BY Joseph Brian Madhimba INTERNATIONAL trade is a useful weapon in the arsenal to fight poverty.
Currently, international trade is dominated by the European Union (EU), the United States, Brics countries, Japan and the Asian tigers
The time has come for Zimbabwe to stake its claim in world trade. Our vast resources stand us in good stead.
International trade is regulated by the World Trade Organisation (WTO). Its predecessor, the General Agreement on Tariffs and Trade was formed after the Second World War to remove tariff and non-tariff barriers on trade.
When the WTO was formed in 1995, it extended the scope of international trade to include services such as banking and insurance. In addition to ensuring free trade, WTO also adjudicates on trade disputes.
Zimbabwe needs to take advantage of the Africa Continental Free Trade Area (AfCFTA) and the provisions of the WTO to increase trade with African countries and the rest of the world.
In its drive to trade more, Zimbabwe can take a leaf from Japan’s model of trade.
First and foremost, Japan has leveraged the correlation between foreign direct investment (FDI) and trade.
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Japanese multinational companies have speeded up the internationalisation of manufacturing systems by taking advantage of cheaper transportation and technologies to outsource some of their production. This has led to more exports of manufactured goods and services, that is, expanding international trade.
Increased FDI by Japanese multinational companies has radically changed international trade patterns. For example, outward FDI can be a substitute for exports with parent companies setting up subsidiaries to meet local demand or to get around trade restrictions in the host country.
Another reason for outward FDI is to take advantage of favourable conditions in the host countries such as cheaper labour or lower taxes.
Japan has a thriving manufacturing sector. For example, Japanese car manufacturers, Nissan, Toyota and Honda, dominate the world market.
Japan has also been successful in manufacturing and exporting televisions, radios and computers.
Japan’s competitive advantage is its low import tariffs compared to other industrialised countries. This makes imported raw materials relatively cheaper. Japanese firms are, therefore, competitive in world markets because they can export high quality goods at low prices.
Zimbabwe should learn from Japan. We must expand our manufacturing sector.
Our agro-based economy produces cooking oil, flour, peanut butter, dairy products, sugar, cigarettes, furniture textiles, etc.
The revenue from the minerals which will sooner or later dry up, should be invested in the manufacturing sector.
In developing a robust export sector, the government of Zimbabwe should take small businesses on board. These should be supported financially and given incentives to produce more for export.
Some Zimbabwean small businesses produce peanut butter, cooking oil and soap using simple technologies. State-of-the-art technology should be imported to allow them to expand their production.
While importing some foreign skills to boost the manufacturing sector, we must also support locals who have potential. Zimbabweans are talented and can learn quickly. My late uncle, Cuthbert Tafira,would boast that ”Handina kufunda, asi ndinogadzira mabhazi.”: This translates to “I’m not educated, but I make buses.” His education level was the old Standard Four, but he was a quality assurance manager at Willovale Motor Industries. Such is the talent among Zimbabweans.
Establish more indigenous banks
To support Zimbabwe’s entry into foreign markets, I suggest the establishment of more indigenous banks. A thriving banking industry will contribute immensely to Zimbabwe’s increased penetration of foreign markets.
Indigenous banks will finance Zimbabwean firms wishing to buy into world markets through acquisitions, equity positioning and joint ventures.
Not only that, such a vibrant banking industry will be a drawcard for inward FDI.
Lastly, Zimbabwe needs to do more international business. The benefits will be more forex and jobs as well as poverty reduction.
- Joseph Brian Madhimba (PhD) is a business and financial markets expert. He owns a university offering development-oriented degrees in business, economics, entrepreneurship, marketing and logistics and supply chain management.
