedness of Zimbabwe to participate in the AfCFTA, monetary policy committee member and economist Persistence Gwanyanya said Zimbabwe needs to have its currency, as this is relevant to the country’s AfCFTA preparedness.
“The need for Zimbabwe to have its currency also finds relevance in this journey.
“This means we need to redouble our efforts to strengthen and stabilise our currency so that, come implementation date, we are prepared as a country to then participate and benefit from the benefits that flow out of this initiative,” Gwanyanya said.
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