Is the Export Council, a 1989 idea, the missing link?
HARARE – In their policy advice in the 2017 monetary policy, the monetary authorities called for the establishment of the Zimbabwe Export Council (ZIMEC) to coordinate and spearhead Zimbabwe’s national export drive in close liaison with export promotion associations and bodies that include ZimTrade. The central bank opined that the establishment of such a Council was not reinventing the wheel as the idea was mooted several decades ago at the inception of ZimTrade, but was never implemented.
The central bank believes that the activation of ZIMEC will be critical for coordinating and championing export growth and diversification. Could this untested Council be the long sought missing link to set Zimbabwe’s exports for a major uplift? And why did it take such a long time to arrive at that realisation?
One might argue that Zimbabwe is very good at crafting ideas that are either never implemented or implemented late or partially. The Zimbabwe Programme for Economic and Social Transformation (ZIMPREST) launched in 1998, for example, was never implemented while the dust-gathering Nziramasanga Commission Report is only starting to make some sense today for our government. We are rather a big think tank and policy supermarket where some nations come to procure our brilliant ideas, much to their prospering, while we continue to face the same challenges whose solutions we already know of. Is that the case with ZIMEC?
The 1989 report (available on request) that proposed institutional development for trade development in Zimbabwe said something very prophetic and sounds truer today. Said the paper: “Zimbabwe’s greatest economic problem is a shortage of foreign exchange. Limitations in forex retards development and inhibits investment initiatives. Only through increased exports can the forex problem be solved to the benefit of Zimbabwe in general”. Nearly three decades down the line, we are yet to establish the ZIMEC that could have changed this narrative. And the hard currency is still elusive.
A brief background of ZIMEC and ZimTrade will be briefly discussed here. Government, in 1989, embarked on consultations earmarked at boosting exports. A proposal was submitted to Dr Oliver Munyaradzi, then Minister of Trade and Commerce, for the establishment of institutions and structures to promote and develop exports and to foster export-related investment. Two organisations were to be created by the end of that year, with the Ministry of Trade and Commerce’s trade promotion duties being imparted on the shoulders of the new organisations. One was to be called ZimTrade, a skilled executive trade development organisation responsible for promoting and developing Zimbabwe’s existing and new exports and promote export related investment and advise government on matters to do with trade and investment.
Then there was to be a Zimbabwe Export Council, the highest organ under government in the formulation of export policy, which will also provide a high level coordination point on matters concerning the development of Zimbabwean exports and export-related investment. The primary role of ZIMEC was to be a forum where obstacles to increased exports can be identified and realistic solutions put forward for their amelioration. The Council was also supposed to advise government on matters concerned with the exporting and investing environment. It was to be chaired by the Minister of Trade and Commerce and be composed of the most senior representatives of the principal ministries, parastatal bodies and business associations. Zimtrade was to be subjected to the policy guidelines and general directions of ZIMEC.
Since ZIMEC never came into effect, its impact remain theoretical and hypothetical. However, the gap can somehow be felt. What can be observed right now is that issues that affect trade and export promotion functions in Zimbabwe are currently fragmented and located in different ministries, government agencies and other institutions. These include the Ministry of Agriculture, Mineral Marketing Corporation of Zimbabwe, Reserve Bank of Zimbabwe, ZimTrade, Ministry of Industry and Commerce, Environmental Management Agency, the Competition and Tariffs Commission, Ministry of Finance and others.
It is very difficult to coordinate export and trade functions under such a fragmented approach as these different organisations are driven by different interests. For example, the Ministry of Finance, driven by the need to widen the tax base and increase its revenue collection, might impose an export tax on a certain product. Or EMA might put stringent regulations on the transportation of a certain product for export. Or the Competition and Tariffs Commission might conduct a research that proves that a certain export sector should no longer be protected from imports. In the current scenario, the central bank can also allocate export incentives and define the quantum and sectors to receive it. The central bank also makes exchange control decisions based on its own understanding of export priorities.
What can be also observed is that due to the absence of ZIMEC, export policies have been crafted by the Ministry of Industry and Commerce. A case in point is the National Trade Policy whose primary objective was to increase exports and promote the diversification of the country’s export basket and increase export earnings to US$7 billion by 2016. There is always an element of contradiction in the manner in which these key institutions play their roles in the export conveyer belt. Another example is how the Ministry of Industry and Trade makes deeper regional integration commitments aiming at abolishing tariffs and quarters, yet using the same instruments of tariffs and quarters in the protection of the local industry, for instance through legislation such as SI 64 of 2016.
Clearly, there is no harmonious and effective coordination of export promotion activities and calls by the central bank that ZIMEC be put in place are justified and legitimate, against that background. Each player in the circus is just doing what they think is right. There is need for a stronger institution that is independent to authoritatively perform the export function in an objective manner and from a common understanding. As things stand, no one has conducted a comprehensive and informative trade competitiveness assessment, or export potential assessment or export opportunity scan or sector competitiveness brief on Zimbabwe.
The existing institutions are often understaffed, underfunded and lack the requisite skills indispensable to perform the export promotion and development function. Only mediocrity can come out from a mixture of such ingredients. We can have a different scenario if all the export functions are transferred to one organisation with the appropriate authority to organise effective policies that pull in the same direction.
For that organisation to effectively play its role, it will require a sustainable funding mechanism that ensures that adequate resources are there to cover all its programmes. Ideas can be borrowed from organisations such as NSSA, ZIMDEF and POTRAZ. If exports are really important to the country, then it should also reflect in the manner we structure our institutions which play that role. And in rolling out a new paradigm, the powers that be should be careful to avoid the creation of extra bureaucracies to the one that is already there, avoid repetitive functions of institutions and foster independence in their operations. In doing that, we can create a ZIMEC that proves to be the perfect piece that completes the exports development puzzle.