On February 6 the World Bank, in collaboration with the National Implementation Unit of the Ministry of Commerce, Trade and Industry hosted a validation workshop to share findings and proposed targeted areas of trade reforms for Zambia. This event is related to the World Bank report on trade and regional integration—the Diagnostic Trade Integration Study (DTIS) for Zambia.
And Consumer Unity and Trust Society (CUTS) Lusaka, a member of the National Steering Committee (NSC) of the Enhanced Integrated Framework (EIF) which commissioned DTIS review process through the National Implementation Unit (NIU) at the Ministry of Commerce Trade and Industry (MCTI) says it is content with the review process and encourages the bank to hastily finalise the document after taking into account some of the comments raised during the validation meeting.
CUTS also implores Carbinate to consider endorsing the DTIS at the earliest to avoid a repeat of the previous situation where endorsement of the first DTIS was only done in 2006 despite the document being validated in 2005. This situation delayed implementation of some of the immediate trade related priorities.
The DTIS is a tool provided for under the aid for trade initiative – the EIF – as a vehicle through which trade related priority sectors and the challenges thereof are identified. These are then itemized in a priority list and according to their exigencies called Action Matrix.
The key message of the report is that lowering trade costs is essential to diversify into higher value activities. Therefore, the DTIS provides guidance to (1) implement logistics and trade facilitation reforms covering both formal and informal players. Adopting a clear national logistics strategy as well as a proactive approach to regional logistics is imperative to lowering the high trade costs within the country and across Zambia’s borders. While there are clear policies on infrastructure rehabilitation and development, there is need to pay attention also to the dynamics of competition and complementarities between the road and rail systems. Secondly, delays at border crossings due to lack of cross-border information exchange between border agencies, and out-of-date or cumbersome transit regimes are some of the largest barriers to trade between Zambia and neighboring countries. Even at borders where One Stop Border Posts (OSBP) have been introduced there are still some challenges that still need to be addressed. For maximum impact OSBPs should be the culmination of multi-pronged reforms of procedures to speed up the clearance of goods through the borders.
For trade facilitation to have a tangible impact on poverty reduction the strategy needs to be inclusive – it has to cover formal firms as well as smallholders and informal traders. Initiatives to support the participation of smallholders and informal traders in commercial cross-border activities should be encouraged, in particular the removal of constraints that discourage their transition into formal trade activities. A key recommendation for cross border trade is the reform of the Simplified Trade Regime (STR). Furthermore, the proposed Charter for Cross-Border Traders offers an opportunity to improve the treatment of traders at the border, increase efficiency of cross-border transactions and address corruption and abuses.
A second key area for trade costs reductions are the behind the border barriers. The DTIS proposes a focused approach to define and implement better rules and regulation (a) to govern key manufacturing sectors where competition is limited and impacts on jobs and poverty are significant (for example, sugar and cement); to eliminate distortions in the maize sector and apply adequate standards relating to crop inputs; and to enhance the role of services in Zambia’s trade – both as a source of export diversification (for example, tourism, services related to mining, professional services) and as key inputs into new activities (for example, financial, and education services).
“The role of the World Bank, says Praveen Kumar, Lead Economist, is to raise the profile of these issues—supporting informal traders, facilitating trade in agriculture, reducing non-tariff barriers and raising the profile of services—so that governments in Africa and the private sector can work together to boost regional trade opportunities and provide people with competitive prices for the inputs and products they need.”
For more information, please contact:
Simon Ng’ona
Email sn2@cuts.org or Lusaka@cuts.org
Tel: +0962 809427